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The Alkaline Water Company Expanding as Cannabis Industry Heats Up

It’s been another busy month in the cannabis industry, including several watershed moments. The 2018 Farm Bill, which will legalize industrial hemp, passed in Congress and is awaiting being signed into law by President Trump. Cannabis producer Tilray (NASDAQ: TLRY) partnered with drug giant Novartis (NYSE: NVS) to distribute medical marijuana where legal around the world. Beer juggernaut Anheuser-Busch InBev (NYSE: BUD) also partnered with Tilray, with the two agreeing to collaborate on a joint venture to make new CBD- and THC-infused beverages.

These developments dovetail with the decisions of The Alkaline Water Company (NASDAQ: WTER)(TSX-V: WTER) to expand its portfolio both in product and distribution. The Scottsdale, Arizona-based company is already the best-selling bulk alkaline water in the U.S. with its Alkaline88® sold in nearly 50,000 stores, including leading retailers Kroger (NYSE: K), Albertsons/Safeway, Walmart (NYSE: WMT) and CVS (NYSE: CVS).

In November, the company set a sales record, generating $3.1 million in sales during the month.

Looking to capitalize on the growing trend to shift away from sugary drinks towards functional beverages, including those containing CBD (cannabidiol), The Alkaline Water Company is widening its product offerings to include flavored and hemp-infused beverages. CBD is a component of cannabis and its cousin, hemp. Hemp is clearly differentiated from cannabis in that while it does have CBD, it does not contain (or only has trace amounts of) THC, the psychotropic constituent of cannabis responsible for the “high” commonly associated with marijuana.

CBD is trumpeted to have a multitude of therapeutic benefits, ranging from anti-inflammatory to new therapeutics for hard-to-treat diseases like cancer and epilepsy. With consumers becoming more health conscious all the time, the global functional beverage market is forecast by Grand View Research to reach $93.68 billion in 2019.

The expected passage of the 2018 Farm Bill presents The Alkaline Water Company with a unique opportunity to become the first national U.S. beverage firm to bring true water-soluble, full-spectrum features of bioactive CBD molecules from hemp plants via its A88 Infused Beverage Division. Late in November, the company inked a deal with Infusion Biosciences to utilize Infusion’s proprietary Aqueous Phytorecovery Process technology that uniformly dissolves CBD directly in water. Generally speaking, manufacturers are challenged by the hydrophobic nature of CBD, meaning that they must resort to using chemicals or additives for infusion. The quality and purity of Infusion’s technology fits squarely with Alkaline’s mantra a “clean beverages” that are free of chemicals and additives.

The new infused beverages will be marketed under the brand SOOTHE™ and are expected to be available during the first quarter of 2019 based upon the contention that all necessary approvals are in place.

The new products can be rolled into Alkaline Water Company’s expansive – and growing – distribution network. In its bid to expand internationally, the company this month teamed up with British Columbia, Canada-based World Choice Bottling for production of Alkaline88® early in 2019. Through the agreement, Alkaline88® will be made available for sale in the Canadian markets and throughout the fast-growing Asian markets, particularly China, where WTER management says it has already made substantial progress in the last 14 months.

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