Tag Archives: medical

August 2, 2021

Flower-Side Chats Part 8: A Q&A with Andreas “Dre” Neumann, Chief Creative Director of Jushi Holdings Inc.

By Aaron Green

In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices to navigate a rapidly changing landscape of regulations, supply chain and consumer demand.

Jushi Holdings Inc. (OTCMKTS: JUSHF | CSE: JUSH) is a multi-state operator with a national footprint and core markets in Illinois, Pennsylvania and Virginia, with developing markets in California, Nevada, Massachusetts and Ohio. In addition, Jushi maintains offices in Colorado, New York and Florida. In Q1 2021 they posted $42M in revenue representing 30% growth over Q4 2020 and 77% of their sales were conducted online. Jushi brands include Beyond / Hello, The Bank, The Lab, Tasteology, Sēchē, Nira CBD and Nira+ Medicinals.

We interviewed Andreas “Dre” Neumann, Chief Creative Director of Jushi Holdings. Dre joined Jushi in February 2020 after connecting to the founders through a colleague and running a large user experience research project. Prior to Jushi, Dre cut his teeth in advertising and branded entertainment. He was a startup founder at TalentHouse.com and a Partner at Idean, which he later sold to Capgemini.

Aaron Green: How did you get involved in the cannabis industry?

Andreas Neumann: I’m a guy who has been interested in many genres – I’m always looking for the next big thing. I started out in advertising and then I faded into branded entertainment when the traditional advertising wave was kind of shaky due to the digital attack of the internet with platforms like Facebook and Myspace.

I’ve also been fascinated by digital which led me to move into Silicon Valley. I had a startup called TalentHouse.com which was like LinkedIn for creative people. I learned a lot there about building a company in Silicon Valley. It was the first time I was confronted with experienced customer and user experience people. CX and UX was already kind of a thing in Silicon Valley at the time. My last company I was a partner in was a company called Idean, a Silicon Valley-based user experience company which we sold to a French company called Capgemini about four years ago.

I continue to be involved in the entertainment industry as kind of a creative outlet. I’m working with a lot of big rock bands like The Foo Fighters and Queens of the Stone Age. I just did the last Foo Fighter album. Photography is my last domain of total creativity where I can do whatever I want specifically in the rock business.

Andreas “Dre” Neumann, Chief Creative Director of Jushi Holdings Inc.

Coming to the cannabis point, I was actively looking for a partner to do a cannabis brand with The Queens of the Stone Age. I met Jushi through a very interesting coincidence. I was on the way to do a shoot in Silicon Valley with a guy called Les Claypool, who is from a famous band called Primus. I shot Les there and I was driving through Silicon Valley and remembered I had a friend nearby I should talk to. So, I called him and he was in Singapore. He called me right back (he never calls back normally) and said “You’ve got to talk to Jushi! You’ve got to talk to these guys Jim Cacioppo and Erich Mauff (two of the founders). They are starting something very exciting. They could be your partners.”

This is where the conversation started. It was my first time confronting a cannabis MSO and understanding how this works. I had just exited from my last agency and put together the best people from my previous endeavor to create a new sort of “creative collective” of UX and marketing experts. We did a test project for Jushi, a big research project on cannabis for California in retail, which was super interesting. It was a 200-page document – the first phase of user experience of the process before you build something – and through that I saw this as a big opportunity. I spoke to the founders again and came fully onboard in February 2020, just before the pandemic hit. From then on, it’s been a real amazing journey with me and the team. And it was the right moment to jump on the Jushi train as it was just about to leave the station.

Green: Can you talk about some of the geographies you are active in?

Neumann: Jushi is a multi-state operator. The most important state for Jushi is Pennsylvania. That’s where we have the most stores and we are building more stores there this year as well, very aggressively. We currently have 13 Beyond / Hello medical cannabis dispensaries in the state with many more to come, bringing an unmatched in-store experience, coupled with online reservations and in-store express pick-up.

The next important market for us is Virginia. We have a unique position there in Manassas with a cultivation facility and manufacturing and extraction facility, with the license for up to six stores. We started store number one in the facility, and we are rolling it out in HSA II. We are the only ones who can open stores in HSA II and this is straight on the border to Washington D.C. We call Virginia the “sleeping giant.” So much happened in the last year in Virginia around regulation and the industry, and now flower is finally legal.

Then we have Illinois – super interesting stores there. We have two flagship stores located straight on the border of Missouri, basically in East St. Louis. They are our biggest performers in the whole network because of the location. You have people coming over from Missouri, which is really in the beginnings of a medical market, and Illinois, which is now adult use. It was a super cool experience to see a medical market change to adult-use and be part of that change.

In other states, we recently announced the acquisition of Nature’s Remedy in Massachusetts, where we will have cultivation, processing and stores there. In Nevada, we have a grower-processor and we’re looking at opportunities in retail as well. At the moment, we have all our brands launched there. We are also continuing to build out our processing and cultivation capabilities in Ohio.

Last but not least is California. I’m based in California and the whole creative team is here. It’s a vanity market and it’s very competitive, but you’re in the capital of the world of cannabis in terms of brands and retail. California is in the future compared to the other states. So, we need to be here. It’s just like a soccer team. You must compete against good people or you’re not going to grow. So, that’s why competing here in California is key.

Green: How do you think about brand development, specifically in the cannabis CPG space?

Neumann: California is the king of brands. There are more products than brands in the cannabis industry at the moment. The products may have nice packaging, but brands aren’t really out there yet. The only states where you have “brands” as I would call them are California, Colorado and Oregon. I think we are just about to get to the place where the first rush is over and people with more experience about brands come in and build on the story of the brand. The myths, the cult, the legend of that story is important, and I think this is just about to get started.

Our brands, The Bank and The Lab, have good stories. They have been around a long time. We acquired them from a company in Colorado and we rolled them out in Nevada with a total revamp of look and feel as well as story. The Bank is celebrating this kind of roaring 20s idea. We have a lot of images, from black and white prohibition-style photos to this black-gold, very high-end, adult use tailored brand.

Vaping products from The Lab brand in Colorado

The Lab is a solid vaping brand from Colorado, and one of the 8th best-selling vape brands of all time. We revamped The Lab image to “take the lab out of the lab.” So basically, take the hairnet and the lab coat out of the vibe and add a whole new energy, with symmetry and nature in a leading role.

Tasteology, which is one of our self-made, self-created brands, was all based on customer research. In Pennsylvania, we have thousands of people we can communicate with, and we can test our brands. So, we’ve done focus groups and testing to see what sticks, and the name Tasteology came out of a huge research project with hundreds of names.

The last brand comes back to your question “Where are the brands going?” I think our brand Sēchē is the first one of our own creation and has this total lifestyle feel. It’s fine grind flower which normally might make its way to extraction. We treat it well and then we sell the raw flower, as well as a pre-roll line. It’s this kind of a young, cost effective, very affordable pre-roll and pre-ground brand, which is fabulous. And Sēchē really gets a lot of traction – flies off the shelves in Pennsylvania. It is a great product.

