Cann Social Tonics Raises $5 Million to Expand
Cann, a California-based beverage company specializing in low-dose “cannabis-infused social tonics,” has secured $5 million in funding from an impressive lineup of investors as it looks to expand production and distribution in 2020.
The seed round was co-led by Imaginary, a New York-based venture capital firm, and JM10 Partners, a Boston-based fund that invests in emerging cannabis companies. Navy Capital, Global Founders Capital, Entourage Effect Capital (formerly Cresco Capital) also participated in the round.
In addition to the growth capital, Cann will now be able to tap into the collective experience of a cadre of cannabis and CPG investors. JM10, which is led by the founders of Ascend Wellness, has backed Flow Kana, PharmaCann, GrassRoots, Lord Jones, and Nuka Enterprises (1906), among others.
Navy Capital has also backed Nuka Enterprises, while Entourage Effect’s previous investments include Ebbu, which was acquired by Canopy Growth, and Arcview, among many others. Meanwhile, Imaginary has invested in popular CPG brands Dirty Lemon (beverages) and Glossier (skincare), while Global Founders Capital has invested in Away (luggage) and HelloFresh (meal kits).
"It's rare – and a real honor – to find the support of two well-respected brand platforms, lifestyle investors, as well as the backing of the industry's leading investment firms," Cann co-founder Jake Bullock said via a press release. "Counting industry experts and consumer specialists among our ranks proves that this isn't your typical cannabis company. It's a vote of confidence that Cann will change the way people socialize."
Cann has positioned itself as a “healthy” and hangover-free alternative to alcohol. The company produces three flavors – Lemon Lavender, Blood Orange Cardamom, and Grapefruit Rosemary -- and all of its offerings are “micro-dosed,” packaged in 8 oz. cans, contain 2mg of THC and 4mg of CBD, and contain 35 calories or less.
According to TechCrunch, the beverage startup has sold 150,000 cans, which retail for $4 apiece, since last May. Cann products are available at just 60 dispensaries in California, and online via the Eaze cannabis marketplace, making the $600,000 in revenue the company generated in less than a year even more impressive.
"We feel beverages like Cann provide the perfect product for the cannabis-curious,” JM10 founding partner Gregory Thomaier said via the release.
Indeed, investors who participated in the seed round view Cann as a disruptor that can shake up the alcoholic beverage category and appeal to sober-curious consumers.
"We have been tracking the new generation of consumers who are searching for and embracing new forms of responsible social drinking which do not involve alcohol," Imaginary co-founder Natalie Massenet said via the release, noting that her firm is “obsessed” with funding disruptive consumer product companies.
For his part, Imaginary co-founder Nick Brown said his firm “views Cann as the future of social drinking.”
According to research firm Nielsen, 66% of millennial consumers are making efforts to reduce alcohol consumption, which has led to an uptick in low-and-no alcohol beers, as well as cannabis-infused beers and seltzer waters like Ceria and Hi-Fi Hops.
Cann’s founders believe that as more consumers adopt more mindful drinking habits, and as social stigmas around marijuana use begin to fade away, cannabis-infused beverages will grow in popularity.
“We want to go out and be social with our friends – have a big night – but we don’t really want to drink alcohol and we often feel pressured to because there’s really not another option,” Bullock said during while delivering the winning pitch during last year’s New Beverage Showdown competition at beverage industry conference BevNET Live.