Dave Holmes created an alcohol beverage category by founding and developing SpikedSeltzer, which he sold to Anheuser-Busch in 2016. Now his ambition is focused on the burgeoning hemp-based CBD (cannabidiol) beverage market. In March, Plant Life Group, which Holmes co-founded, launched PLNT Blend, a line of organic plant-based drinks incorporating full spectrum hemp extract with 15mg of cannabinoids. The line comes in three versions with flavors such as “turmeric + ginger.” A 10-oz bottle sells for about $4. The beverage, sweetened with coconut nectar, contains 60 calories and 10g of sugar. The package is hot-filled and has an 18-month shelf life (the company is investigating other pasteurization methods). Holmes was among those who testified during a day-long public hearing on May 31 hosted by the FDA, as the agency considers how best to regulate CBD as a food and beverage ingredient. Echoing other CBD product makers, Holmes told the regulators that he supports “clear regulation of naturally derived cannabinoids” in order to “pave the way for responsible growth.” Holmes also suggested that the FDA use its existing New Dietary Ingredients Notification Process as a framework for hemp regulation in food and beverage. BD spoke to Holmes about the burgeoning CBD beverage market. The following is edited for clarity and space:
BD: How did you get into hemp and CBD as a beverage ingredient?
DH: Early in the early days of SpikedSeltzer, a friend and NY restauranteur, was interested in Spiked but he was more interested in how to put THC in product like SpikedSeltzer. In 2012 or 2013, it wasn't something I would have considered or even known how to approach. A bit later he came back and asked if I’d be interested in helping with a CBD product. I had my hands full with Spiked, so I demured. When Nick and I sold the company to ABinBev in 2016, I called them and jumped on board. In the interim, I was becoming familiar with the whole cannabis world in various ways.
DS: What does your distribution network look like?
DH: We are continuing to build out a distribution network. We have decent coverage through the Northeast, and are expanding into new areas as opportunity arises. We’ve just started in the metro area of New York and have a growing business through Chicagoland and around Illinois. We will start in Colorado shortly. Plus, we've got the flexibility of direct ship where we can. I’m less focused on accumulating as many PODs as possible. I’d rather focus on velocity and being able to truly support our customers and partners. That, for me, is the way to boost your reputation and story. It's really about curating retailers who are have ‘bought in’ and appreciate a product, as opposed to having 20 SKUs collecting dust on the corner of 10th and 43rd Street in New York.
BD: Other than online sales, do you mostly direct-ship to retailers, or do you have some DSD?
DH: We do have some DSD partners. We have a growing number. It seems to ebb and flow as to interest and who’s willing to look. It goes anywhere from mainstream alcohol beer distributors to sub-distributors for very specific channels like gyms and alternative therapy spots. It really runs the gamut. There’s a way to approach distribution by continuing to write checks for attention, but when you’re a hammer everything’s a nail. It’s okay to concentrate on the market, find a place for thought leaders and help make those accounts shining stars. That word does travel. Like for SpikedSeltzer in Connecticut, on Thursday, Friday and Saturday nights you would see the managers of other stores walking through an account to see what their competition was doing and what was working. There’s always a network effect in any trade.
BD: Did you pick your distribution territories based on where you think state laws are most amenable?
DH: We’re not excluding any markets out of fear. We have just found those places most accommodating. It’s very hard to find a retailer or a distributor — or a combination of both — who are ready to just be a pirate and go for it.
BD: How big is the market for hemp-infused beverages? What’s the opportunity?
DH: When I think about how to mentally model this business financially, I go back to the functional beverage market at its onset. The segment I key in on is kombucha, because it was something of a sleeper of a category for years. If you told somebody 10 years ago they were going to intentionally drink something that had a live culture in it they'd probably look at you a little funny. So when I look at functional beverages and kombuchas, that's where I model my market size.
BD: Your product is labeled “full spectrum.” Is that where the market is going? Are consumers looking for a broader benefit than just CBD isolate?
DH: There are so many opinions. From our way of looking at this, the product is the plant. We’re trying to stay as close to the plant as we can. To make a plant product that has been stripped and chemically derived doesn’t seem to be the same. I feel like there’s a distinction, and there quite possibly could be some future FDA guidance about the difference between using isolate and a naturally expressed ingredient. In some ways, isolate is way closer to where pharma is, rather than using something that is not amplified. I think everybody wants some guidance.
BD: What was your big takeaway from the recent FDA hearing on the regulation of CBD-infused products?
DH: One of the things that really resonated was a researcher who said, “I can’t study this because of all the hoops I have to jump through to bring this into my lab and do any types of investigation, but my son can go and buy it at the corner store.” Pretty much after every bit of testimony they would ask, “Do you have any research that you can send us?” The way it’s been treated, it’s very difficult for anyone to do that research in a way that would provide the type of evidence and results that the FDA is looking for.
BD: What’s the solution?
DH: The FDA has a very hard job right now. The horse is out of the barn, from the perspective of this industry having grown up without a regulation. Now the question is how to create a framework that will allow good actors to succeed and bad actors to be taken out. To have regulation and testing so consumers trust what these ingredients are, how they’re being sourced, and that they’re actually verifiable. Right now you don’t know if what you get as a salve or a cream, or whatever it is, has the amount of the active ingredient that you’re really paying for, or whether the ingredient that you’re paying for is there or not. That’s the scariest thing, that there’ll be so many exposés of people who aren’t acting properly and that it will harm the producers that are acting responsibly.
BD: Are you convinced hemp has health benefits?
DH: I am, and that's pretty much as far as I can go because of the lack of hard scientific evidence. I can count dozens of folks who have said that it's helped them and had an effect. I know, it has for me. I've had enough folks who have had a good experience that I would err to that side rather than err to the side that it's snake oil. I really look forward to researchers, scientists, and academics being able to do studies and say it’s helpful for this, it's not for that. To have some type of guidelines and some type of understanding is clearly better than guessing. Additional study will help everybody involved from the consumer to the producer to the farmer.
BD: Given your background and expertise with SpikedSeltzer, why didn’t you formulate a hemp extract product around sparkling water?
DH: It goes back to where I want to be in this new category. You end up stumbling when CBD or hemp extract becomes more understood and more widely available, and suddenly you’ve just got one leg to stand on. We want something premium with function and taste outside of just the one ingredient. At Expo West, a buyer from a big grocery store said PLNT would be great without the hemp. So hemp is just a hook. Also, it’s hard to formulate with full spectrum hemp, because it can be bitter, so a lot of the formulations end up leaning on high sweetness to overpower the bitter.
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