Xanthic Beverages, an Oregon-based beverage company, just unveiled their flagship product, and it’s disruptive for the entire cannabis industry.
While other cannabinoid companies have been fighting for shelf space in marijuana dispensaries, Xanthic Beverages has been quietly taking over the mainstream brick and mortar market. Their flagship product, Xanthic CBD Water, is produced by a PepsiCo independent bottler, and is currently distributed through a network of Pepsi independent distributors in Washington and Oregon. Xanthic CBD Water contains cannabidiol (CBD) derived from natural sources other than cannabis, making it the first commercially-available CBD exempt from the federal cannabis laws that typically hamper large-scale distribution agreements in the U.S.
Xanthic Beverages was founded in January 2018 by Ryan Maxson and Ryan Stroud, two lifelong residents of the Pacific Northwest. In March 2018 they signed a partnership agreement with Xanthic Biopharma, a publicly-traded Canadian company (CSE:XTHC).
Ryan Maxson is a fifth-generation farmer who recognized early on the value of merchandising his products. After two years of working in the West Wing – where he served under Donald Rumsfeld as an advisor to President Bush – he was ready to return home and settle down in the Pacific Northwest. “Kale was just beginning to trend,” he says, “so I grew a bunch of kale, but I knew all along it’s never the farmer who makes the strongest margins.” It wasn’t long before he’d expanded his business model to include food processing and packaging. And not long after, kale chips that he’d grown, processed, and packaged were being sold in thousands of large-scale retail locations across the U.S., as well as in three other countries.
When Oregon opened up its state-regulated cannabis market, Maxson saw the opportunity to take an even bigger step. Maxson explains, “Because cannabis is still not federally legal, there’s a lot of mainstreaming and consolidation that hasn’t happened yet. I wanted to take part in the opportunity by helping professionalize the industry, so I went looking for a business partner who had the cannabis industry piece, but who also had the professional piece.”
That’s when he met Ryan Stroud. Stroud has been working in the cannabis industry for fifteen years. He’s also a military veteran with a background that includes public policy development and Fortune 50 consulting. He explains, “I grew up on an island in Alaska, which was beautiful but also isolating, so when I left I was looking for an adventure. I joined the military, but stayed CONUS for all four years, so when I got out I was still looking for that adventure.” He returned to the West Coast, where he met Tim Blake, founder of the legendary Emerald Cup. Says Stroud, “Tim introduced me to that adventure. At that time under the California medical program many people were still just beginning to move their production out into full sun. My first season in Mendo (Mendocino County, California) I worked as a gardener, then ran a trim camp. The next year I was commissioned to grow a crop, and actually ended up placing in the (Emerald) Cup.”
Stroud eventually moved to Portland where he earned a graduate degree and built a mainstream career. “But I always kept a foot in cannabis,” he says. “It was just something I kept to myself. I’d be working on a research project for a report to U.S. Congress, or I’d be helping an executive resolve a conflict, and then I’d go home and tend my medical grow.”
Oregon has long been a cultural and industrial center for the cannabis industry. In 1973, Oregon became the first U.S. state to decriminalize marijuana, and in 1998 the Oregon Medical Marijuana Act was passed. Oregon began allowing recreational marijuana sales in 2015. Arcview Market Research and BDS Analytics estimate the North America cannabis industry represents at least $100 billion of economic activity per year. Total legal sales in North America already top $6 billion, with estimated legal sales of over $15 billion by 2020.
And now the scale of the industry – and the rapid transition out of prohibition – has caught the attention of some of the largest companies in the world. Says Stroud, “Some of the biggest companies in the world in their respective categories have come to Oregon looking for ways to cash in on the cannabis opportunity. Last fall an exec from one of those companies challenged us to make a cannabinoid product that a publicly-traded company like theirs could be involved in legally. So we did.”
Maxson continues: “We also recognized that cottage-scale practices would not be sufficient to fill the scale of distribution pipeline we envisioned for ourselves, so we found a PepsiCo-contracted bottler to produce our product. Once distributors and large-chain retailers understood our capacity, they began to look at us a lot differently.”
“The cannabinoid industry is no longer just about cannabis,” says Stroud. “Whether a cannabinoid company focuses on medical efficacy or recreation, there are a number of different ways to produce and deliver cannabinoids. Xanthic CBD Water is part of that evolution.”