At least in Canada, legislation is quickly coming to allow producers to roll out a series of Cannabis edible products. The edible cannabis products are seen as a move towards the light regarding product diversification. This is the next logical step in the process for producers trying to find their niche in a crowded space. Cannabinoids will be coming to a store shelf near you in drinks, candies, baking, lotions, creams and in all sorts of food stuffs.
With any product questions of public safety, advertising and marketing abound. There must be a clear understanding of what is the specific cannabinoid included, its potency and the dosage being ingested. After the content issues, there comes the need for consistency of the product and the price that product is being delivered.
This issue is further complicated when you consider the issue of chocolate. Blending chocolate mixed with Cannabis creates inconsistencies because of the natural chemical interactions happen with the THC in the Cannabis. An odd thing occurs with the measured THC content which either tests too low (causing mislabelling) or too high (causing the batch to be outside of legal limits). The larger the sample – the bigger the problem. This problem turns out to be is a tough nut to crack. If it is solved this opens a huge market for the producer to capture a piece of this lucrative market. Producers are diligently applying themselves to resolve this issue.
Some producers look at the picture as being insurmountable and choose to isolate their attention to the cannabidiol (“CBD”). CBD is easier to work with given it is not a psychotropic substance. This side steps a whole tangled knot of legislative and regulatory issues.
Each party wants to increase their share of the market and capitalize on the success they hope to realize. Markets are predicted to increase over the years. The United States and Canadian markets reached a value of $12 billion in 2018. The projected value in 2019 is nearly $17 billion. The biggest growth to come from recreational cannabis consumption. What really is the prize the producers keep their eyes on is the $24 billion market in predicted in 2021.
This begins to explain the enthusiasm for the purchase of shares in the companies in this space. After this excitement dies then comes the scrutiny of the classical business benchmarks like cash flow and profitability.
As this enthusiasm begins to wane consolidation of the industry starts to immerge as we begin to see it now happening. As they say “such is the circle of life”.