Building Inside Iowa’s Hemp Framework
Sky High is one of many hemp beverage companies gaining traction in Iowa. While they sell D2C nationwide and retail in some states, they have focused on building within Iowa’s legal framework as they continue to expand.
Iowa launched its medical market in 2018 with no indication of legalizing adult-use soon. Since hemp products (except smokables) are allowed for sale in most retail liquor stores, craft breweries/bars, convenience/gas stations, grocery and big-box retailers, and farmers’ markets. In addition, D2C sales are allowed! For some operators, Iowa’s hemp framework already offers many of the commercial advantages associated with adult-use cannabis.
How Iowa Regulates Hemp Beverages
Under Iowa law, hemp products must contain less than 0.3% total THC on a dry-weight basis; they can’t sell them to anyone under 21, and the drink itself is capped at 4 mg THC per serving and 10 mg per container. Iowa also prohibits synthetic THC in these products and requires warning-label style labeling similar to alcohol products.
For a hemp beverage to be sold in Iowa, it has to be a compliant consumable hemp product sold by a registered Iowa business. Iowa HHS says approved prepackaged consumable hemp products can be sold at retail without a food license, but products intended for immediate on-site consumption, such as a hemp coffee drink made in-store, require a food service license.
The On-Premise Challenge
Taylor Fairman, co-founder of Sky High, says on-premise restaurants and bars have been slower to adopt hemp beverages because of special insurance requirements, such as dram-shop or “liquor liability” insurance, which can make hemp beverages financially difficult unless establishments fully commit to the category and generate enough sales volume to offset the additional costs. Or they’re the ones manufacturing it, like the many breweries that have switched to hemp.
Registrations Instead of Licenses
Instead of traditional cannabis licensing, Iowa regulates hemp businesses through registrations. The two main registration types are:
- Consumable hemp retailer registration for retail sales to consumers.
- Consumable hemp manufacturer registration for manufacturing, processing, packing, holding, preparing, distributing, or selling consumable hemp products on a wholesale basis.
Depending on the business model, a hemp beverage company may also need a separate food license. Iowa HHS says a food service license is required if hemp is added as an ingredient in a beverage prepared for immediate consumption, and a food processing plant license is required if the hemp product is being manufactured or processed for use as human food or as a food ingredient.
Sky High acquired a Consumable hemp retailer registration to sell D2C within the state and wholesale to retailers. The registration also allows Sky High to ship finished products into Iowa from manufacturing partners in neighboring states, such as Minnesota and Wisconsin.
Expanding Into Missouri
Missouri has hemp beverage laws similar to Iowa’s, making it easy for Sky High to expand across the border, where more on-premise establishments serve drinks. Fairman says they are targeting the Lake of the Ozarks for their launch, a longtime testing ground for alcohol brands introducing new products because of its dense concentration of waterfront bars, nightlife spots, and seasonal tourism. The on-premise limit is 4 milligrams per drink, while C-stores and others allow 10 milligrams per serving.
Marketing Through Major Events
Iowa also allows for hemp beverages to sell products at major events, as long as you have a mobile unit, but no pop-up tents. Sky High has been showing up at major events with an outfitted retro-trailer, including the famous RAGBRAI — the Register’s Annual Great Bicycle Ride Across Iowa. It’s the state’s famous weeklong ride that draws thousands of cyclists from all over the U.S. and abroad. Fairman says the company has also targeted Iowa Hawkeyes football games, where the retro trailer can park directly outside Kinnick Stadium.
Building State by State
Rather than trying to become a national brand overnight, many hemp beverage companies are building state by state, learning local regulations, retailer relationships, and consumer behavior market by market. In places like Iowa, where adult-use cannabis legalization appears distant but hemp beverages remain accessible, brands have an opportunity to establish consumer loyalty early and normalize THC drinks in everyday retail settings long before broader cannabis reform arrives.
