Flora Growth forms joint venture to tap U.S. cannabis beverage market

Flora Growth Corp. (NASDAQ: FLGC) is doubling down on its efforts to expand in the U.S. cannabis market, announcing a joint venture with Althea Group Holdings to enter the hemp-derived beverage sector, the company announced Tuesday.

The 50/50 joint venture, named Peak USA LLC, will combine Flora’s brand development, sales, and marketing expertise with Althea’s subsidiary, Peak Processing Solutions, a player in cannabis-infused beverages with a 40% market share in Canada, according to a statement from Flora Growth.

The companies aim to create a leading nationwide cannabis beverage brand in the U.S., positioning their products as an alternative to alcohol. The company cited data analyzed by Carnegie Mellon University showing that daily cannabis use has surpassed daily alcohol consumption in the U.S., with approximately 17.7 million cannabis users versus to 14.7 million alcohol drinkers.

“Aligning with Althea instantly bolsters our credibility within the beverage sector,” Flora Growth CEO Clifford Starke said in the statement. “Our focus lies not solely on cannabis but on providing an alternative to alcohol.”

The U.S. cannabis beverage market has significant growth potential, as the product category accounts for only 1% to 3% of the overall cannabis market, according to data from Headset. The infused beverages market is expected to reach $500 million by 2030, growing at a compound annual growth rate of 14.7%, Data Bridge Market Research reported.

Flora Growth plans to use its e-commerce platform and distribution network to drive sales of the new beverage products. The company’s leadership recently signaled optimism about the prospects for federal cannabis reform in the U.S. and Germany, where Flora Growth recently entered through the acquisition of TruHC.

The Florida-based hemp company’s move comes amid regulatory challenges faced by other competitors in the space, such as Jones Soda, who is reeling from increased scrutiny from California health authorities regarding the legality of the sector itself.