So, this is now the first stage where brands are created, but I think overall, there’s not many brands yet. They have to find their stories and their real purpose, I think. But California is ahead of it. And there’s some of them coming out now. So, I think there’s a new wave coming. It always goes in phases.

Green: How do you think about brand partners?

Neumann: We did the first step towards outside partnerships recently. We just partnered with Colin Hanks, Tom Hanks’ son, on his handkerchief line called Hanks Kerchiefs and we’re going to sell these in our stores. Hanks Kerchiefs has nothing to do with cannabis, but it takes our stores to a place where it’s not only cannabis products, it’s more the retail scene, the lifestyle scene. If we go into future partnerships with people, we would partner with big talent agencies to create something special. Maybe it’s limited editions, maybe it’s something more story-driven, but it doesn’t have to be there forever. I see using outside partnerships for more “drops,” as we call it. But we will see. You cannot force these collaborations. They have to come at the right time and need to be real. That’s what people feel. If it’s real you can feel it.

Green: Do you notice any differences in consumer preferences between the states you’re in and do you have to tailor your messaging differently?

Neumann: This is a super interesting question. I’ve been working in Europe, and you have all these different countries, so every market is different. Every market gets different messages. Every market gets different commercials. It’s the same in cannabis in the United States! The only difference is that it’s so regulated. I could launch a gummy in Virginia and all Virginia would know about it. It would become a household name, and everybody uses that gummy. But in California, no one will hear about it. No one would care about it. And the same vice versa, right?

So, different states, different brands. With our acquisitions, we are acquiring new brands, which then live only in those states. Then we have to support that. If the data would show we should then we do it. When we acquire something we consumer test in many states, and specifically in the states where the acquisition happened.

Overall, you can say flower is always what people want. But in markets like Virginia, we cannot sell flower at the moment. In Pennsylvania you have flower, but you can’t have edibles. Do Pennsylvanians want edibles? Of course, they want it but it’s not allowed yet. So, there’s always this to consider.

Green: What are some of the forward-looking opportunities that you see to merge product with technology?

Neumann: It’s interesting that flower, the most old-fashioned thing you could have, is the biggest thing. If you get into it, it’s pure, you can smell it, you can trust it. Flower has its own charm.

The Beyond / Hello retail location in Scranton, PA

So, asking about merging technology and product is like asking what technology comes with drinking wine. There’s lots of stuff around it. I think in the end the technology will be more about how you can create a product which delivers high THC, fast and controlled. The technology that goes into making stuff like live resin has a big future, because not everybody can make it. It has a very complicated process of freezing the product within four hours after the harvest, and then cold extraction. So, I think technology there has a big impact and gets the experience of the consumption right.

In the consumer world, people have tried a lot of things with technology. For example, limiting doses and inserting flower into a device. There are people trying all kinds of stuff. Common sense is always the key. What do you want to use most? Do you want to have a pre-roll and just enjoy it? A long one when you have friends around? A short one if you’re alone walking a dog? I think you have to keep it simple. That’s the most difficult thing most of the time.

Green: Final question here. What are you most interested in learning about? This can be personal life or cannabis.

Neumann: When I entered the cannabis industry, I hadn’t been a consumer since I was 18. I was more of an alcohol guy, but then later I stopped drinking alcohol, so I was totally clean the last 15 years until I entered the cannabis industry.

When I do something like making films about a jet fighter, I have to fly the jet fighter. If I make a film about jumping out of a plane, I have to jump out of the plane. So, if I work in the cannabis company, I have to consume cannabis. I cannot not consume it. So, I started professionally consuming cannabis every day. From day one when we started research, every day I tried other products and I became a real user. Not during the day, but in the evening when it’s the right time.

First of all, I compare it a lot with music. It’s like a feeling. Everybody feels it differently. I think what it does – and this fascinates me about it and it’s why I love to be in this industry – is it seems to be slowing down the world a little bit and your desperation. This slowing down of desperation actually opens you up to receive and when and you receive good stuff it comes to you kind of effortlessly. Not only is it great for medical use – it has helped me for pain as well – but also as a receiver of energy. I think it clears a lot of the “signal.” I’m always interested in learning more about this incredible plant.

Green: Thanks Dre, that concludes the interview.

Neumann: Thanks Aaron.

July 29, 2021

Soapbox

Can Cannabis Avoid Alcohol’s 3-Tier Distribution System?

By Rick Kiley

No Comments

As an experiential marketer that works with a lot of vice-oriented brands, I’ve always been fascinated by the story of the rise of spirits in the US – a history marked by ingenuity in the face of heavy restrictions, clashing social norms, crime and political ideals. Since then, those same qualities have emerged in the story of cannabis and how, against all odds, it has recently begun to push its way into the mainstream. But on the path to legalization, cannabis can also learn a lot from the spirits industry about what not to do.

For example, when laws governing the spirits industry were written in the post-Prohibition 1930s, the federal government wanted to create an equitable landscape. So, they created a 3-tier system – manufacturers or importers must sell to wholesalers, wholesalers must then sell to retailers and retailers sell to us. They figured that keeping manufacturing interests separate from wholesale and retail interests would keep any large company from owning an entire supply chain, muscling out smaller competitors.

In theory, it’s not a bad idea. Imagine the consequences of massive companies like Diageo or AB InBev using their money to pay bars and liquor stores to only stock their brands and not competitors. Add on the Tied House Laws, which basically says an entity in one of the three categories cannot have an ownership stake in any of the others, and you get a seemingly even-handed marketplace.

Tied House Laws theoretically limit one entity from monopolizing a supply chain

In truth, it makes it almost impossible to be disruptive or for new brands to break through. Other industries have innovated by cutting out the middleman and selling direct-to-consumer – something that simply cannot happen in alcohol (minus the wineries and distilleries that can sell direct out of their tasting rooms). Also, now distributors are so consolidated that there are only one or two big distribution companies in each state. So, as a company trying to bring a new product to market, you have to get into one of these highly selective and competitive distributors if you are going to be successful – a challenging ask for a small, independent brand.

Protection racket

Now, imagine that same challenge coming to the cannabis space. With legalization around the corner, the adult use (as opposed to medical use) cannabis industry could easily look like alcohol in the rules that will be set up.

Right now, adult use manufacturers can sell their products to dispensaries directly. Some use a distributor, but there is no nationwide mandate to – which is probably for the best. If a distributor isn’t a requirement, it forces brands to offer something new to differentiate themselves. It will spark innovation, rather than add an extra profit margin that will get rolled into the final price – a price that is already higher than it should be due to the murky federal legal status. Adding complexity and cost will only make it harder to compete with the illicit market. For the industry to grow, costs for illicit cannabis can’t be lower than its legal counterpart.

