Alumnus’ Brainchild: Cannabis-Infused Beverage Company

Cans of Levia - Cannabis-infused seltzer
LEVIA, our April UConn Startup, is introducing cannabis -infused seltzer to the Massachusetts Dispensary market. (Photo Courtesy of LEVIA)

Alumnus Matt Melander ’09 is the President of LEVIA, a new cannabis-infused beverage company, based in Massachusetts. The company currently has three seltzers that are distributed at 38 dispensaries in Massachusetts, with roughly 40 more on the waiting list. Sales have been better than anticipated and the startup is growing quickly.

Below, Melander discusses the company’s experience entering a new, largely untested, market.

Alumnus Matt Melander '09
Alumnus Matt Melander ’09 (Contributed Photo)

What does a cannabis-infused seltzer taste like? Who is your target customer? And why would someone select a cannabis-infused beverage over an alcoholic one?

The flavors taste as advertised (Raspberry-Lime, Lemon-Lime, and Jam Berry) and we worked extremely hard to remove the “weed flavor” and produce something that has no after-taste. If it tasted like bong water, no one would buy it!

Our target market is very broad, as a zero calorie/zero sugar product that comes in a format that everyone is comfortable with. We believe that as cannabis continues to become more mainstream this format will become accepted by all.

Alcohol is an extremely crowded space with massive multi-national conglomerates controlling the vast majority of the supply; cannabis is a micro-economy as each state controls the supply chain, from “seed to sale.” The natural opportunity was to focus on the space where the big guys still cannot operate at an economy of scale.

How did you and your team come up for the idea for the seltzer and is it true you first started experimenting using a SodaStream machine?

Cannabis beverages have been around for the better part of a decade in the western part of the country, and when we looked at national sales data it was the fastest-growing segment of this rapidly evolving industry. Couple that reality with the societal norm of gathering around drinks with anticipated effects, and we knew where we wanted to go.

Yes, we did all our prototypes in a SodaStream. As crazy as it seems, it allowed a rapid protoyping method without much cost. We mix our C02 extracted cannabis oil with our partner’s technology to make the substance water soluble, at which point we dose our production tanks with the cannabis and natural flavoring, let the carbonation stones do their job, and off to the canning line it goes. It is that simple.

I understand a UConn company was integral in your success. How so?

Yes, 100 percent! We would not be where we are without the partnership of a company within the UConn TIP Program. They are our secret weapon!

And have you been successful in raising capital?

We successfully closed our capital raise on Dec. 30 and were able to raise north of $4M to fund the development of our factory and the necessary equipment to run a cannabis-beverage operation at scale. Prior to venturing into this new world, I had spent my entire career working in Capital Markets, so it certainly helped having that background, and Rolodex, when structuring a deal in an industry that has very limited access to traditional banking products.

How difficult was it to create a startup in this heavily regulated domain?

See these gray hairs? I owe each one to this project and the constantly evolving industry and regulatory process. In all honesty, the licensure process is extremely arduous, but we knew the demand for the beverage segment, and just kept our heads down and continue to take on every challenge as a chance to be better. If it was easy, someone else would already own this market.

Do you have any idea of how big this industry could be?

All signs point to cannabis being north of a $100B in annual business, so I would say the sky is the limit. We are actively hiring across all facets of our business, from food science, to operations, sales, and marketing. It’s a fast-paced, growing landscape. We tell all our teammates, ‘We don’t have a monopoly on good ideas, so please feel free to be creative and think outside the box.’

In the course of building your business, I’m sure you’ve had some funny or unusual stories. Can you share one?

We work in cannabis. The entire thing is unusual, there is no case study. I’d say the most fun part of building a business in this industry has been the people. Just because someone is an executive in a major company, doesn’t mean they don’t enjoy cannabis. Our investors are a who’s-who of powerful people. Don’t judge the book by its cover… you never know, your CEO might just be one of them!