Cheech & Chong may be one of the most recognizable names in cannabis, but that doesn’t mean they can rely on nostalgia to sell beverages.

Like many hemp beverage brands, Cheech & Chong initially built awareness through direct-to-consumer channels before pushing into retail. But looming regulatory changes, including a potential federal crackdown, are making distributors hesitant. Many are holding back on orders or preparing for the possibility of returns, creating a stop-start retail environment that makes long-term planning difficult for everyone, including the farmers.

At the same time, demand at retail is escalating. Liquor stores and breweries increasingly see hemp beverages as a lifeline as alcohol sales continue to decline. Whitney points out that many liquor stores are independently owned, and a ban on hemp could be the beginning of the end for some of these businesses, which have been replacing lost revenue with hemp sales.

Betting on the Three-Tier Future

Despite the uncertainty, Whitney is betting on the long game. He sees the three-tier system as inevitable and is actively positioning the company to operate within it. Regulating hemp beverages like alcohol has been a guiding principle for much of the industry, and Whitney wants to move in step with that direction.

His background in beer distribution gives him an edge. With more than 20 years of experience and deep distributor relationships, the company has already secured placement in 28 states and recently partnered with Breakthru, one of the largest distributors in North America.

For emerging CPG brands, distributors can be invaluable, explains Whitney. They extend reach, provide a sales force on the ground, and simplify compliance. Whitney also points to advantages like excise tax collection and product verification at the warehouse level, which are far easier to manage than tracking compliance across individual retailers.

On the flip side, distributors often carry hundreds, sometimes thousands, of SKUs, and holding mindshare with reps is one of the hardest parts of scaling a brand. In a crowded distributor portfolio, even strong products can get overlooked if they are not clearly tied to strong retailer performance. Sales get you in the door; brands are responsible for generating sales velocity. Jon Halper, CEO of Top Ten Liquors, expects brands to show up and support in-store sales through various activations, pop-ups, and educational initiatives to drive sell-through.

Small Format, Big Opportunity

While Whitney believes low-dose beverages should serve the broader market and high-dose beverages should be in dispensaries, the company is seeing momentum in the 25mg “shot” format, which is quickly gaining traction with consumers. Whitney sees real potential here, even as he worries that regulators could eventually force the category into a standardized 10mg, 12-ounce format, since the rules are still being written.

He believes that would be a mistake. Smaller formats open up entirely new occasions and revenue streams. They are easier to bring on fishing trips, backpacking trips, or anywhere portability matters, and they give consumers more flexibility in how they dose.

Retailers agree, Jon Halper, CEO of Top Ten Liquors, says shot formats are moving fast, with roughly 5,000 units sold weekly across his 12 stores in Minnesota.

Beyond Terpenes: What Actually Works in Drinks

While the infused beverage category continues to mature in dispensaries, with more advanced formulations and flavor profiles, it’s still unclear whether mainstream consumers are ready to move beyond distillate-based seltzers or fully understand concepts like the entourage effect.

There is also an ongoing debate around how terpenes translate into beverages. Ingestion behaves very differently from inhalation, and the science is still catching up.

Whitney’s team is taking a measured approach. Instead of leaning heavily into terpene enhancement, they are exploring minor cannabinoids that may better align with how the body processes THC when consumed. The goal is not to overcomplicate the product, but to build something that appeals to a broad consumer base while the research continues to evolve.

There is also room for improvement in nano-emulsion technology. While fast-acting products deliver a quicker onset, they often wear off just as quickly. Whitney advocates for a blended approach that combines a nano-emulsion with a distillate to achieve a faster onset and longer-lasting effects.

The Rise of the AI-Powered Sales Rep

Whitney believes artificial intelligence will fundamentally change how distributor reps operate. Even the best reps can only hold a buyer’s attention for so long before the buyer tunes out. Retailers don’t need to hear about another brand’s standout features that are just like every other brand’s. They need to understand how a product will make them money.

Cheech & Chong is now using AI to give them an edge in convincing retailers to buy their product. The company has built tools that analyze store-level performance, optimize shelf sets, and generate data-backed recommendations for retailers. What once took months of manual analysis can now be done in seconds.

With these tools, reps can walk into a store with clear, actionable suggestions. Swap out underperforming SKUs, bring in products that are working in nearby locations, and show exactly how those changes could increase weekly revenue.

“The bandwidth to do those calculations didn’t exist before,” says Whitney. “Now we’re creating near-supernatural sales reps. They can go in and know more about a retailer’s business than the retailer knows.” AI doesn’t replace the human layer; it strengthens it. Reps become more informed, more strategic, and ultimately more valuable to retailers.

Whitney also warns brands to be cautious when negotiating with retailers. Many stores still operate on pay-to-play models, charging steep fees for shelf placement that are difficult to recoup and don’t make business sense. “There’s no reason to do a deal that loses you money,” he says. “And I wish more operators thought that way instead of accepting a bad demand.”

To Market With Speed

The Cheech & Chong approach is to go wide, not deep. The company is already making international moves, including expanding its dispensary licensing agreement into Guam and beverage partnerships in South America.

It’s a long way from “two buddies just passing through.”