Of course, we are in the nascent stages of legalization here and we’ve come a long way culturally and technologically since the 30s. But remember, the rules governing alcohol were written nearly 100 years ago along with the passage of the 21st amendment repealing prohibition. Startlingly, those laws haven’t changed that much since they were written, so any mistakes made now in dealing with the cannabis industry could last for a long time.

A new way forward

What the cannabis industry needs is a new model for the adult use/recreational space, keeping some of what exists in the alcohol industry but without ever mandating use of a distributor – the middle tier. This would mean keeping Tied House Laws in place and applying them to cannabis so that a manufacturer could never hold an interest in a retailer, while still allowing them to sell directly to dispensaries and to consumers. Currently, some states allow for vertical integration, which would change under Tied House Laws.

This should be pretty simple, since most states are already separating licenses by type of activity (manufacturer, retailer, etc.) and it would promote competition while bringing the widest array of products possible to each consumer. Also, it would prevent any behemoths from squeezing out the up and comers.

extraction equipment — Constant innovation is a hallmark of the cannabis market and a key factor in continuous growth.

Of course, some retail license allowances could be considered on a case-by-case basis. For example, I would carve out an exception that growers/manufacturers could sell direct to consumers through a single “tasting room” at their brand home. This is similar to the operations of microbreweries, distilleries and wineries. It would encourage education for consumers, and provide great opportunities for brands to show why their products are better or unique.

Given the technology and logistics solutions available to businesses in a 21st century economy, mandated distributors create a sometimes-unnecessary barrier to an already efficient supply chain. If mandated, prices will inflate to cover added margin, thus making it harder to bring consumers over from the legacy market to the legal one. I’m not against the idea of a distributor – they can add tremendous value, but the mandate would seriously curtail industry growth.

Direct-to-retail and direct-to-consumer sales are necessary for the economic health and growth of the industry. Without this, using alcohol as a cautionary tale, at some point the middle tier cannabis brands will inevitably begin to wield an outsized amount of power. We are living at a time where innovation is going to be the key to explosive growth in the cannabis industry, so it’s important to do everything possible to let the market find its way without falling into a century-old trap.

July 27, 2021

The Importance of Understanding Cannabis Testing Results

By Josh Reed

2 Comments

Cannabis testing is important for both operators and consumers, but there are some differences in what is important to each group. Obviously, safety and efficacy are important to both. Cannabis is primarily tested for safety reasons to ensure that consumers are receiving a product that is safe to consume and accurately labeled. In addition, consumers may look for a potency they’re used to consuming or a certain terpene profile that gives them a desired effect. Cannabis operators, on the other hand, use testing results to improve their processes and to monitor product quality versus state specific regulatory requirements that could cause their products to pass or fail.

What cannabis operators need to understand about cannabis testing results

Historically, there was an education gap on the side of the operators when it came to interpreting results. The regulated cannabis industry is still quite new and cannabis operators were initially focused on getting products to market. While there was always a focus on regulatory compliance and safety, the same level of quality control that existed in other regulated industries like food production seemed to lag. That has changed as operators have become more sophisticated and are hiring experts skilled in interpreting results and quality control. For a laboratory, hiring scientists with a regulatory background offers the operators the experience needed to ensure they’re getting accurate results that are easy to understand. This has led to more meaningful collaboration between labs and operators who work together to understand what test results mean to their processes and business operations.

OGanalytical instruments. — Consumers can easily grasp high level results in the form of charts and graphs

A common problem is that some operators see testing as just a speed bump. This doesn’t have to be the case. Third-party testing is an integral part of getting safe products to consumers. Businesses need to find a lab that understands their objectives and knows how to support the manufacturing and production cycles. Establishing a testing protocol with a lab will help ensure that there are no surprises and that products can be tested and sold as quickly as possible.

Now that operators and labs are speaking the same language, the challenge becomes translating that information into a consumer-friendly format. Consumers don’t necessarily need (or want) to explore the minutiae of every tested analyte, but they can easily grasp high level results in the form of charts and graphs. Translating the testing results into an easy-to-digest format allows consumers to better understand the products they are buying.

What are the main components of test results cannabis businesses should look for?

The first and most obvious results to look for is what was tested and if any tests delivered a failing result. A failing result is determined by comparing the tested values against the state requirements. If a product has failed testing in any area, operators will need to work with the lab and their internal teams to determine exactly what the issue is and if it can be rectified. Failing of any state required test (pesticide, microbial, metals, ….) means the product cannot be sold in its current form. Depending on the state, failing results may be required to be confirmed by another lab, processed further to remove the failing contaminants or destroyed. The production cycle to grow, process and manufacture cannabis products can take anywhere from 120 to 160 days with many different processes and handlers. Despite attempts to control all the variables that impact final product quality, failing tests do occur.

EVIO labs photo — Despite attempts to control all the variables that impact final product quality, failing tests do occur.

Once businesses have passed the state-required testing, the remaining tests are focused on product characteristics including potency and terpene profile. The potency of a product measures the levels of cannabinoids and influences both production and marketing decisions. Lower potency flower may be extracted for distillate products while higher potency flower will demand a higher price and will most likely be sold as flower or processed into concentrate products. Cannabinoid profiles go well beyond just CBD and THC. Understanding the full cannabinoid profile of a product is an important factor in how it can be marketed, and how it will be used.

The terpene profile of a product is also quickly becoming just as important to medical and adult use consumers. Terpenes play a major role in the effects that consumers experience with cannabis products. In the past, consumers relied heavily on strain names to purchase products that they believed would give them the effects that they were looking to achieve. Moving forward, we believe that consumers will be more interested in a product’s terpene profile given the strong influence that terpenes have on effects. In states like Nevada, cannabis businesses put terpene profiles on their product labels and cannabis consumers are starting to select products based on terpenes rather than raw potency numbers.

What is the most important factor in cannabis testing results?

Trust is the most important factor when testing cannabis. Operators need to trust that their lab is providing consistent, accurate and timely results. Consumers need to be able to trust what they read on the certificate of analysis, and they ultimately need to trust that the products they buy will deliver the effects that they expect.

The easiest way for businesses to increase trust in their products and testing results is transparency. When there is transparency from the testing lab to the business and customers, it will help build trust and establish a brand for the long term.

Another important aspect of this process is ensuring businesses share the right information with consumers and educate them as to what it means to them. Information overload, without explanation, will only lead to confusion. It’s important to educate employees, especially those interfacing with customers, on how to interpret and explain test results in a way that consumers can understand.

It can be challenging to translate highly technical test results into consumer-friendly language but being able to do so will enable businesses to build a stronger relationship with customers. This isn’t something that businesses need to figure out by themselves. Rely on your trusted lab partners to help design and deliver easy to understand, consumer friendly certificates of analysis. Consumers want to be educated and understand what is in their products, and how the products will work for them. Trust, transparency and education will help cannabis operators strengthen relationships and continue to grow their business.

