Jones Soda Co., an original craft soda company known for its unconventional flavors (you might recall the Thanksgiving package with mashed potato- and turkey-flavored varieties?) and user-designed label art, is beginning their ascent into the cannabis space.
The company revealed details of financing that would support its transformation plans in the cannabis space. Jones Soda has issued to SOL Global Investments Corp. a $2 million unsecured convertible debenture and entered into a non-binding term sheet with Pinestar Gold Inc., planning to use the proceeds of the debenture and transactions in the term sheet for costs and expansion of business to the product and sale of “cannabis-containing beverages, edibles and related products,” according to a Business Wire press release.
The company is looking to facilitate their cannabis operation through one or more subsidiaries kept separate from Jones’ craft beverage business. President and CEO Mark Murray spoke on Jones’ next steps, admitting that cannabis is a natural and appropriate next step for the soda company.
“We believe that cannabis-infused beverages and edibles are a perfect fit for the iconic personality of the Jones brand, and that the proposed transactions will lay the groundwork for a strategic transformation of the company to an additional business line that we feel builds on our current business model,” Murray said.
Jones’ announcement comes two years after SOL, which specializes in the cannabis industry, took a minority stake in the firm.
Jones plans to acquire all of the outstanding, common shares of Pinestar (following a consolidation of the shares) and warrants exercisable into common shares of Pinestar, in exchange for an aggregate of 4 million shares of Jones common stock (Jones Shares) and 1.67 million warrants exercisable into Jones Shares, under the terms of the term sheet.
The term sheet also notes that Pinestar will complete an offering of subscription receipts that is expected to be subscribed for by SOL and significant Pinestar shareholders for $8 million.
The term sheet is meant to express a mutual interest in the Plan of Arrangement, though it isn’t a legally binding commitment on the part of either party, so there is no assurance that either the arrangement or the offering of Subscription Receipts will come to fruition. Essentially, there will be many conditions to closing an agreement, and some may be out of either party’s control. It also can’t be adequately predicted whether these conditions will be satisfied, or if the parties will even negotiate and sign a binding agreement.
Cannabis-infused beverages are their own booming industry. Many brewers and distillers are looking at branching into infused options, and most dispensaries already carry options for non-alcoholic, infused sodas.
Many consumers find drinkable edibles more appealing because, in the way they are metabolized in the body, they typically hit the user quicker than ingestible edibles and infused foods. For that same reason, some find that drinks infused in THC can also promote more intense effects than the same dosing of infused foods.
And the sales of cannabis-infused beverages are also increasing, up 40 percent last year, according to data from cannabis analytics firm Headset as reported by MJBizDaily. The increase is credited to companies capitalizing on new consumers seeking a familiar form of consumption, an alternative to alcoholic drinks and a convenient, discreet option to use cannabis.
While the conditions of their mutual plan could potentially shift as each company ventures forward, Murray expressed his assurance that the collaboration with Pinestar and SOL will elevate Jones to the next level.
“We are also confident that SOL, along with certain large shareholders of Pinestar, will provide Jones with the knowledge, expertise and resources necessary to help us deliver on our growth plans within the cannabis sector.”
