Infused products continue to expand their market share of the cannabis industry as new technologies and techniques provide customers unique ways to consume.
With edibles now accounting for $1 of every $5 of sales in a dispensary, the power of the sector cannot be ignored. Additionally, manufacturers of infused products are becoming increasingly creative with new product development and offerings thanks to technological advancements, making for an increasingly competitive market.
From new extraction methods to specialty mood claims, manufacturers must be prepared to take on new challenges and adopt new techniques to remain competitive. Most importantly, they must come armed with creative and innovative ideas to set themselves apart from their competition.
At the National Cannabis Industry Association (NCIA) recent cannabis business summit in Oakland, a panel of industry leaders, including Nancy Whiteman, co-founder & co-owner, Wana Brands; Marc Graboyes, co-founder and CEO, Next Frontier Biosciences; and Charles Jones, CEO, LucidMood; revealed what’s on the horizon for producers of infused products, as well as tips for how to keep up with latest trends. Common threads that each of the panelists addressed were Experience vs. Class Specific, Cannabinoid Ratios & Stacking, Purification, Micro Dosing, and Advanced Formulations.
The cannabis industry has come a long way in a few short years. As recently as 2010, edibles were made in home kitchens, wrapped in saran wrap, and sold from a backpack carried from dispensary to dispensary. There were no testing requirements and wildly inconsistent dosing, which was a really big problem for consumers new to edibles.
From salad dressing to beef jerky, people were infusing everything to see if they could make a market out of it. And there was no sense as to whether a product was tested for consistency or contaminants.
Now Colorado is highly regulated, with mandatory lab testing for potency, contaminants, residual solvents and pesticides. Child resistant packaging is required. Packaging must be re-closeable. Elaborate information must be included on the regulatory labels.
And in October, 2016, Colorado added yet another step: Every individual edible must be either stamped or imprinted with the Universal THC symbol. Much has changed since the dawn of the industry.
According to BDS Analytics, the largest category today within the edibles market is candy, with gummies as the largest category within candy by far. Chocolate is the next largest category, followed by infused foods/baked goods, tinctures, beverages and then pills/capsules.
“It’s still a largely undifferentiated market, and I would say mainstream products dominate,” Whiteman noted during the panel discussion. “It’s gummies, chews, baked goods. For years, I’ve been hearing ‘I wish there were more savory products, I wish there were sugar-free products, I wish there were healthier products.’ But the truth is, there’s a bit of a mismatch between what people say they want, and what they actually buy. We hear a lot about people wanting those products but still not a lot of sales. I think this may be because the market is still developing, and it’s not large enough yet to support a lot of niche-y products.”
Whiteman said what she does see in Colorado these days is that “me-too products” have a hard time. Most stores have very limited shelf space, which is competitive. “If a product is the same as something else that is on the market, they have to knock a market leader off the shelves to get in. That speaks to that need for differentiation,” Whiteman noted.
Graboyes said that we’re at the beginning of the emergence of this industry, and “there is a lot of opportunity for continued research, development and scientific innovation.”
According to Jones, why people use cannabis isn’t necessarily obvious. “People use cannabis for other purposes than just getting high: pain relief, reduction of anxiety, helping to get to sleep, helping to focus, treating ADHD, as well as enjoying music and being creative,” Jones remarked. “Infused products provide a wide range of delivery systems that help people get cannabinoids and terpenes into their body, so that expands the ability to use the product.”
Experiences vs. Class Specific
Jones recalled the point he realized buying cannabis wasn’t just about buying the strain with the highest THC. “[Different strains] have different effects? Really? I was like a kid in a candy store,” he said.
Whiteman noted that for a long time, most infused products were hybrid, then brands started coming out with indica or sativa products, which became enormously popular because customers could dial in their experience. “I can tell you that our Wana sativa gummies are the No. 1 edible in Colorado, so I know class-specific products are very popular.”
But as the industry matures, brands and consumers alike are finding that just labeling a strain or a product ‘indica’ or ‘sativa’ often isn’t a sufficient description. As this new wrinkle plays out, more and more companies are describing their products by the experience they are attempting to create, such as Calm, Relax, Energy or Creativity. These labels speak more to the way that the manufacturer is hoping the consumer will feel when taking the product.
“For example, our company is coming out with a product called Party, which is very pro-social, reduces inhibitions, and doesn’t feel much like marijuana,” Jones said. He continued on to predict that the industry will increasingly see movement from strain specific to the end effects, with development starting with the end in mind. “Particularly as new consumers come into the market, they’re not going to take 15-20 minutes to understand the difference between indica and sativa and dial in whether Green Crack or Blue Dream have the qualities they’re looking for.”
Cannabinoid Ratios and Stacking
Whiteman recalled that until about 2015, THC was the focus in Colorado, and there really wasn’t discussion about anything else. Then CBD started coming to the forefront. Now consumers will find CBD products in varying ratios, such as 1:1 THC: CBD, 10:1, 3:1. As extraction technologies have gotten more sophisticated, it has been possible to isolate other cannabinoids such as CBC and CBN, and consumers will start seeing products with even greater variety of the cannabinoids.