July 21, 2021

5 Pivotal Trends Propelling Growth For the Medical Cannabis Market: 2021-2027

By Priya Deshmukh

1 Comment

Growing awareness and public support for medical cannabis around the world has pushed regulatory authorities to consider the legalization of medical cannabis, which remains the major factor driving growth for the medical market. Cannabis-based medication has conventionally been used and studied to be an effective therapeutic solution for various disorders. Increasing R&D activities for the development of novel solutions and applications has led to various formulations being approved by The United States Food & Drug Administration (FDA). For instance, in 2020, the FDA had approved application of Epidiolex for treating seizures related to tuberous sclerosis complex in patients aged one year and above. On account of shifting interest towards the benefits of medical cannabis and significant technological advancements, application of medical cannabis is increasing rapidly, which is positively impacting the overall business space.

According to Global Market Insights, Inc., the medical cannabis market size was valued at USD 22.4 billion in 2020 and will record exceptional growth numbers in the coming years, considering the emergence of the following trends:

Development of new products by key market players

Prominent players operating in the medical cannabis industry such as Canopy Growth Corporation, Aurora Cannabis Inc., Aphria Inc., GW Pharmaceuticals, ABcann Medicinals Inc., The Supreme Cannabis Company, etc. are focusing on strategies pertaining to product development and acquisitions in order to gain a strong market presence. Citing an instance in 2018, GW pharmaceuticals, announced that it had received an FDA clearance for its first plant-based pharmaceutical cannabidiol for treating rare pediatric epilepsies. Apparently, the approval helped the company expand its portfolio while giving it the innovator’s advantage in cannabis-based treatments.

Rising demand for treating nausea conditions

Medical cannabis is finding extensive usage in the treatment of nausea conditions especially for the patients undergoing chemotherapy, as a part of cancer treatment. Numerous tetrahydrocannabinol- and cannabidiol-based medications have been approved for treating the symptoms of nausea. The rising incidences of cancer and nausea segments across medical cannabis markets is anticipated to register a substantial CAGR of 18.4% through 2027.

Increasing preference for topical route of administration

Topical administration of medical cannabis is gaining prominence as topical solutions such as lotions and creams can be directly applied to the skin for the treatment of an injury. They are also replacing opioids for injury-related pain management as these have shown several side effects. Topical products also allow for self-administration that’s minimally invasive, while exhibiting limited side effects. With increasing adoption of topical route of administration, the segment is estimated to register an appreciable valuation of $5 billion by 2027.

Higher sales through dispensaries

Dispensaries have become a prime distribution channel globally. Considering the stringent regulatory scenario around medical cannabis, its consumption and sales are highly monitored by authorities in order to avoid any abuse or instances that lead to addiction. It is relatively easy for both suppliers and consumers to engage in a conventional brick and mortar store model under a regional medical cannabis program. Given that, dispensaries are anticipated to retain dominance in the market over the coming years. In 2020, the segment had held a sizeable market share of 58.4%.

Rising consumption of medical cannabis in Latin America

South American countries like Argentina and Chile are the major consumers of medical cannabis in the region. While Argentina has legalized the domestic cultivation of cannabis, Chile is known to have a history of medical cannabis with various clinical trials being performed since 2014. The country is one of the leaders in the LATAM medical cannabis industry wherein the regulatory authorities keep on simplifying the laws time and again. With favorable regulatory scenarios, the regional market is projected to expand significantly by recording a CAGR of 20.9% through 2027.

July 14, 2021

Soapbox

Too Many Cannabis Firms Put Sustainability in Last Place

By Mitesh Makwana

No Comments

Cannabis has long been considered a green industry by the masses.

As a standalone item, the cannabis plant is very environmentally friendly. This is particularly true when it comes to hemp, a variety of the cannabis plant with a huge range of environmental benefits. An extremely versatile and robust crop, hemp uses far less land and water than other common crops and even captures carbon dioxide and regenerates soil. Approximately 20,000 products can be made from its seed, fiber and flower, from biodegradable plastics to food supplements, meaning all in all – it is an environmentally and economically sustainable crop

Yet as with most things, when cultivated in mass, the cannabis plant isn’t quite so green anymore. With its high demand for water, land and artificial lighting, cannabis cultivation can actually leave a large environmental footprint (this does however, pale in comparison to the food industry).

What’s more, many firms do not properly understand how to correctly treat and apply chemical fertilizers and pesticides, and use a machine gun approach to growing their crops. This can result in unnecessary bleed waste, which in turn can kill micro-organisms and contaminate soil, water and other vegetation. Packaging has also been cited as particularly environmentally unfriendly in the cannabis industry, with several organizations using single use plastic for their products, due to the strict guidelines attached to packaging products of a medical or pharmaceutical nature.

A field of hemp plants, (Cannabis sativa L.)

So as the CBD, medical and even adult use cannabis industries become increasingly commercialized across the globe, there is risk cannabis might start moving in the wrong direction when it comes to sustainability.

Still relatively new, the cannabis sector is nascent and exciting, with the global cannabis market size valued at $10.60 billion in 2018 and projected to reach $97.35 billion by the end of 2026. Yet as the industry grows, so too will its footprint.

I’ve seen it first-hand. The industry being hugely competitive, so for companies vying for precious investment and fighting for a spot on the stock market, often, sustainability is the last thing on their minds. In my opinion, this is wrong. Not only morally – we all play a part in looking after our planet – but it’s also a poorly calculated business decision.

It’s no secret sustainability and ESG have become a hot topic when it comes to investing. Just yesterday, Credit Suisse told CNBC that the pandemic has accelerated the trend towards sustainable investments. The bank has even introduced an exclusion strategy whereby those investing can actively exclude controversial sectors.

So with the environment firmly on investors’ minds, cannabis firms need to realize that actually, if they want to secure the support of forward-thinking shareholders, they need to consider more than just the bottom line and truly take the sustainability of their operations into account.

photo of outdoor grow operation — Outdoor growing can require less energy inputs

Luckily, there are practices which cannabis cultivators can take on board to reduce their environmental footprint. To start with – growing outdoors. This enables cannabis farmers to harness the sun’s natural power, saving them money on electricity bills and increasing energy efficiency. With cannabis being a rather thirsty plant, water use is also a major concern – although this is nothing compared to the amount of water used by cotton plants. However, it is in fact possible to design indoor operations which recycle close to 100% of the water use, including capturing the perspiration from plants – at AltoVerde this is something we are looking to implement in our upcoming Macedonian sites.

Firms keen to improve on sustainability should also cultivate in a way in which soil is fully replenished and repaired after use – this is called regenerative farming, and it’s extremely effective for maintaining and improving soil quality, biodiversity and crop yields. Another interesting concept is the use of hemp. Some farmers have started using hempcrete – a concrete-like material made from harvested cannabis plants. As if the recycling aspect wasn’t good enough, hempcrete is actually carbon negative, meaning the production of hemp for hempcrete removes more carbon from the atmosphere than it produces.

