Douglas Fulton, Board of Directors, Office of the CEO, says the company has cornered the market on cannabis beverage co-manufacturing in the U.S.
It all started six years ago, says Fulton. “Our founder, Jeff Maser, worked in the securities business,” he explains, “and he sometimes went out with his colleagues to a bar at the of the day. He always felt like the odd man out because he didn’t drink alcohol. But he liked the taste of margaritas, and one day he got an idea: why can’t somebody come up with a cannabis margarita?”
Why not indeed? Maser took that epiphany and ran with it, securing seed funding and establishing Tinley as an alt-alcoholic beverage company. Working with formulators from some top alcohol beverage firms, Maser marketed several botanical-infused beverages, including bespoke interpretations of such popular cocktails as the Moscow mule, gin and tonic — and of course, the classic margarita.
At first, Tinley Beverage Company produced non-cannabis beverages that could be sold in supermarkets and liquor stores. But as legal outlets for cannabis increased, the company expanded its line to include cannabis-infused products.
“I came on board about three-and-a-half years ago when Jeff decided Tinley needed to scale, and he transitioned to an advisory role,” says Fulton.
And scaling is what Tinley Beverage Company has done — with a vengeance. The company’s newest permanent bottling facility in Long Beach spans 20,000 square feet and has a capacity of 12 million beverage “units” a year. Its other bottling facilities include a canning line that yields 10 million units, and a mini line that produces 7 million two-ounce shots.
“We also have a fourth line, something no one else has,” says Fulton. “It packages non-alcoholic cannabis-infused beer, and it’s just started production.”
And that’s only for the regions Tinley currently serves: Canada and California, the world’s two largest legal cannabis markets. As legalized cannabis continues its seemingly inexorable expansion, Fulton says, Tinley Beverage Company will expand with it.
“We have two primary business streams,” Fulton continues. “First are the beverages we make under our own brands, and we’re justifiably proud of them. They’ve won the Emerald Cup (the cannabis industry’s most prestigious competition). But to really scale, we recognized the need to provide manufacturing for third-party products. So, to serve that market — which we’re sure will become huge — we’ve built a facility that is far larger than our current needs.”
That makes sense, given third-party production typically results in greater volume — and revenues — than proprietary brands. Tinley provides a one-stop shop for anyone intent on marketing their own cannabis-infused beverages.
“We focus on high capacity and high volume,” says Fulton. “Basically, you come to us with an idea. We consult with highly qualified flavor houses — all they do is figure out beverage flavors. We also work with established emulsion companies. THC (the primary psychoactive compound in cannabis) is an oil, and you have to know how to make it water soluble, so it stays in solution. Once you’re happy with the product, we manufacture it and distribute it to licensed outlets.”
For now, Tinley Beverage Company has the cannabis beverage co-manufacturing sector pretty much to itself. That will likely change, of course, as the legal cannabis market expands and the demand for THC-infused beverages grows with it. But Fulton isn’t particularly worried about that. Several of the company’s executives come from the Cott Corporation, one of largest third-party beverage manufacturers in the world. Tinley isn’t so much a cannabis beverage company that is engaged in co-manufacturing; to a real degree, it’s a co-manufacturing company that also makes its own cannabis-based beverages.
“Right now, beverages are only about two percent of the entire cannabis market,” says Fulton. “We’re at the inflection point of the hockey stick — just before the rocket ride up the shaft. As the cannabis market grows and matures, a lot of people will want alternatives to smoking or vaping. And not only that, they’ll want options in their preferred product. We offer beverages that range from five to 10 milligrams of THC to 100 milligrams. It’s comparable to someone who wants a glass of white wine to someone who wants a couple of cocktails. Cannabis beverage consumption is mimicking the social rituals associated with drinking alcohol — with one big difference. No hangovers.”
Challenges: “It’s all about getting the product directly to the consumer,” says Fulton. “The quicker we can do that, the faster the category as a whole will grow. That implies, of course, movement in state and federal legislatures on full legalization.”
Opportunities: “For the midterm, our greatest opportunity lies in building out the whole cannabis beverage category for California via third-party brands,” says Fulton. “That’s going to be possible with our new facilities. Longer term, it’s supplying the entire market as legalization proceeds, including with our own brand products. Also, we want to become the Coca Cola of cannabis beverages in terms of business model. We have concentrate formulations without THC. We negotiate licensing with companies in each state, and supply concentrate. They add water, THC, and their own brand packaging. It’s how Coke operates — and we have the capability to do the same thing.”
Needs: “We always need more staffing so we can run more capacity.” Fulton says. “And we’re always speaking with large and strategic capital companies about growth opportunities. Raising capital is an ongoing priority.”