Additionally, companies can now extract terpenes and add them back into a product. The terpenes are important in terms of the flavor profile, but they’re also what causes one strain to feel different than another strain. “These sophisticated extraction capabilities are allowing companies to begin ‘stacking,’ or begin creating products designed with particular experiences as the goal,” Whiteman said.
“Labeling a product in terms of the experience or the effect that the person will get makes the product increasing accessible to people, and I think we’ll see this trend growing,” Jones noted. “By taking purified cannabinoids and terpenes out of the plant and combining them in novel ways, novel experiences and effects can be created.”
Whiteman said that this trend combines a couple of things, sometimes accomplished through cannabinoid stacking, and sometimes by adding functional ingredients to the product. “So if there’s a product called Calm, maybe it has St. John’s Wart or another product that has been proven to have some calming impact on the system,” Whiteman said. “There’s still not a lot of research … but it is more accessible and understandable for someone to say, ‘How are you trying to feel? Are you looking to relax? Have more energy?’ And then to ease into purchasing a product based on that.”
Graboyes noted that different cannabinoids have been found to have a range of therapeutic benefits, from anti-inflammatories to analgesics and more, and that THC and CBD are synergistic and work together to provide therapeutic benefits together that exceed their therapeutic potential individually. There’s great interest in coming up with combination products – THC and CBD in particular – as potential alternatives to opioids and other traditional pharmaceutical medicines for the treatment of a wide range of medical conditions.
“We believe that as the industry continues to emerge, there’s a great need for further purification of all these different compounds,” Graboyes said, “Such as cost effective purification methods that allow you to take the plant, isolate the key active ingredients and select targeted cannabinoids. In the hemp-based CBD market, you can find CBD isolate that’s 98 percent pure. We’ve done our analytics and we know that it is very pure high quality CBD isolate. And it’s possible to find it on the THC side as well, but when you start looking at some of these other rare cannabinoids, it’s very difficult to isolate some of those rare cannabinoids in a cost effective manner,” he said.
“We see a great need for that moving forward. When you’re coming out of the biotech industry you realize the purity of the active ingredient is very important for the ability to formulate it and deliver those therapeutic benefits.”
Purifying cannabinoids removes chemical impurities, which adversely affects the ability to formulate products with very accurate safe and effective dosing, plus good stability. It also allows for highly purified cannabinoids to be recombined in very accurate ratios for different therapeutic benefits.
“Another trend we are going to see is products that start with purified cannabinoids and terpenes, and formulate from there,” Jones noted. “These products will be formulated to dial in the effects that someone is looking for while leaving out the effects that they are not looking for. You want to be energized, but without paranoia; you want to be relaxed but not locked to the couch, things like that.”
Whiteman noted that when Wana came into the market in 2010, marijuana infused product dosage levels were relatively low. It wasn’t uncommon to have a 10-20 mg product. As the medical market matured in Colorado, it was a race to the top, so to say, as dosage levels went up and up and up. “Brands were sort of competing on who had the highest dosage product,” Whiteman recalled.
When adult-use came into play, regulations limited packaged products to 100 mgs, with 10 milligrams per unit within the product, clearly delineated. “Now it’s very interesting to me to see a trend in the other direction with low dosage products,” Whiteman said. “Low dosage products are appropriate for new people entering the market because edibles can be a strong experience for people. So when we have newbies to edibles, it’s nice for them to have low dosage products. But the whole concept of micro-dosing is coming into the forefront, not just for the fact that it is a low dosage product, but that it can be taken for medicinal purposes – low amounts, many times a day. We are seeing a lot more variation on dosing than we have seen in past.”
Advanced formulations combine an active ingredient such as THC and CBD with other inactive excipients or other ingredients to improve delivery. That allows a product to be designed and optimized for specific modes of administration. “Next Frontier Biosciences is really focused on nasal and sublingual administration,” Graboyes said. “We have a line of topical products, and as we continue to execute our research and development program, we will look at lines of capsules, oral strips, and potentially veterinary products. The end result is that through cannabinoid purification and scientific formulation, there is an ability to produce well-characterized products that are very accurate, consistent and reproducible, and we think that’s where the future of cannabis-based medicine is going to go on both the medical and recreational side.”
“On edibles side of things, I think we’re going to see more products with rapid onset, so in 15 minutes, you’re going to have a pretty good idea what your state of mind is going to be before you pop that next edible or whatever that might be,” Jones noted. “And increasingly, we’re going to see extended duration, particularly if you are taking something for pain or for sleep, you want it to last 6-8 hours.”
Graboyes said that what they are most excited about long term is the ability to pursue their Gen 2 product development program with a focus on improved bioavailability. “We are working with mucoadhesives, permeation enhancers and solubility agents to improve our formulations, while introducing new cannabinoids such as CBC, CBG and CBN, as well as new product lines,” he said.
Whiteman noted that now the minimum for success today is professionally produced and packaged products. “Success ultimately will depend on quality, innovation and good pricing,” she said. “The market has matured to a point that it can support more diversification than it has in the past. But brands will need to be more than me-too brands to succeed, and that means brand development is going to be essential to the success of new edibles coming up.”
Jones reminded the panel’s audience that people use cannabis for a wide range of reasons. “Infused products expand the use-cases and comfort in which people consume these products. Branding will increasingly focus on effect instead of strain. A much greater degree of science, technology, and branding acumen is going to be required to compete in the industry going forward,” he said.