It’s been incredibly exciting to be a part of the cannabis industry and I am excited to watch its growth in the years to come. It’s taken hard work for the sector to improve its traditionally poor image and to be accepted across the globe, so now, cultivators must lead by example and stop industry from being branded as one which pollutes. By transitioning to more environmentally sustainable practices, firms will be doing their bit for the planet, attracting the investors of tomorrow and ensuring their own success for years to come.

July 8, 2021

Flower-Side Chats Part 7: A Q&A with Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

By Aaron Green

No Comments

In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulations, supply chain and consumer demand.

The California legal flower market is the largest in North America. According to recent BDSA data, monthly cannabis sales in January 2021 were $243.5 million. Flower sales represented 35.6% of overall sales, or about $87 million, representing a $1 billion yearly run rate for 2021 flower sales in California.

Union Electric was founded in California in 2020 as one of OpenNest Labs’ first incubator brands. Its model is uniquely asset-light, and focused on filling an area of opportunity with a consumer-first approach, aimed at an underserved market: the working-class customer. The name Union Electric was inspired by the punching-in and punching-out aspect of working a union job — more specifically, the average cannabis user’s job. The name also represents the brand’s union of stakeholders: Customers, cultivators and retailers alike, working together to provide affordable, quality products.

Max Goldstein is the CEO of Union Electric and Founding Partner at OpenNest Labs. Max incubated Union Electric at OpenNest Labs, a cannabis venture studio he helped co-found, and launched the brand in 2020 the day after COVID lockdowns began in California. Prior to Union Electric, Max worked at Google managing a 90 person, 12-market partnerships team.

Aaron Green: How did you get into the cannabis industry?

Max Goldstein: I’ve had a fun entrepreneurial and professional journey. I started my career in my 20s with Google working in the marketing department sitting at the intersection of new product development and customers. During that time, I really learned the ins and outs of bringing products to market and building brands. I had to understand how to value and champion the customer, or the user. At Google, I was sitting at the intersection of people building products that are affecting billions of people’s lives and users and customers that potentially have really cool insights and feedback. It was an incredible learning experience. I was able to focus on what I’m good at, which is that early stage of businesses and most importantly, listening to the consumer and developing products and services that they ultimately really want.

Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

Near the end of 2018, I co-founded OpenNest Labs, a cannabis venture studio. We came together as a four-person partnership to form OpenNest, as an assortment of skill sets, with all of us contributing an area of focus that we could really combine our experiences to take focused and concerted efforts at building brands that resonate with different consumers across various form factors in cannabis and health. My partner Tyler Wakstein has been in the cannabis industry for several years and helped launch the brand, hmbldt (which is now Dosist) and a number of other projects in the cannabis space.

Green: Was Union Electric an incubation project out of OpenNest?

Goldstein: Yes. Union Electric is the first project we incubated out of OpenNest. We launched the day after the pandemic. So, it was interesting timing.

At Union Electric we’re focused on the core, everyday consumer of cannabis. I think a lot of folks, particularly the new money that have come into the industry, have often focused on new form factors or things that they think the new cannabis consumer is going to enjoy or appreciate. Because quite frankly, that’s their level of familiarity with the industry. For us at Union Electric, we want to hit the end of the market with exactly what they want and that is high-potency, affordable flower with a brand that really stands for something and has values.

Union Electric is positioned as an advocate for the legal cannabis industry as a whole. We look at the stakeholders and the work that needs to be done across the board. The idea of just being one member of the value chain and not trying to ultimately uplift and elevate everyone in that value chain, it’s just not going to work in cannabis. We’ve seen a lot of people trying to go at this alone and I think the pandemic, if anything, showed that you’re only as good as your partners. We truly believe that the investment in our partners, in the local communities and everyone that’s really touching this industry is critical to ultimately building success for one company because a rising tide raises all ships.

Green: How did you settle on the name Union Electric?

Goldstein: One of the things that we wanted to do was focus the brand on who we see as the core consumer, which is somebody that is working hard, like a shift worker punching in and punching out and putting in the long hours on a daily basis and using cannabis as a critical part of their personal wellness and relief. There are elements of that which we certainly want to tap into. The “Union” represents our stakeholder approach, which is, all of us are in this together and our tagline “roll together” represents that. The “Electric” part is what we’ve seen cannabis sort of representing culturally, and for people more broadly. This is an exciting product that’s going to change a lot of people’s lives and, and I just don’t think there’s anything else in our lifetimes that we’re necessarily going to be able to work on from a consumer-packaged goods perspective, that’s going to change as many people’s lives. It’s electric. That’s how we came up with the name.

The coloring and a lot of the brand elements that we focused on were about providing transparency and simplicity to the marketplace: big font and bold colors. There are little nuances with our packaging, like providing a window just so people can see the flower on our bags. We look at the details and made sure that we’re ultimately out of the way of the consumer and what they want, but providing that vehicle that they’re really comfortable with.

Green: You have an asset-light business model, focusing on brand and partnerships. How did you come to that model?

Goldstein: I think everyone who’s operating and working in cannabis right now is looking at strategy and what the model is that’s going to work for them. We’re ultimately going to find out what works, which is why this industry is so fun and exciting. Our specific approach is really under the assumption that vertical integration in a market that’s maturing as quickly as California is going to be hard, if not impossible – it’s just too competitive. There are too many things going on in order to be successful in California. You have to be really good at cultivation, really good at manufacturing, really good at distribution, and then ultimately, you have to be able to tell a story of that process to ensure sell-through and that you really resonate with the consumer.

I think the big, missed opportunities that we’re seeing are that a lot of great cultivators are not marketers or storytellers. They really do need people that are there to help amplify and provide transparency to their stories. There are amazing stories out there of sacrifice and what cultivators have done to create a new strain. We all enjoy Gelato. What’s the process to make that happen or to create any other new strain? It’s fascinating. It’s too hard for a lot of these cultivators to go out and tell that story themselves. So, we act as a sales and marketing layer on top of the supply chain to provide visibility, transparency and trust with the consumer so that they know who grew their product, how it was grown, when it was cultivated and that they can build a real strong relationship with that cultivator as well.

It’s also hard to be a brand that’s using 19 different suppliers, selling the same genetics and expecting the same results. As an example, we’ve gotten Fatso from one of our partners, Natura. We’ve also gotten Fatso from Kind Op Corp (fka POSIBL). We renamed one of the strains – by adding a number on the end – just so that the consumer knew that we’re not saying that this is the same product, because it’s not. It’s from a different farmer and there’s going to be differences. While it does create a little bit more complexity for the consumer, we ultimately believe that every consumer has a right and will expect to know that type of information in the future.

Green: You launched Union Electric one day after the COVID lockdowns began in California. How did you navigate that landscape?

OpenNest Labs Logo

Goldstein: A lot of praying to the cannabis gods! It was really an incredibly challenging and difficult time. We were all concerned about the impacts of the virus. There were moments where we didn’t even know if dispensaries would be open, particularly in states that just legalized. You went from something being completely illegal to an essential business in 12 months. As a team, we were just trying to hold on to our hats and focus on product and partnerships.

