Keef Brands is making waves in the cannabis industry, setting a high bar for competitors with its focus on cannabis-infused beverages. The Colorado-based company is riding a surge of demand, driven by innovation, consumer preferences, and a knack for navigating regulatory landscapes.
Sales Soar Amid Industry Growth
From January to August this year, Keef Brands pulled in $18.9 million in sales, marking a 26% increase from the $15 million recorded in the same period last year. This data, provided by Seattle-based analytics firm Headset, highlights a company outperforming an industry already seeing significant growth. Cannabis beverage revenue grew by 11% year-over-year, according to a Headset study.
Keef’s offerings span more than 70 product types, including gummies, oils, and vape cartridges. However, their carbonated beverages dominate the portfolio, accounting for 80% of total sales. With eight soda flavors and three sparkling water varieties, Keef is clearly committed to its niche.
Why Carbonated Beverages Lead the Pack
Keef’s sodas sell for $5-$7 per can, infused with 10 milligrams of THC, or $12-$15 per can for a stronger 100-milligram dose. CEO Erik Knutson reveals that production costs for a single can are $1.15, leaving the company with margins between 50% and 60%.
Among Keef’s lineup, the Xtreme Bubba Kush Root Beer Classic Soda stands out as a consumer favorite. This 100-milligram THC beverage saw sales skyrocket this year, doubling from $144,000 in January to $352,000 in August.
THC Dosing: A Delicate Balancing Act
Keef Brands tailors THC content based on state regulations, creating unique challenges and opportunities in different markets. For instance, Colorado restricts THC in beverages to 10 milligrams per can, while Missouri allows up to 25 milligrams. This flexibility has helped Keef cater to a diverse audience, from cautious newcomers to seasoned consumers.
Chief Revenue Officer Blake Patterson compares THC dosing to alcohol consumption. “It’s like having a bottle of vodka in front of you,” he explained, “and knowing exactly how much you need for the effect you want.”
Interestingly, Keef’s higher-dose beverages have consistently outperformed their lower-dose counterparts. Knutson notes that consumers often see better value in high-THC drinks, comparing them to other edibles, such as gummies. For retailers, these beverages make logistical sense too, as higher THC products maximize shelf space.
Keef also equips dispensaries with refrigerators—ranging from mini-fridges to wall units—to ensure their beverages remain fresh. Despite the expense, these units account for less than 5% of the company’s overall costs, making them a worthwhile investment.
Hemp-Derived THC Expands the Reach
Keef’s venture into hemp-derived delta-9 THC products has opened new doors, especially in states without regulated marijuana markets. These products are already available in several hundred Tennessee stores, with plans to expand into 300 liquor stores in Texas.
By focusing on hemp-derived products, Keef introduces its brand to consumers who might otherwise be out of reach. However, the company takes a cautious approach, avoiding sales of hemp products online or in regulated marijuana markets to maintain strong relationships with its retail partners.
“We were born and raised in the regulated space, so we’re never going to turn our back on it,” Knutson said.
A Tale of Two States: Colorado vs. Missouri
Colorado, Keef’s home state, and Missouri represent the company’s largest markets. Surprisingly, Missouri leads the way, with $14.3 million in sales from January through late August, compared to $11.2 million in Colorado during the same period.
Keef attributes its Missouri success to its early entry into the market and a strategic partnership with Clovr Cannabis. “We were the first edible sold in Missouri,” Knutson shared, emphasizing the importance of being a first-mover. In Colorado, Keef has spent years cultivating retail and consumer relationships, maintaining its status as a local favorite.
The company’s third-largest market, Arizona, trails behind with $5.3 million in sales during the same timeframe. Still, the brand’s consistent growth across regions highlights its ability to adapt and thrive in varied conditions.
Keef Brands’ rise in the competitive cannabis beverage industry is no accident. With a keen understanding of consumer preferences, a strategic approach to regulation, and a diverse product lineup, the company has positioned itself as a leader. As cannabis beverages gain traction nationwide, Keef seems well-poised to maintain its momentum.