Shooting for the Moon

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Thriving industries create incredible growth opportunities for new businesses. Expanding cannabis availability combined with a growing craft beverage market and a popular movement away from alcohol, THC beverages are high on the list of thriving niches.

Asheville, North Carolina, may be known as “Beer City,” but Eli Cotellese crafts a different kind of buzzy beverage — sodas infused with hemp-derived Delta 9 THC. Founded in September of 2023, Moonwater Beverages has grown at an out-of-this-world rate within a community supportive of craft beverages and small businesses.

Focusing on quality products and authentic community connections has been key to Moonwater’s growth, and Cotellese and his team are still ramping up. Dialing in recipes, streamlining logistics, and launching a new rebrand, Cotellese hopes to not only expand growth of his business, but also to help normalize business in the cannabis space.

Cotellese sat with The Green Letter to give us some insights into his business journey and his hopes for the future of community in cannabis. This interview has been edited for length and clarity.

When did you first establish Moonwater?

Moonwater started roughly September of 2023, so it’s been about a year and a half now. We were in five locations, then I went from door to door to different retailers around our local market trying to get our product in. We started in glass bottles, and that became a logistical nightmare when it came to weight because I was delivering all of our orders. Also for manufacturing capacity — we were doing it all by hand, and you just can’t manufacture enough product for the demand doing that. We made the strategic decision to rebrand to a newer label that’s a little more aggressive and also rebranded to cans. 

So you guys are just finishing a rebrand refresh. What's going on there?

The full rebrand is something I’ve envisioned for Moonwater since we started. We wanted to push into the all natural space, or at least the all natural THC space. Since I was a kid, I always liked eating healthier foods or healthier drinks if I could. In the beginning, we really just couldn’t afford to order really high quality ingredients in bulk.

At first, it was figuring out how I could get a quality drink on the market that’s still really good, and that’s affordable enough that I can manufacture where we can still make enough profit to scale the business. We did that with the first line and it sold great. People love it. I love it. As we started getting bigger and ordering more and more volume, I was like okay, it’s finally time where we can really dive into a deep rebrand and reformulation. We spent about four months working with a really reputable flower house to help us formulate these new recipes and finally got it on the street. It’s more of a national-level brand when you look at the marketing. Now, it’s a lot more clean, very energetic, and it’s easy to consume. People aren’t afraid to grab it off the shelf. It’s been a learning curve for sure. We switched manufacturers, so we’re shipping product all over the country now just to get the quality ingredients to the right places that we can formulate then ship to the canning companies.

What’s your growth rate been like during the rebrand process?

When we started pushing to cans, we were like ‘wait, this weighs a lot less,’ and it’s a lot easier to get bigger distributors and larger clients. When we have enough product in backstock that we can supply those clients – not promise the product then make it – we started scaling more and more. We didn’t have our first distributor for the first four or five months; I was just doing everything by myself. Eventually you meet someone who knows someone who knows someone, and they know a distributor that may want to sell our product and offer to put a meeting together. That’s how almost all of our distributors came about.

We manufacture about five times as much product as we manufactured before. Our volume is picking up and our distributors are wanting larger amounts of inventory, and we want to make sure we can keep fulfilling those. We sold five to 10 cases in month one; now we’re probably doing 600 to 700 cases this month.

What are the new flavors like?

Our two best sellers were the Fizzy Lemonade and the Fizzy Punch, so we remastered those and added a Lemon Ginger and a Clementine Orange. We still wanted a lot of soda flavor, but we wanted less calories and we wanted cane sugar, real fruit juice concentrate, and a natural preservative. They are real flavorful sodas, and a healthier alternative than they were before. With the cola, it’s such a unique flavor. We want to remaster it and do a cane sugar cola like those you find in glass bottles. We tried for about a month to reformulate our cola recipe, and it’s really hard to push toward natural ingredients and not turn it into a root beer. It’s really hard to keep that cola taste, so we’re going to pause that for a little bit. We wanted to get four really good flavors out first and then start pushing a few extras out from there.

How many team members do you have now?

The way I structured Moonwater is we have amazing copackers. We spent many months formulating and owning the rights to the formulas, then we outsourced because purchasing the manufacturing equipment required to manufacture as much product as we’re doing would be an extreme overleverage for a small company. We’re talking hundreds and hundreds of thousands of dollars in machinery, a larger warehouse, plus making sure we have the right team in place to use certain canning equipment or brew the product. 