Fortunately, with a brand like ours and the price point that we’re operating at, we just needed to consistently be on the shelves and available, and to be present with the bud tenders. So, we focused on that and shoring up our supply chain and just trying to wait it out. COVID forced a lot of cannabis companies to make a lot of decisions quickly and I think in some ways, because we have not been in the market for 24 months under one paradigm, we were pretty quick to be able to adjust and keep the team super lean to fit the emerging and rapidly changing environment. We learned a lot. We focused on partnerships and we leaned into the model that we set out to build which is being asset-light and focusing on the sell-through.

Green: I understand you have a 2% giveback program. Tell me about that.

Goldstein: The 2% giveback program was something that we wanted to put on the bag from day one. It’s on every bag that we made and put out into the market. We’ve seen a lot of cannabis companies come in and invest tens and hundreds of millions of dollars in infrastructure. Then, month 24 they realize “oh, crap, I gotta figure out what I’m going to do to get back and actually tap into the issues that are most important to cannabis consumers.” These are issues like social equity, equitable development of the industry, and ensuring that cannabis companies and its owners are active, responsible members of society.

What we’re going to focus on with our giveback program is working with our supply chain partners. We highlight the local communities, because when you look at the landscape in California, two thirds of its municipalities still don’t allow cannabis operations. We’re in a heart and minds battle still, even here in California, just proving that the operators here are not criminals and that they’re not going to bring negativity to local communities.

As we scale in California and scale to other states, the giveback program for us is a platform and a medium to work with our supply chain partners to make sure that we’re giving back and investing every step of the way. As founders and operators, it’s how we show that we are being mindful of the importance of equitable development of the industry. Ultimately, prosperity is going to come if everyone is getting a piece of the pie.

Green: What are you most interested in learning about?

Goldstein: I’m a student of history (I was a history major) and I was very fortunate to be part of a big evolution of technology development starting in 2011 working at Google and other tech companies. In some ways, this is the second generational industry that I’ve been a part of, and I have a lot of regrets about how the first one developed – not that I necessarily was the chief decision maker. The idea that large tech companies would always act responsibly (i.e. “Don’t be evil”) didn’t really pan out. I think it was an ignorant thought process as a person in my young 20s.

What I’m most interested in learning is: Can the cannabis industry develop consciously? Can you keep the greed and the things that bring industries down at bay? How can I, as an operator, be the best facilitator of that future? I’m always thinking how I can continue to bring in the people around us and around me as the CEO of Union Electric to ensure that we’re always focused on that.

Green: Great, that concludes the interview. Thank you, Max.

Goldstein: Thanks Aaron.

From Union Electric: Union Electric Cannabis will be offering their first Regulation CF crowdfund raise in an effort to give everyday consumers a stake in one of California’s fast growing cannabis brands. Due to the ever-evolving legal status of cannabis in the US, there have been very few opportunities for individuals to invest early on in American cannabis brands. This decision to give everyday cannabis smokers access to investing in their favorite cannabis brand (for as little as $100) is a natural manifestation of Union Electric’s mission: Collective power and championing accessibility for the plant. You can learn more about their raise by visiting https://republic.co/union-electric

July 7, 2021

A Guide to Outsourcing Your Cannabis Delivery Service

By Claudia Post

2 Comments

If you are interested in adding a new delivery option for your cannabis dispensary, choosing a third-party service is a great move. Generally speaking, the most significant selling points of third-party delivery services are overhead cost and convenience.

Not only will third-party delivery services run your entire courier operation under a single platform, but they will also streamline your sales process with the latest technology. In addition, working with a third-party vendor will help you avoid financial risk with workers’ compensation and auto insurance expenses.

Please consider the following points to build a successful partnership with a third-party cannabis delivery service.

Research Your Local Market Regulations

Before you can outsource a delivery option for your cannabis dispensary, you need to research if it’s legal to do so in your given market. Whether medical or adult-use, each state has unique regulations for delivery services. In addition, individual counties and municipalities within these states also have their own rules concerning cannabis delivery on a more granular level.

As an illustration, Denver, CO, has had an adult-use cannabis market since 2013, but the city just passed legislation approving delivery services. So, starting in late summer 2021, third-party vendors will be the only businesses allowed to deliver cannabis in Denver legally. As can be seen, just because cannabis is legal in a particular state doesn’t mean delivery is always an option.

How Do I Vet a Potential Delivery Partner?

You must be discerning when starting a partnership with a third-party cannabis delivery service. As these delivery companies will be representing your brand in the field, you want to make the best choice possible. Luckily, there are some specific parameters you can follow in vetting a potential delivery partner.

License: Perhaps the most critical part of vetting a delivery partner is ensuring they have the appropriate license. Especially in hotbeds like California, countless unlicensed cannabis businesses are in operation, including delivery services. Therefore, asking to see their paperwork should be the very first step in vetting.

App & User Experience (UX): Taking a good look at the User Experience (UX) provided by a third-party vendor’s app or website is a great way to vet them. In the end, delivery services are all about convenience. If their ordering software is robust and offers flexibility and great reporting, they will likely provide you the springboard to retain your repeat buyers.

Payment processing can be a challenge in retail

OSHA Certification: Another critical factor to consider when vetting a delivery partner is OSHA training. Those companies who have taken steps to train their employees on safety protocol appropriately will likely make good partners.

How Does Online Ordering Work with My System?

Payment processes for cannabis dispensaries are incredibly complex. Moreover, since cannabis is still federally illegal, major credit cards and banks do not accept charges from dispensaries. Because of such complexities, the prospect of accommodating deliveries might prove to be a challenge.

Enter Scarlet Express. Third-party cannabis companies like Scarlet Express can integrate with your established system to seamlessly add delivery payments. They even offer customizable software that integrates with your menu provider and POS system while also importing essential brand elements like logos and colors.

If you are a small cannabis dispensary that has never developed online ordering, certain third-party vendors can also help you build out an eCommerce page on your website.

What About Compliance & Seed-to-Sale Tracking?

Compliance is one of the essential elements of running a successful cannabis business. However, compliance regulations can get tough to follow when you begin dealing with third-party delivery companies, namely because cannabis products change hands several times before they are finally sold to the consumer.

PlantTag — A plant tagged with a barcode and date for tracking

The state has thoroughly vetted any third-party delivery service that has received a license. Therefore, not only are they up-to-speed on compliance protocol for your given market, but they are also trained on the appropriate seed-to-sale software. With these controls in place, you can trust they assume legal responsibility for cannabis products after leaving the dispensary.

To operate compliantly, third-party delivery services time-stamp their orders, which can then be tracked through GPS in the delivery car. Finally, all cannabis products are stored within a secure lock box that is only opened at the time of delivery.

Adding a delivery option for your cannabis dispensary is a great way to entrench yourself with your clients. Working with a third-party delivery service is a painless way to expand your business.

When considering a partnership with a cannabis delivery service, be sure to thoroughly vet them and make sure they share your goals and vision. In doing so, you will ensure an invaluable partnership that will continue long into the future.

