After being stuck in limbo for much of July following the passage of regulations on THC-infused beverages in Iowa, Iowa City-based Climbing Kites is pushing new products into retailers this week.
The return to retail in Climbing Kites’ home state follows a portfolio reshaping to adhere to a law that went into effect July 1 that lowered the allowed THC dosage in beverages. In addition to that law, the Iowa Department of Health and Human Services (DHHS) issued follow-up guidance that limited dosages to up to 4 mg of THC in a 12 oz. beverage container.
Climbing Kites and Field Day Brewing, maker of THC-infused beverage brand Day Dreamer, are now embroiled in a lawsuit against the state and the DHHS, seeking an injunction to block enforcement of the law.
A recent review of the law by an Iowa legislative committee did not provide relief, leaving the guidance unchanged, which paved the way for the DHHS to enact the 4 mg dosage limit. Although this isn’t the outcome Climbing Kites’ leaders were hoping for, they now have a path forward, albeit a more limited one.
Climbing Kites co-owner and CEO David Moore told Brewbound that the company has adjusted all of its 5 mg and 10 mg products to lower dosages. The company will roll out a portfolio of three 4 mg and one 2.5 mg THC-infused beverages this week.
Rolling out this week are:
- 4mg Mixed Berry, previously 10mg and Climbing Kites’ best seller;
- 4mg Passionfruit Pineapple, previously 5mg;
- 4mg Peach Prickly Pear, previously 5mg;
- And 2.5mg Orange Mango (unchanged).
“We’ll build that portfolio just for Iowa,” Moore said.
More products are on the way, including a grape and ginger flavored transfusion and an iced tea lemonade, both of which will contain 4 mg of THC.
The new restrictions don’t affect CBD dosages, though Climbing Kites will be sticking to a 1:1 ratio going forward following consumer feedback that higher CBD dosages were “a little too chill” and made “some people a little sleepy,” Moore said.
Iowa grocery chain Fareway Meat & Grocery, which paused sales of THC-infused products amid uncertainty caused by the new law, is also expected to bring back Climbing Kites products to its 116 Iowa stores, Moore told Brewbound.
As Climbing Kites and others navigate Iowa’s new regulatory framework, the company is looking outside the state for new opportunities.
Climbing Kites Still Seeking Injunction to Block New Law
Climbing Kites and Field Day Brewing filed briefs last week supporting a renewed motion for a preliminary injunction to block Iowa’s enforcement of the new law. In the brief, the companies wrote that the law and DHHS’s actions “have decimated” their “businesses” and left “manufacturers and retailers are utterly confused as to the status of any products.”
The filing, in the U.S. District Court for the Southern District of Iowa Central Division, argues that “Iowa corporations are entitled to fair notice of what conduct is prohibited by law, and no business should be expected to run their operations based on a Google search.”
Climbing Kites and Field Day argued that “the statute’s per-serving potency limit, as enacted by the Legislature, is impermissibly vague in all applications and therefore unconstitutional.” They’re seeking an injunction to block the DHHS and director Kelly Garcia from enforcing the per-serving potency limit, further guidance from the Iowa Legislature, and reinstatement of legally compliant products and an acknowledgement in writing of the legality of their pre-approved retail products.
Leaders for both breweries laid out the issues they’ve faced since the law was enacted.
In a supplemental declaration, Climbing Kites co-founder Scott Selix wrote that all of the beverage brand’s products approved of before July 1, “even those undisputedly legal after July 1 – have been shadow-banned, without notice.”
Selix and Field Day Brewing director of operations Dan Caraher, in a separate declaration, wrote that “retailers … have refused to sell or order more” products from Climbing Kites and Field Day “due to the department’s shadow-ban.”
Selix and Caraher both wrote that their products were removed from an approved-products list in early July, thus leaving them unable to sell any products. They added that their products were pulled from store shelves, including Climbing Kites being removed from more than 100 Fareway stores.
“[T]he grocer removed Climbing Kites’ products because it is unwilling to take the risk of selling any of Climbing Kites’ products due to the uncertainty (i.e., vagueness) of the current state of the law and Climbing Kites’ products,” Selix wrote.
Moore told Brewbond that Climbing Kites is anticipating a ruling on its request for an injunction possibly as soon as this week.
“So there’s still a chance 5 mgs and 10 mgs could live on in Iowa, but I put that at very slim chance at best,” he said.
Climbing Kites Begins Southern Expansion with Help of Creature Comforts Co-Founder
Beyond Iowa’s borders, Climbing Kites is self-distributing its products in Nebraska and Wisconsin.
Minnesota is expected to come online through Dahlheimer Beverage and Hohensteins within the next 30 days. The company is also in talks with a Nebraska distributor.
“The next few months are going to be pretty launch-heavy,” Moore said.
The company also recently inked distribution deals in Tennessee, through Eagle Distributing Companies and AJAX Turner. Alabama and North Carolina, via Adams Beverages, are expected to launch in mid-August.
Southern expansion is expected to continue in Florida, Georgia and South Carolina. Climbing Kites has formed a strategic partnership with Creature Comforts co-founder and former CEO Chris Herron and former CCO Seth Herman to lead those efforts.
“We were struggling a little bit to get into the market,” Moore admitted. “We didn’t have connections there, we didn’t know distributors.”
Moore credited Herron and Herman with helping build relationships with wholesalers in those markets and gain traction with chain retailers.
Climbing Kites is also looking to add distribution in Midwestern states such as Illinois and Kansas, as well as western markets such as California and Arizona.
National distribution through bev-alc retail chain Total Wine & More is also in the works.
To feed its markets, Moore said Climbing Kites has moved the bulk of its production to Canteen, a Texas-based canned cocktail maker and co-packer. The company was previously producing at Fair State Brewing Cooperative’s Chill State Collective in St. Paul, Minnesota. (Fair State filed for Chapter 11 bankruptcy in February).
R&D and smaller batches will be produced at Niche Beverage Company in Cincinnati.
Big Grove, which acquired a majority stake in Climbing Kites from Des Moines-based Lua Brewing in 2023, is going through the process of applying to produce hemp products. The company hopes to do some small batch products and testing at the new Iowa City facility.
Climbing Kites will continue to produce 5 mg and 10 mg products for other states, where legal, despite the 4 mg ceiling in Iowa, Moore said.