The internal team has grown. We have a few sales reps and some delivery drivers. We have a bigger warehouse now for shipping, but the actual manufacturing capacity is a lot of planning logistics, ordering the right ingredients, and shipping them to the right location to make sure that the product is manufactured on time and it gets to our shipping warehouse so we can ship it to our distributors.

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How are you growing your community?

Festivals are really important because it’s the easiest way to communicate directly with the customer base, let them get to know who you are, and build the community. This shows we’re not just some corporate drink or whatever; we’re actually really involved in the space. It also helps with social media content. We do sell product when we’re at the festivals, but very rarely are we making money or even breaking even. It’s more of a way to meet all my community, give out a ton of free product, have a blast, and still have some sort of revenue. It kind of equates to some business, but mostly it’s brand awareness.

A huge one coming up is Appalachian State’s Thaw Out Festival in April – we’re sponsoring the VIP section. We’ve become close friends with the community around that festival; we’re going to get a slushy machine, a T-shirt cannon, blow up cans, and put it all out and make it such a cool time. We’ll be giving out products and taking videos and just having a blast with the community. That’s one of the big events coming up, and we have a bunch of smaller events throughout the next couple of months.

It’s not how many drinks I can sell; it’s more about what the vibe is, if people have fun, and if they were vibing when they were talking to you at the festival. That will stick in their brains more than paying $8 for a drink. Doing these events is a commitment to the understanding of whatever you do today at whatever festival will equate to growth in the future, but it’s more about laying the seeds that may not equate to immediate profitability. Everyone sees my logo and sees our vibe, and when they shoot out into every corner we sell to and see our product, they will remember us from the festival.

What makes Moonwater different from other THC drinks on the market?

I would say it’s the community; it’s the people behind the scenes. Our community that we’re building and the brand we’re building, when it comes to social media and branding itself, is a lot different than our competition. We’re a lot more behind the scenes and more personal with our community. I’m not some corporate guy that’s going to hire some kid and say ‘take some videos of you pouring a drink into a glass and make a mocktail, and post those videos every two days’ and that’s our branding. The corporate structure is not what this industry is about. As we start growing more and more, you’ll really start seeing how we’ll branch out from the competition just because of how we communicate with the general community we’re trying to build around cannabis and the drinks. We're all just hanging out, having fun online, drinking Moonwater. It's not supposed to be some serious thing or be made into some corporate kind of structure. I mean, we're drinking hemp-derived cannabis drinks. Everyone should be happy about that. We weren't doing that five years ago.

I’m not against competition; I’m all for more and more drinks coming up. It helps to normalize our industry, and it helps more stores get the products on their shelves, then it’s much easier for me to go into a store and say ‘hey, I offer these THC sodas, would you like to put it in your store?’ if they already have a drink or two that is a THC product.

More brands that come up are helping all of us to pioneer this space to make it normalized enough so that if I’m not selling to XYZ liquor store but someone else is, it gives me an ability to say ‘I see you’re already selling THC drinks. They look like they’re selling, but it looks like 90% of those products are seltzers and we make a THC soda.’ 

Moonwater has a lot of flavor. It’s not watered-down seltzer water; it’s a flavorful soda that tastes amazing with a very high milligram strength hemp-derived THC. There’s probably one or two other brands on the market that are sodas; almost all of them are seltzers, juices, or teas. No one really wants to touch the soda space; they think it’s like a bad word. You can make a really tasty natural soda that isn’t just junk food and people will love it, and they really do with Moonwater already. We’re a natural soda versus a natural seltzer.

Are you selling more in head shops, liquor stores, or direct-to-consumer online?

We’re doing all three right now. Direct to consumer online is a very small percentage. I didn’t want to push hard online until we had the product and the branding that I specifically wanted to push, so now with this dropping online, we can start pushing more there. The majority is wholesale monthly — about 80% is dispensaries and head shops, and the rest would be liquor stores and a few small grocery stores, and that’s the goal with the new drink line.

We had perfected the 30 milligram drink — that’s what we were selling before — but we realized it’s very hard to sell a 30 milligram drink to any of the large box stores or a lot of these beer and wine shops because they need a lower milligram-strength drink. We decided to manufacture a ton of these 30s, but we’re also going to do a 10 milligram and a five milligram drink. If we want to break into the bar scene, we can compare it to a strong IPA. The 10 milligram is great because you can bring it to the liquor stores and it’s still strong enough for customers to get a good buzz when they’re drinking it. The 30 milligram is a great product for the convenience stores, the head shops, and the dispensaries where the clientele is already used to a stronger product. 

