As California gears up
to allow recreational cannabis sales, startups are jockeying for a bite of the
state’s growing marijuana edibles market by going upmarket, and by adding cannabis to everything from traditional munchies, to iced coffee, pastilles and breath mints.
Explosive growth
According to Arcview
Market Research, a research and investment services firm focusing on the cannabis
businesses, it’s an industry that barely existed out of home 10 years ago, but that
now shows no sign of slowing down. The company estimates that
California customers consumed about $180 million worth of edibles last year - about 10 percent of the state's overall legal cannabis sales which are expected
to grow more than 25 percent annually to hit $5.8 billion by 2021.
Trends in other states suggest that the edibles market will
continue to grow in California as the state’s recreational cannabis sales
start. Sales of cannabis-infused treats increased 121% last year in Washington
state, where recreational cannabis is legal, according to cannabis analytics
firm Headset Inc.,
while in Colorado, according to Arcview,
sales of edibles more than tripled from $17 million in the first quarter of
2014 - when the state first allowed recreational marijuana use - to $53 million
in the third quarter of 2016.
Market diversification
California's edibles market is diversifying, with companies
adding healthy, organic, vegan and gluten-free options to their product lines,
and making low-dose edibles for new
patients and people who want to medicate while at work or at home with their kids.
Oakland-based Kiva
Confections was one of the early pioneers of microdosing with its low-dose chocolate-covered espresso beans and
blueberries containing just 5 milligrams of THC. When those became Kiva's
best-sellers, the company decided to go even lower - coming out with 2.5
milligram mints. For comparison, Christie Strong, Kiva's marketing
communications manager estimates a pot brownie at a Grateful Dead concert could
have anywhere between 50 to 500 milligrams of THC.
San Francisco’s Ritual Roasters and local edibles
startup Somatik are bringing cannabis-infused coffee to the Bay Area. Somatik cannabis cold-brew is
an eight-ounce bottle of coffee that contains THC. According to Christopher
Schroeder, founder of Somatik, this product contains less cannabis than most
infused drinks on the market.
A caveat for prospective canna-entrepreneurs and startups,
though. As California finalizes its marijuana regulations, Arcview warns that edibles
startups will face added food safety hurdles that their peers in other cannabis
industries, and in the general foods market, don't have to navigate.
Smoke free option
The reason
for the explosive growth is that as the pot market expands, it’s starting
to reach people who prefer not to smoke – the overall the smoking rate of
cigarettes among adults is down from 20.6% in 2009 to 16.8% in 2014. Edibles
provide a discrete, smoke-free experience, and since they can command higher
prices, often accounting for 25 to 60% of a dispensary’s profits, this is making
edibles an appealing – and growing - slice of the pot pie.
Pot-laced mints containing as little as 2.5 milligrams of THC, the chemical compound in marijuana that makes users high, began showing up on dispensary shelves late 2016, and are said to be gaining favor among users who want to avoid smoking or over-dosing on edibles. Breez mints which are made with oil derived from the marijuana plant, sugar, and peppermint oil, were introduced earlier this year and are said to have positive user feedback. Each mint has five milligrams of THC, the rough equivalent of smoking one-fifth of a joint or less.
Pot-laced mints containing as little as 2.5 milligrams of THC, the chemical compound in marijuana that makes users high, began showing up on dispensary shelves late 2016, and are said to be gaining favor among users who want to avoid smoking or over-dosing on edibles. Breez mints which are made with oil derived from the marijuana plant, sugar, and peppermint oil, were introduced earlier this year and are said to have positive user feedback. Each mint has five milligrams of THC, the rough equivalent of smoking one-fifth of a joint or less.
Couture cannabis
The bag containing the cannabis munchies is increasingly
likely to be from a well-known designer as opposed to a well-known kitchen
brand. Treats are going gourmet, for example, Beboe,
a cannabis brand targeting the luxury market, that launched
in San Francisco at a "Cannabis Cotillion" in June this year.
Also going upmarket are the cannabis tastings and cuisine created
by gourmet chefs - such as Jeff the
420 Chef aka “the Julia Child of Weed" - at the recent Norcal CannaCuisine Gala organized by cannabis entrepreneur, Elise McRoberts. Hosted
at a private space within Sonoma County, 150 guests enjoyed hand crafted creations
and canna-cocktails while rocking out to San
Francisco psychedelic band Moonalice
fronted by advocate
for cannabis
reform, Roger McNamee. Each cocktail and course during the meal ranged
from 1.5 - 3 milligrams of cannabinoids, with precise dosage provided for
guests on the menu.
In Los Angeles, the Beverly Hills Cannabis Club promotes “couture cannabis” with cannabis tastings, cannabis yoga retreats, secret speakeasy-style cannabis parties, cannabis-infused cosmetic products and a green cannabis juicing line – on point with a study that has identified cannabis beverages as one of the five trends for the future of the food and drink industry.
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