According to “The Tasty Future of Cannabis Edibles” released by ArcView Market Research and in partnership with BDS Analytics, cannabis edibles spending reached $1.4 billion this year and sales are on track to bring in more than $4.1 billion by 2022. But that number could prove to be just a fraction of its potential now that major consumer packaged goods companies are entering the industry.
The packaging of edibles is particularly important. Packaging has a lot of restrictions, including that it must prevent product spoilage and not be appealing to children. Just this week, Washington state put a ban on all cannabis gummies, chocolates, and candy, in particular, no matter the packaging.
We asked Tom Adams, editor in chief of ArcView, what he thought the impact might be of Washington’s surprise move. “Gummies and chocolates are two of the most popular product categories in the edibles sector, so Washington state’s decision to crack down could have a short term effect on the state’s market,” he said. “Overall, Washington state is a small piece in the broad scale of the cannabis industry and this will likely have a trivial impact on a revenue that is growing at a 22 percent CAG (Compound Annual Growth).”
His answer offers little solace to processors being impacted and could mean $30 million dollars in lost sales.
The biggest projected factor will be branding. The normalization of cannabis is already here with well established brands entering the cannabis marketplace. According to the report, edibles have become the face of cannabis in dispensaries and their success has caught the attention of CPG business behemoths, as evidenced by beverage maker Constellation Brands’ nearly $4 billion investment in Canada’s Canopy Growth over the past year.
Even more recently, published reports of discussions with Aurora Cannabis prompted a statement from Coca-Cola, stating: “We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world.” Other recent moves include Molson Coors Brewing Co. working with Canada’s Hexo Corp. on cannabis drinks and Lagunitas craft brand is already selling a non-alcoholic, THC-infused beverage.
Not all that enter the sector are going to be conglomerates and many cannabis-centric brands are just now becoming household names in states with some form of legalization. But still, more smart, well known brands will certainly be investing. At the rapid clip that cannabis is becoming a burgeoning industry in the U.S. and with Canada going legal in a matter of days, investing in edibles, whether drinkable or chewable, is already becoming the “it” thing.
“It has become clear that the legal cannabis market is about much more than inhaling the smoke of smoldering cannabis flower,” read the ArcView report. It stipulates that “the trending shift toward consumables will continue over the next five years, with flower’s share of total spending dropping from 50% in 2017 to just 36% in 2022. Edibles is forecasted to grow from 12% to 14% in that time frame.”
“Consumers in front-running adult-use markets within the United States have significantly shifted their spending over recent years to other categories of cannabis consumables, especially into concentrates and edibles,” said Adams. “The edibles markets’ growth provides an early opportunity for investment in a cannabis sub-sector that is quickly growing, brand-focused, and full of opportunity for new and innovative products.”
This article was originally published on The Fresh Toast.
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