JONES SODA CO

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors set If enacted into law, recent federal legislation would prohibit the unregulated sale of intoxicating hemp-based or hemp derived products (including delta-8/HD9), which would negatively impact the Companys revenues from its hemp-derived HD9 products.

On November 12, 2025, U.S. federal legislation was signed into law that, when implemented, would materially alter the federal treatment of hemp-derived products by narrowing the 2018 Farm Bills hemp carveout. This new federal law prohibits the unregulated sale of intoxicating hemp-based or hemp-derived products (including delta-8/HD9 and similar isomers) and redefines legal hemp to apply a total-THC standard across all tetrahydrocannabinols and any cannabinoids with similar effects, as determined by the U.S. Department of Health and Human Services (HHS). The legislation also caps legal hemp products at 0.4 milligrams of total THC (and similar-effect cannabinoids) per product, prohibits intermediate hemp-derived cannabinoid products marketed directly to consumers, and bars products containing cannabinoids synthesized or manufactured outside of the cannabis plant or not capable of being naturally produced by it. Within 90 days of enactment, the U.S. Food and Drug Administration (FDA) and other agencies is required to publish lists of cannabinoids known to be naturally produced by Cannabis sativa L., tetrahydrocannabinol-class cannabinoids naturally occurring in the plant, and other cannabinoids with similar or marketed-similar effects, with the new total-THC framework taking effect within one year. The bill also restricts retail channels by targeting sales in online marketplaces, gas stations, and convenience stores forth in  products deemed intoxicating.

This new law is scheduled to become effective in November 2026, and once implemented would likely require significant reformulation or discontinuation of the Companys current hemp-derived product lines, accelerate inventory obsolescence and write-downs, disrupt supply chains (including upstream intermediate inputs), and increase the Companys compliance, testing, labeling, and distribution costs. The total-THC and similar effects standards also creates interpretive uncertainty and potential variability in enforcement pending FDA/HHS guidance, as well as raises the risks of litigation, recalls, and uneven state-federal alignment. Limitations on online and convenience retail channels could adversely affect sell-through and customer acquisition, while the prohibition on synthesized or non-naturally occurring cannabinoids may reduce product innovation and margin profiles. Collectively, these factors could materially and adversely impact the Companys business, financial condition, results of operations, and cash flows.

Other than the above, there have been no material changes in the risk factors set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.