On our website, we’re very particular about ‘this is strong.’ If you’re a heavy user, this might make sense for you. If you just want a little relaxation at night, maybe go for our five milligram drink or maybe even our 10. We even have a little quiz that you can take that asks you about your experience with cannabis. It will generate what we think you should buy — the five, 10, or 30. If you’re an occasional user with a medium tolerance and you want to go out socializing but want it to come on slowly, you might want to pick up a four pack of the five milligram because you don’t want to get smashed all of a sudden. The 30 milligram Moon Shot is called that because you’re going to the moon. 

How do you manage shipping to different states with different cannabis laws?

We tried to make our labels generic enough that it would cover us for the states we’re occupying pretty heavily. Each state is slowly entering into their own hemp laws and they're trying to do their own thing since the federal bill is lagged behind. Not only is the manufacturing and distribution aspect a whole logistical learning curve, but then each state has individual label individual licensing requirements, so you have to go state by state by state and get your permits. We submit applications to the state if they require that, and there’s also a learning curve where you’re going into every single state and applying for licensing, and we have to figure it out. With this rebrand also came a rebranded label that can hold up in as many states as we want to sell to as we’re expanding this year.

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Have there been other challenges in overcoming perspectives about the cannabis space?

I don’t really see a ton of stigma as long as you’re open and communicative about it and provide the right type of marketing materials when setting up displays. If you’re selling to a grocery store, you might want more fridge stickers that are saying ‘21+ This is a hemp-derived product’ more loudly than if you’re selling at a dispensary. Everyone going in there is 21+ already and knows what the products are on the shelf. As long as you’re straightforward, it’s more about figuring out the legality. Sometimes they have to check with their attorneys to make sure they can sell our product, and sometimes we have to check with our attorneys to make sure we’re allowed to sell in their state and where we need to put it. Sometimes the fridge needs to be behind the counter or in a location for only 21+ people. Different states have different rules, but as long as you abide by those and are very communicative, people tend to be very interested.

What is your hope and vision for the cannabis space as a whole?

That’s a tricky one; I really don’t know what the proper direction would be. I would love a hemp program and a cannabis program and I would love for the drinks to stay in the hemp program and medical marijuana be in a separate category, but that might have people upset because a lot of people are either on one side or the other. The people that are in the medical or recreational marijuana space are very adamant about expanding their territory and the people that are in the hemp space are very adamant about protecting what they’ve already created; so my dream is just clear regulations. 

Clear regulations would allow small- and medium-sized businesses to grow and thrive, and specifically show what we need to do to stay compliant, safe, keep our banking relations, keep our merchant processing, and keep paying our taxes so everyone makes their money. It’s really tricky when one state goes because the federal bill is so vague that each state is taking its own liberties. Those government officials have their own priorities or connections on one side and others have connections on the other side, so everyone’s battling it out in the government capacity for regulations. A lot of times things don’t get done properly or they’re very confusing, and that hinders or completely eradicates a lot of small businesses. A lot of the regulation you see feels like it’s a knife coming at you; it’s not like they’re looking to bring us into the fold. 

Some states, luckily, are being a lot more lenient. If you apply to the state and get your licensing, you can go ahead and sell whatever you want to sell because you’re licensed. We want small businesses growing with clear regulations and as little government overreach as possible. The more small businesses, the better for everyone in the country and in the state you’re occupying.

What’s your growth vision for Moonwater? Do you have a two-year plan?

The closest initial plan is to at least double our revenue in the next two months, and I think we’re already on track to do that, but I need to get over a certain hump of volume so we can stay competitive and hire the right people to keep growing the business. A medium-term goal is to really solidify logistics, delivery, and sales on one side, and on the other to solidify communication with our community and grow that. To do more events, give out more product, and meet more people and hear more stories. The most important thing is to have sales reps, distributors, and the delivery itself as streamlined as possible and know how quickly I can get someone product if they’re 800 miles away. Logistics need to be solidified enough so if they fill out an application, they get approved and have their product within a week. Then if I can iron out more quality content on social media to build a community around Moonwater, it would be a double-edged sword. I mean, it would just push us to the moon.

Within five years, I’d love to have one of the first Sierra Nevadas of the THC space and set up a really fun cannabis lounge — a really large brewery where we could do our canning, our brewing, and have a small restaurant, live music, and a cannabis shop where you can buy merch and flower. In that market, I’d have locally-made products in the cannabis space — plus obviously the Moonwater merch and drinks — to showcase the Asheville community and that there’s a lot of local people manufacturing really cool products here. Also, let’s get a drink and listen to music, then feel great and not hungover after. That would be a really good dream to have.

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