• 🧑‍⚖️ Real Water Must Pay $3 Billion
• 💧 Sprecher Takes Minority Stake in O2
• 🛥️ MA Allows for Maritime Marijuana Distribution
• ☕ Coffee Holding Co. Terminates Proposed Merger
• 💻 Canna Giant Embraces E-Comm Hemp

Within the broader landscape of the functional beverage boom, Pacific Islands-indigenous root  kava had already planted roots well before other calming ingredients like ashwagandha and CBD worked their way into trendy liquids. 

It has been entrenched in Florida since the early 2000s within the on-premise scene and among consumers prioritizing alcohol reduction. Despite its growth – Florida has around 75 kava bars and there are about 180 locations total across the U.S. – retail positioned formats like cans, powders and shots still struggle to find a foothold in an increasingly competitive functional beverage category.

Price and taste might play a role, but it's also the regulatory landscape, which has largely relegated kava to on-premise and specialty channels, that could be stifling kava’s success. The ingredient has been deemed a dietary supplement by the FDA but does not have Generally Recognized as Safe (GRAS) status (though the Hawai‘i State Department of Health is working to change that.)

Sol Broady launched his kava brand Leilo (pronounced Lay-Low) in 2019 expecting consumers to come flocking.

“I thought kava would be huge in two or three years and we were going to take over the world,” he said. But Broady now believes it will be a slower build. 

In the 52-week period ending May 19, kava functional drink dollar sales reached about $16,500, a 52.4% increase compared to the year-ago period, according to SPINS data. The shot format remains the biggest retail category for kava with dollar sales up 86.7% accounting for about $81,550. Shot unit volumes were also up 86% year-over-year.

​​One of the biggest trends in kava beverages has been pairing it with kratom, a leaf derived from a relative of the coffee plant, which can induce opioid- and stimulant-like effects, according to the National Institute of Drug Abuse. However, pairing kava with kratom raises even more regulatory-related questions.

BevNET Insiders can access the full story to learn how kava compares to other slow growth categories and the tempered trajectory stakeholders now expect it to follow.

What’s the cost of drinking toxic water? For a group of five children and three adults that consumed water labeled as “alkaline” from manufacturer Real Water, the answer was severe liver problems from the presence of the chemical hydrazine. And for a Las Vegas jury tasked with assigning punitive damages in a lawsuit brought by the group, the answer was a staggering $3 billion, plus another $89.75 million in compensatory damages, too. 

💰 The compensatory verdict awarded on Friday for past and future damages came after Real Water was ordered to pay in excess of $129 million in a separate case based on similar claims. The plaintiff in that case, who needed a liver transplant as a result of complications from drinking the product, was awarded $14 million for loss of life expectancy alone.

🤔 Is this the end of the Real Water saga? Recall this story started back in 2020, after a Salt Lake City doctor tipped off the FDA following an increase in liver patients. A subsequent investigation revealed that unsanitary conditions and unregulated practices at the company’s bottling facility led to contamination with hydrazine.  

Milwaukee’s Sprecher Brewing Company is continuing its cross-category beverage expansion with a new investment in startup sports drink brand O2 Hydration, taking a minority stake in the Ohio-based brand.

🚚 Sprecher announced the deal earlier this month; it includes plans to begin producing and distributing O2.

🔋 The deal continues a string of M&A and investment activity from Sprecher, a legacy craft soda and beer brewer that, in January, purchased startup energy drink brand Juvee – its third acquisition since 2021.

🏋️ Founded in 2014, O2 has built its business with a focus on CrossFit and has positioned itself as a better-for-you alternative to leading sports drinks.

Marijuana can now traverse the high seas between mainland Massachusetts and its two largest island communities, Martha’s Vineyard and Nantucket, after the Commonwealth’s Cannabis Control Commission issued an administrative order allowing for maritime transport of legal cannabis within the state’s territory.

🏝️ The decision stems from a lawsuit filed by Vicente LLP on behalf of dispensaries on the state’s island communities. Prior to the ruling, transport of cannabis from the mainland to the islands forced island-based dispensaries to grow their own cannabis or buy from a limited number of cultivators on the island.

🐰 The lawsuit had a strikingly fast turnaround: Vicente filed its complaint on May 21. The Cannabis Control Commission voted to enter settlement negotiations just nine days later, with an official ruling now arriving less than a month after the initial filing.

🌊 The case highlights the continued difficulties businesses face in navigating the disparity between state legalization of cannabis and federal prohibition. But whether other states with island communities follow Massachusetts’ lead in allowing water transport is an open question.

Publicly traded wholesale coffee roaster Coffee Holding Co. has canceled a planned merger with logistics company Delta Corp. Holdings Limited, the Staten Island, N.Y.-based business announced this morning.

📜 The termination comes two years after the deal was originally announced, and even after the merger received SEC approval in March. However a shareholder vote in April was unsuccessful, leading Coffee Holding to cancel the deal and remain independent.

💱 According to a release, Coffee Holding CEO Andrew Gordon said the company has managed to improve its balance sheet and pay off past debts, allowing it to “address our ability to continue as a going concern.”

🏭 “We have secured several new pieces of business over the past year, including production agreements with the largest retailer by market share in the Northeast and a two year agreement with one of the larger U.S. national retail chains,” Gordon stated.

🌴 Coffee Holding Co. produces a number of dry coffee brands including Cafe Caribe, Cafe Supremo, S&W Premium, Premier Roasters and Via Roma.

Curaleaf wants to be The Hemp Company – no, really. The world’s largest cannabis company is attempting to harness the momentum behind hemp-derived THC products by launching TheHempCompany.com, its “new home for all fully Farm Bill compliant hemp derived products,” including new items from its in-house edibles and drinks brand, Select.

🚚 Along with direct shipping in 25 states and Washington, D.C., the site will also fulfill orders starting June 26 through “strategic partnerships with conventional retail” and on-demand delivery powered by DoorDash (Florida, Texas, Illinois, New Jersey and Minnesota only).

💤 Curaleaf’s new line of hemp-derived gummies will come in four categories – Fast-Acting, Classic, Snooze and X Bites – while Select Zero Proof seltzers feature 5 mg of THC per 12 oz. can and come in four fruit flavors.

Go Deeper: Why Cannabevs Matter to All Beverage Categories