The cannabis industry knows many of the challenges facing the edibles category well. In no particular order, edible brands confront issues with onset time, taste, dosage, and a reliable, consistent experience. That’s not an exhaustive list and won’t come as new news. Some manufacturers have cleared one or more hurdles. Brands like Kiva have led the way by continuing to add innovative products to its line of chocolates and mints. For example, Kiva’s new “Singles” small packs are intended, as the company’s website states, “for new and returning users of cannabis.” But a subtle headwind may be building, bolstered by crashing flower prices, a macrotrend impacting most industries, and the viral (and increasingly visual) nature of online communication.
What Was That Crashing Noise?
This opening paragraph would have sufficed to tee up our thoughts on the – spoiler alert – impact of the do-it-yourself trend on cannabis. That is, until last week. The Washington State Liquor and Cannabis Board came down on candies, jellies, colorful chocolates, and “gummy type products” reportedly based on “concerns raised by the Board, stakeholders, and the public regarding infused edible candy.” (Quote lifted directly from the “Marijuana Infused Candy” deck reviewed by the Board last week.) The concern focuses on products potentially appealing to kids. Sweets, essentially.
The actions by Washington can’t be viewed as an outlier. As High Yield Insights co-founder Eric Giandelone put forward in our previous CBE contribution, the cannabis industry should expect regulators to follow the precedents laid down during the crackdown on the tobacco industry. If companies in the cannabis industry are to continue to grow and thrive, threats like this must be anticipated.
Some Will Take A Harsh Hit
Taking local favorites in Washington as an example, companies such as Billifer’s have little chance swaying regulators to look the other way on products such as “Hard Candy” and “Stoney Blast Packs”. The latter bears an especially damning description: “this pixy stick like candy is a blast in a pack”. Elsewhere, the Zootologists behind ZootRocks (available in flavors such as Green Apple and ZootBerry) should focus entirely on the future: Zoot’s line of infused shots, drops, and bites. In short, manufacturers selling into Washington should assume anything looking remotely like Jolly Ranchers will go the way of flavored cigarettes. This phenomenon will work through the West Coast and other adult use states (at minimum) as the state-level patchwork of rules for edibles takes on another layer.
Pick your cliché: lemons and lemonade, doors and windows, you name it, politicians, philosophers, and pundits from Sun Tzu to Alexander Graham Bell to JFK to Al Gore have waxed on about the interrelationship of threats and opportunities. Not all developments in the market, be it new entrants, consolidation, or regulation, pose an existential danger. Nor should we expect to uncover opportunities free of risks. Two key questions can be considered to devise a growth strategy for edibles: 1) What do we know about what is happening now? 2) What is it we know about what is likely to happen in the future? We’ve already answered the latter above.
Where Can We Look For Inspiration?
As companies ponder diversification and rebranding, consider a deft solution to this inevitable wave of new rules for edibles: leverage the ongoing do-it-yourself craze. To answer #1 above, we know DIY is and has been a thing. The timeline published on Make:Magazine’s site works as a proxy for the trend’s history. The magazine launched in 2005, followed by Etsy in 2006, and Pinterest in 2010. (Instagram, perhaps the most cannabis-friendly mainstream social media platform also went live in 2010.) Home to countless recipes and cooking tips, Pinterest now boasts more than 200 million users worldwide and over 1 billion ‘pins’. Thus the platform exists. Several tailwinds support the continuation of the DIY macrotrend:
- High-speed broadband, smart speakers, and streaming video put access to information just a “Yo, Google” away
- Ongoing value and interest among consumers for the artisan, the handmade, and the local
- Personalization continues to drive… pretty much everything
While the DIY trend has splintered (composed now of the “maker movement”, repair-it-yourself, do-it-for-me [i.e. Uber, et al.], etc.) the broader picture remains unchanged: consumers want to be engaged with products and services and not passively take in what the market offers.
Beyond The Brownie: Why DIY for Cannabis?
The cannabis community has a proud history of embracing the intimate craft of cultivation and the social rituals of consumption. Not to be too tongue-in-cheek but we need look no further than the humble pot brownie for evidence of DIY’s promise for cannabis. While some of us share an uneasy history (don’t eat more than one) with the house party staple of old, the brownie is the prototypical edible.
But with the wealth of product on the market in adult use states, why would anyone but the most devoted bother?
Let’s consider a participant in a recent High Yield Insights 1:1 live qualitative interview on edibles. “Tea Time Tony”, as we’ve come to call him, offers the following insight on why he made the switch to homemade – tea, in his case:
Elsewhere in the interview, Tony calls out the benefits he sees in DIY edibles including notable factors such as:
- Customization: Tony likes to experiment with flavored teas, incorporating lavender and hibiscus for a unique and personal taste
- Cost and convenience: by purchasing flower in bulk, combined with common ingredients, he can produce in large batches at low costs in the comfort of his home, free of constraints placed on edibles by the state, and easily portable should he need an on-the-go solution
- Control: by carefully selecting a strain and measuring out amounts, Tony feels he can tweak the dosage of his homemade tea
Clearly there are a number of significant drivers leading consumers to switch to a DIY solution, even in adult use states (like Tony’s home in the Pacific Northwest) where accessibility is less of an issue. Finally, note Tony’s comments on smoking… the handcrafted “category” (let’s just start calling it that) can have an impact on other products as well, not just edibles.
Who Is Doing This Today?
Let’s return to Washington to examine another local darling: Green Revolution. The good people at Green Revolution specialize in non-smokable delivery methods especially various infused products along with tinctures, sprays, and topicals. The company produces a sativa and indica variety of infused cooking oils as well under the name “Home Baked“. This is what the nascent handcrafted category looks like today. Faced with a confounding regulatory environment, products geared toward would-be cannabis chefs, culinary connoisseurs, and Pinterest fanatics could elevate what is an ad-hoc niche into a full-blown category. The Home Baked products are formulated with an organic coconut oil base, but with investment and innovation, cannabis cooking oils could run the gamut much like the olive oil and other specialty oils of mainstream retail today – and the opportunities shouldn’t stop at oils alone. The pivot from candy and gummies to oils and infused ingredients may look like a lurch, but the DIY consumer is ready and waiting and the need states driving the widespread use of the imperiled edible products have not – and will not – disappear. As JFK famously (albeit erroneously, as it turns out) stated: “In the Chinese language, the word “crisis” is composed of two characters, one representing danger and the other, opportunity.”