SEATTLE, WA – Jones Soda Co. (OTCQB: JSDA) has announced the divestiture of its entire cannabis beverage division, known as Mary Jones, completing the transaction with the private firm MJ Reg Disrupters LLC. The sale, finalized on June 23, 2025, signifies a strategic shift for the long-standing beverage company.
Transaction Details
The deal for the Mary Jones division was valued at a total of $3 million. However, the financial structure involves a relatively small upfront cash component. According to the announced terms, Jones Soda received less than $500,000 in cash at closing. The substantial remaining balance is structured to be paid out over the next three years via a promissory note. Notably, this promissory note comes with no guarantees, placing the risk of future payment squarely on the performance and solvency of MJ Reg Disrupters LLC.
Under the terms of the agreement, Jones Soda will retain ownership of the trademark for Mary Jones, a move that could potentially allow them to re-enter the market or license the brand in the future under different circumstances or structures. Meanwhile, MJ Reg Disrupters LLC has acquired the product rights associated with the Mary Jones cannabis beverage line, gaining control over formulations, manufacturing processes, and distribution channels.
Strategic Refocus and Driving Factors
Jones Soda framed the exit from the cannabis sector as a strategic refocus on its core business operations, primarily its traditional carbonated soft drink offerings. The decision was influenced by a confluence of factors that presented significant challenges to the cannabis division’s viability and growth prospects.
A primary driver for the divestiture stemmed from regulatory challenges, particularly issues related to compliance within the stringent legal framework of California. The company encountered problems involving the improper use of hemp-derived isolate and THC emulsions. These components, crucial for formulating their cannabis-infused beverages, reportedly did not meet California’s compliance standards. This non-compliance created what the company explicitly termed a “trust issue” with regulators, impeding operations and market access in the crucial California market.
Beyond the regulatory hurdles, the Mary Jones brand also faced internal challenges. Despite initial marketing efforts that garnered attention and the fact that some products received awards, the division experienced a lack of momentum. This suggests that market performance, in terms of sales volume and consumer adoption, did not live up to expectations or the investment made in the venture.
Implications and Outlook
The sale underscores the significant operational complexities and regulatory risks inherent in the nascent legal cannabis industry, even for established consumer brands attempting to diversify. Navigating disparate state-level regulations, particularly regarding product formulations and sourcing like hemp-derived compounds, presents considerable challenges that can impact a company’s ability to operate efficiently and maintain regulator confidence.
For Jones Soda, the exit allows the company to allocate resources and management focus entirely back to its legacy business, which may offer a more stable operating environment away from the volatility and compliance burdens of the cannabis market. The structure of the $3 million deal, particularly the non-guaranteed promissory note, suggests that while Jones Soda is exiting the operational side, the full financial return on the sale is contingent on the future success of MJ Reg Disrupters LLC under the Mary Jones product rights.
MJ Reg Disrupters LLC now assumes the task of navigating the complex regulatory landscape and building momentum for the Mary Jones brand. Their success will depend on their ability to address the compliance issues that challenged Jones Soda and effectively market the products in a competitive sector.
The divestiture, announced on June 23, 2025, marks a definitive step for Jones Soda away from the cannabis industry, highlighting the difficulties faced by companies bridging traditional consumer markets and the regulated cannabis space.
