Canadian startup Sweet Reason has sparkling spin on CBD beverages

Sweet Reason chief executive Hilary McCain says she launched her sparkling CBD-infused water brand because of her own obsession with cannabis beverages.

That obsession, coupled with the lax regulatory environment in Canada where marijuana is already legalized, led the former Boston Consulting Group consultant and longtime food industry insider to launch the sparkling water company.

“The recreational legalization of cannabis was on the horizon. A lot of my mentors and advisers from the food industry were switching over to cannabis… and I believe beverage is the most social and healthiest way to consume cannabis.”

Sweet Reason describes its product as a “premium sparkling water infused with 7mg of… unique form of CO2-extracted CBD.” Its CBD is water-soluble and the company’s drinks contain no sugar, sweeteners, sodium, carbs or artificial ingredients. The company sources its cannabinoid extract from a hemp grower in Colorado and uses a co-packing facility for bottling and distribution.

McCain contends that the beverage is meant to be enjoyed throughout the day as a mild stimulant compared to something like a Red Bull or a soda. But, reader, I’m one bottle into the day already and let me tell you, I’m definitely not going to be able to drink a second one if I want to get anything done.

In January 2018, McCain started the company with a personal investment of a couple-hundred thousand dollars. The money went into market research, brand development and the creation of her CBD-infused concoctions. And when getting a new consumer business off the ground, especially one operating in the regulatory gray area of cannabis and marijuana, the first thing to do is understand the regulatory environment, says McCain.

By the end of the year, she was ready to go to market, but regulatory changes in Canada meant that her home country wouldn’t be the first port of call for the beverage brand. Instead, McCain hit the U.S. market, landing first in New York and selling around the country through online sales channels. 

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After the sales started rolling in, the company began attracting the attention of some pretty heavy hitters in the consumer venture capital market.

Sweet Reason now has $2.5 million in new financing thanks to a seed financing round led by ​Lerer Hippeau — the investment firm behind startups like Glossier, Warby Parker, Allbirds, Casper and Soylent. Other investors included ​RiverPark Ventures and the New York-based consumer internet investor ​Max Ventures. Subversive Capital​, a cannabis investor financed by the Peter Thiel-backed Privateer Holdings, also committed capital to the round. 

“With Sweet Reason, we’re betting on a team that’s laser-focused on delivering superior quality and building a best-in-class brand,” says Lerer Hippeau’s Caitlin Strandberg. “Hilary’s deep domain expertise in the food industry as well as her passion for health and wellness will accelerate Sweet Reason into a category leader.”

While cannabis, cannabis extracts and marijuana have become hot commodities in startup land, many companies are still wrestling with the ways in which they can help undo some of the damage that the criminalization of marijuana and cannabinoid sales previously experienced. Sweet Reason is no different.

“There is a responsibility for cannabis companies and hemp companies by affiliation to support those efforts and initiatives to help remedy the damage that’s been done,” says McCain.

However, her company has not determined what steps it will take to support amnesty for non-violent drug offenders incarcerated for marijuana-related crimes, or how it will address issues of promoting entrepreneurship in the communities ravaged by the “War on Drugs.”

Sweet Reason is planning to donate 1% of its sales to mental health initiatives — something that could wind up benefiting the company if those donations go toward investigating the role that CBD can play in the treatment of mental illnesses.

The company’s sparkling cannabinoid-infused concoctions are available at Dean & Deluca, Westside Market and other upscale purveyors of fancy foods and drinks. The drinks come in three flavors — grapefruit, cucumber mint and strawberry lavender, and retail for $5.99.