A CBD company now owns a large part of Jones Soda

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In recent months, an emerging cannabis business has quickly gained an important position in Jones Soda (JSDA) with the intention of bringing the wild child soft drinks to CBD drinks.

Thursday late, Heavenly Rx, a hemp holding company of the investment company in Cannabis SOL Global Investments (FCSON), invested $ 9 million in the purchase of 15 million shares of Jones Soda, bringing its stake in the Seattle soft drink company to 25%. This infusion is a welcome sum for Jones, who accumulates losses.

As part of the agreement, Heavenly Rx received a warrant to acquire an additional 20% interest and obtained the right to acquire shares in the open market, bringing its share to 51%. This Heavenly Rx decision follows an investment made earlier this year by SOL Global, which bought a 10% stake in Jones.

Jones uses this money to develop beverages containing cannabidiol, or CBD, a non-psychoactive cannabis compound that has become fashionable for health and wellness benefits, such as reducing pain, reducing pain, and reducing the risk of pain. anxiety and reduce inflammation.

The investment by Heavenly Rx will also help fund the creation, marketing and distribution of Jones' base offerings for bottled beverages and fountains, as well as the consolidation of the brand, said Paul Norman, CEO of Heavenly. Rx, who joined the Toronto office last month. a career of 30 years at Kellogg (K) Business.

"It's a good product extension for the Jones brand that can generate growth," Jennifer Cue, CEO of Jones, told CNN Business.

Jones, a company that once bottled a "Thanksgiving Dinner" soda and produced a rainbow of drinks with unique flavors in bottles covered with photographs taken by customers, is rooted in the urge to do things other.

But sales fell, as consumers shunned soft drinks. Jones responded by reducing sugar in his range of sodas, creating sugar-free beverages and launching a non-carbonated lemon and coconut drink called Lemoncocco.

The Jones Soda Company is known for its unusual flavors such as pumpkin pie, wild herb stuffing, Brussels sprouts, cranberries, turkey and gravy.

Jones needed an infusion of investment and innovation, Norman said.

"It's a fabulous brand," Norman said in an interview. "It's rebellious, there's a big story behind that."

At the same time, he said, Jones was a little devious.

The financial statements show that the company's sales have been declining for three years. It closed the year 2018 with revenues of $ 12.6 million, down from $ 13.3 million the year before. Its net loss increased from $ 1.3 million to $ 2.1 million.

2019 was not much better. Sales reached $ 2.8 million in the first three months of the year, the same level as in the first quarter of last year, and Jones recorded a larger loss in the same period .

Norman, citing his background in consumer products at Kellogg, said he thought the opportunities for CBD-based beverages were immense. And while there has been an increase in CBD products derived from hemp since hemp has been protected by the US Farm Bill Act of 2018, the market remains fractured and full of smaller and lesser known brands. , did he declare.

He thinks Jones has the opportunity to be a renowned brand in the field.

"The category will reach $ 20 billion north," he said. "This will increase to a large extent because of the growth of the mainstream distribution."

The amount of growth, however, could heavily depend on regulation. The US Food and Drug Administration, which oversees food products and additives, is currently exploring the possibility of including hemp-derived CBD extracts in foods, beverages and personal care products.

If the FDA gives the green light, Jones will not hesitate to intervene, said CEO Cue.

"If everything comes to fruition as everyone thinks, it could be a huge category," she said. "And we do not want to miss that."

Correction: An earlier version of this story incorrectly described Heavenly RX's participation in Jones Soda.

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