The "Second Wave of Legalization" and Branding

Cannabis infused items such as edibles, beverages, and concentrates will be legal in Canada on or before Oct 17, 2019. The regulation of these derivative products will mark what many are calling the “second wave” of legalization. This will open up an entirely new market and presents a once-in-a-lifetime opportunity for “cannapreneurs” in the country.

Chuck Rifici, chairman and CEO of Auxly Cannabis Group, told CBC that "the brands will really start being built next year." The “second wave” of legalization will give Licensed Producers and craft cannabis companies the chance to truly develop meaningful brands.

As of right now, recreational cannabis companies can only sell flower, oils and capsules. The chosen product mix will be an effective way for brands to distinguish themselves from the competition. Brand differentiation will become bigger when LPs can offer a wide range of products with different flavours and effects.

Industry experts believe that cannabis flower may eventually become a commodity and will likely be replaced in popularity by these new infused goods. The flower market will likely be split into two categories - medium quality bud used as starting material for infused products and high quality craft cannabis.

A report by Arcview Market Research and BDS Analytics seems to indicate that could be true. The report estimates that consumers in the United States and Canada will spend $4.1 billion on cannabis edibles by 2022. Which isn’t that crazy considering that these consumers already spent $1 billion on infused products in 2017. These analytics reveal some additional insights about the potential Canadian edible market:

  • In Colorado, 64% of adult-use marijuana customers have tried an edible, 55% percent in California.

  • Edibles are projected to grow from 12% to 14% of the total cannabis market by 2022, while flower is expected to drop from 50% to 36%.

  • Edibles’ share of the total cannabis market has already more than doubled, from 5.4% in 2011 to 12% in 2018.

This data shows that the edible market is a significant chunk of the entire cannabis economy. Nearly half of Canadians say they are interested in trying cannabis infused edibles such as when these products are permitted, according to a study by Dalhousie University professors. Canadian companies should begin thinking about their infused product strategy now so that they are positioned to win when the regulations allow for sales.

It is still technically prohibited for legal cannabis companies to produce these edible products. However, many LPs have started running experiments on the best ways to make them. Bruce Linton, founder and CEO of Canopy Growth Corporation told CBC that "I think if you're not preparing things two years in advance, you're never ready,". That should be a wake up call for entrepreneurs looking to enter the culinary cannabis space. Get started as soon as possible, because the competition has been preparing for years.

One Licensed Producer that has already dipped their toe into the food world is Altavie, a premium recreational cannabis brand from MedReleaf. This company created the “cannabis crunch” product, which is a non-infused chocolate toffee with “cannabis-inspired flavours”. The campaign received mixed reviews but the product was an attempt to “introduce new or lapsed consumers to the complexity and depth of cannabis flavours and to build brand awareness.” Altavie may benefit from this existing brand awareness around their “Cannabis Crunch” when edible sales are allowed in 2019.

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There is no denying the importance of regulating and legalizing cannabis derivative products. 2019 will open up a brand new market that will be beneficial to both consumers and the industry. AdCann will continue to cover the changing landscape of cannabis marketing regulations and will keep you up to date with the most impressive infused products when they are made available.

Colin BamburyComment