June 30, 2021

Ask the Experts: Microbiological Contamination in Cannabis & What You Should Look for

By Cannabis Industry Journal Staff

4 Comments

Testing cannabis and cannabis derived products for microbiological contamination should be a straightforward conversation for testing labs and producers. However, a patchwork of regulations and a wide variety of perspectives on what we should, or should not, be looking for has left much of the cannabis industry searching for reliable answers.

Organizations like the AOAC are taking the first crack at creating standardization in the field but there is still a long way to go. In this conversation, we would like to discuss the general requirements that almost all states share and where we see the industry headed as jurisdictions start to conform to the recommendations of national organizations like AOAC.

We sat down with Anna Klavins and Jessa Youngblood, two cannabis testing experts at Hardy Diagnostics, to get their thoughts on microbiology testing in the current state of the cannabis industry.

Q: What are the biggest challenges facing cannabis testing labs when it comes to microbiology?

The CompactDry Yeast and Mold Rapid plate provides fast results.

Anna Klavins & Jessa Youngblood: For microbiology testing, it comes down to a lack of standardization and approved methods for cannabis. In the US, cannabis regulation is written on a state-by-state level. As a result, the rules that govern every aspect of bringing these materials to market is as unique and varied as the jurisdiction writing them. When we are speaking specifically about microbiology, the question always comes back to yeast and mold testing. For some, the challenge will often be centered on the four main Aspergillus species of concern – A. terreus, A. niger, A. fumigatus, and A. flavus. For others, it will be the challenges of total count testing with yeast, mold, and bacteria. These issues become even more troublesome by the lack of recognized standard methodology. Typically, we expect the FDA, USP, or some other agency to provide the guidelines for industry – the rules that define what is safe for consumption. Without federal guidance, however, we are often in a situation where labs are required to figure out how to perform these tests on their own. This becomes a very real hurdle for many programs.

Q: Why is it important to use two different technologies to achieve confirmation?

Dichloran Rose Bengal Chloramphenicol (DRBC) Agar is recommended for the enumeration of yeasts and molds.

Klavins & Youngblood: The push for this approach was borne out of the discussions happening within the industry. Scientists and specialists from across disciplines started getting together and creating groups to start to hash out problems which had arisen due to a lack of standardization. In regards to cannabis testing, implementing a single method for obtaining microbiology results could be unreliable. When clients compared results across labs, the inconsistencies became even more problematic and began to erode trust in the industry. As groups discussed the best way to prove the efficacy of their testing protocol, it quickly became apparent that relying on a single testing method was going to be inadequate. When labs use two different technologies for microbiology testing, they are able to eliminate the likelihood of false positives or false negatives, whichever the case may be. In essence, the cannabis testing laboratories would be best off looking into algorithms of detecting organisms of interest. This is the type of laboratory testing modeled in other industries and these models are starting make their way into the cannabis testing space. This approach is common in many food and pharma applications and makes sense for the fledgling cannabis market as well.

About Anna Klavins

Anna Klavins earned a Molecular and Cellular Biology B.S. degree from Cal Poly San Luis Obispo while playing for the Cal Poly Division I NCAA women’s tennis team. Since joining Hardy Diagnostics in mid-2016, she has gained experience in FDA submissions [510(k)] for class II microbiology in vitro devices. She has worked on 15 projects which led to a microbiology device becoming FDA cleared. She has recently begun participating in the AOAC Performance Tested Methods program.

About Jessa Youngblood

Jessa Youngblood is the Food, Beverage and Cannabis Market Coordinator for Hardy Diagnostics. A specialist in the field of cannabis microbiology for regulatory compliance, she is seated with the AOAC CASP committee working on standard methods for microbiological testing in cannabis and hemp. She also sits on the NCIA Scientific Advisory Council as well as the ASTM Cannabis Council.

Content sponsored by Hardy Diagnostics.

June 22, 2021

Unnecessary Obstacles for the Canadian Edibles Market

By Steven Burton

1 Comment

The edible cannabis market in Canada is still green. Delayed by a year from the legalization of dried flower, the edibles and extracts market poses significant opportunities for manufacturers. Edibles and extracts typically have higher profit margins than dried flower (“value-added” products) and consumer demand appears to be high and rising. So, what is causing trouble for cannabis companies trying to break into edibles and extracts? Below are four observations on the market potential of edibles in Canada.

Canada’s Edibles Market: The Numbers

In 2020, Canada – the largest national market in the world for cannabis products – grew more than 60%, largely as a result of the introduction of new products introduced in late 2019, often called “Cannabis 2.0,” which allowed the sale of derivative products like edibles. Deloitte estimates that the Canadian market for edibles and alternative cannabis products is worth $2.7 billion, with about half of that amount taken up by edibles and the rest distributed amongst cannabis-infused beverages, topicals, concentrates, tinctures and capsules. More recently, BDSA forecasts the size of the Canadian edibles market to triple in size by 2025 to about 8% of the total cannabis dollar sales.

In December 2020, the Government of Canada reported that edibles made up 20% of total cannabis sales; Statistics Canada data shows that 41.4% of Canadians who reported using cannabis in 2020 consumed edibles. While sales have gone up and down over the course of the COVID-19 pandemic, there are clear indications that there is a substantial demand for edibles and extract products, which can be consumed more discreetly, with greater dosage precision and with fewer adverse effects (as opposed to smoking).

While sales of regulated edibles products continue to grow, edibles, extracts and topicals sales in Canada are facing a similar problem as dried flower sales: inventory growth is outpacing sales. Unsold stock sitting in inventory is growing at a dramatic pace, showing a clear lag in demand for these products on the legal market. How do we understand this contradiction?

1) Complex Regulatory Standards are a Major Barrier

Cannabis edibles compound the already existing problems around the conceptualization of cannabis products regulation. How should it work? Edibles can be considered in any of the following categories:

Cannabis as a pharmaceutical with medical application. Requires strict dosage and packaging requirements;
CBD as a nutraceutical with health benefits claimed. Requires specific nutraceutical regulations be followed;
Food product to be consumed. Must comply with food safety regulations around biological, chemical, physical hazards through a risk-based preventive control program. A full supply chain and ready-to-recall based system of regulatory standards need to be followed.

Incorporating elements from each of these three regulatory regimes into a single regulatory standards body is a confusing logistical and compliance challenge for both the regulators, and the producers and retailers of the product.

In mid-2019, the Government of Canada released the Good Production Practices Guide for Cannabis. This merged cannabis-specific regulations with food safety-specific regulations. Rigorous food safety requirements were combined with equally rigorous cannabis production and processing requirements, resulting in extremely laborious, detailed and specific regulations. These span everything from building design and maintenance, to pest control, to employee sanitation, to traceability – at all levels of the process. Navigating these regulations is a challenge, especially for many smaller producers who lack the necessary resources, like automation technology, to devote to understanding and tracking compliance.

2) Low Dosage Regulations Give an Edge to the Illicit Market

When edibles were legalized, THC dosage was capped at 10mg per package. For more experienced consumers, especially those who are dealing with chronic pain and other medical needs, this limit is far too low – and the unregulated market is more than able to fill this gap. One analyst from Brightfield pointed out that the dosage restriction, in combination with other regulations, will make it harder for the edibles market to grow in Canada.

It also makes the unregulated market almost impossible to beat. Barely more than half of cannabis consumers in Canada buy exclusively from government-licensed retailers, while 20% say that they will only buy unregulated products. According to a Deloitte report, 32% of legacy cannabis consumers said that unregulated products were better quality, and 21% reported that they preferred unlicensed products because there were more options available. Almost half of respondents also reported that quality was the biggest factor that would cause them to switch to regulated sources, and 28% said that higher THC content would prompt them to switch.

3) There is a Big Price Disparity between Legal and Illicit Edibles

As a result of dosage requirements and other factors, price per gram of regulated edible product is much higher than that of flower, unregulated edibles and edibles available through regulated medical distributors.

If you take the BC Cannabis Store’s price for Peach Mango Chews as an example: a 2pc package is $5.99. Since the dosage limits at 10mg per package, that’s the equivalent of $0.60/mg or $600/gram. A quick Google search reveals that an easily available edible from a medical cannabis distributor contains 300mg of THC and sells for $19.00, a price of $63.00/gram.

That means that not only is 10mg too low a dose for many users to achieve the result they were looking for, but the dosage restriction also makes the products less attractive from both a nutrition and cost standpoint. Deloitte reportsthat higher prices is the reason that 76% of long-time cannabis consumers continued to purchase from unregulated sources. The regulated industry as a whole is missing its legal market opportunity, where consumers prefer a lower price product with a greater range of dosage availability.

4) The Range of Products Available is Too Limited for Consumers

For most of 2020, chocolate edibles were the dominant product in this category in the Canadian market, garnering 65% of all edibles sales. But is this reflective of consumer wants? Despite a demand for other kinds of edibles like the ever-popular gummies, there are still only a few edible brands that offer the range of products consumers are asking for. According to research from Headset, there are 12 manufacturers in Canada making edibles but only two of them produce gummies. In comparison, 187 brands make gummies in the United States.

While some of this delay is likely due to the long licensing process in Canada and the newness of the market, there are other factors that make it challenging to bring a variety of products to market. The province of Quebec, Canada’s second-largest province, has banned the sale of edibles that resemble candies, confections, or desserts that could be attractive to children – giving yet another edge to unregulated sellers who can also capitalize on illegal marketing that copies from existing candy brands like Maynard’s.

When companies do want to introduce new products or advertise improvements to existing product lines, they are restricted by stringent requirements for packaging and marketing, making it harder to raise brand awareness for their products in both the legal and unregulated markets. Industry players are also complaining about government restrictions on consumers taste-testing products, which further compounds challenges of getting the right products to market.

In the meantime, illicit producers have also shown themselves to be savvy in their strategies to capture consumers. It is not uncommon to find illicit products packaged in extremely convincing counterfeit packaging complete with fake excise stamps. New consumers may assume the product they are purchasing is legal. Availability of delivery options for higher dosage, lower price illicit products is also widespread. All of this adds up to significant competition, even if it were easier to meet regulatory requirements.

Conclusion: Significant Room for Growth Remains Limited by Government Regulations

These four challenges are significant, but there are a number of opportunities that present themselves alongside them. A year and a half into the legalization of edibles, cannabis companies are getting a better picture of what Canadian consumers want and low dosages are proving to be desirable for Canadian consumers in some areas.

Some of the many infused products on the market today

In particular, sales of cannabinoid-infused beverages far outpaced other edibles categories last year, likely tied to the availability of these products in stores over the summer of 2020. BDSA’s research has shown that, in contrast with American consumers, the lower THC dosage for cannabis beverages is an advantage for Canadian consumers. Major alcohol brands like Molson Coors and Constellation Brands are investing heavily in this growing product area – though there the dosage limits also apply to how many products a consumer can buy at a time.

At the same time, the large quantity of unsold cannabis flower sitting in storage also poses an opportunity. While its quality as a smokeable product may have degraded, this biomass can be repurposed into extracts and edibles. Health Canada has also shown some responsiveness to industry needs when it shifted its stance to allow for Modified Atmosphere Packaging (MAP), which will help improve shelf life of products.

While strict regulatory obstacles remain, challenges will continue to outweigh opportunities and the illicit market will remain a strong player in the edibles market. As regulations become clearer and producers become more accustomed to navigating the legal space, barriers to entry into the regulated cannabis market and specifically the extracts and edibles market, will decrease. Meanwhile, those getting into the edibles market will do well to be wary of the challenges ahead.

June 17, 2021

Connecticut Legalizes Cannabis

No Comments

Update: Governor Ned Lamont has signed S.B. 1201 into law, officially legalizing cannabis in the state of Connecticut

On June 16, 2021, the Connecticut House of Representatives voted to pass their version of S.B. 1201, a bill that legalizes adult use cannabis. Following the House’s approval of the changes, the bill made its way back to the Senate on June 17, where they approved all changes. It now heads to the Governor’s desk, where Gov. Ned Lamont is expected to sign it into law.

With Gov. Lamont’s signature, Connecticut will become the 19^th state in the country to legalize adult use cannabis. The bill is slated to go into effect on July 1, just a couple of weeks away.

Come July 1, adults in Connecticut can legally possess up to 1.5 ounces of cannabis in public and up to five ounces at their home. The bill allows for adults to grow at home, just not until 2023 unless you are an existing patient registered in the medical program.

According to the Marijuana Policy Project (MPP), the bill will expunge cannabis records for low-level crimes and puts “the bulk of excise tax revenues into a Social Equity and Innovation Fund, which will be used to promote a diverse cannabis industry and reinvest in hard-hit communities.” Half of the cannabis business licenses issued will go to social equity applicants that can receive funding, workforce training and other types of assistance from the program.

DeVaughn Ward, senior legislative counsel at MPP, says the bill includes provisions to repair harm done by the prohibition of cannabis. “The Connecticut Legislature’s commitment to legalizing cannabis through a justice-centered approach is commendable,” says Ward. “For decades, cannabis prohibition and criminalization has harmed some of the state’s most vulnerable communities. This bill not only ends this failed and unjust policy, but it also includes measures that will work to repair the harm that it has caused. This state will be a model for others to follow.”

The bill includes strong protections for employees, tenants and students by limiting discriminatory actions based on positive drug tests. It also dedicates 25% of tax revenue from cannabis to go toward mental health and substance use treatment.

Interestingly, the bill has a THC cap in it. Cannabis flower sold at dispensaries is capped at 30% THC content and concentrates (except for vape carts) are capped at 60% THC. To read more about the nuances of the legislation, the MPP has a helpful summary of the bill you can find here.