Kanha has become one of the largest brands of edibles in recent years.
Cannabis-infused edibles have come a long ways in a relatively short amount of time, evolving to become a superior product at delivering what consumers want, while breaking new ground and continuing to grow.
Lessons
Halo Infusions didn’t get to where it is by being a passive participant in the cannabis industry.
“We’ve been very serious about learning whatever we can,” CEO Murray Stein says. “We’ve spent 10 years to get where we are.”
Stein came from the computer industry and experienced two of its major growth spurts, first with the introduction of personal computers in the 1980s and then with the dot-com era in the ‘90s, so he has some background in booming businesses. His time in cannabis has been influenced by numerous lessons, leading him to be a big believer in whole-plant formulations, among other strategies, as well as realizing how crucial it is to understand your costs.
What’s the big lesson he would pass on to other companies or individuals in the edibles space?
“Be patient and work with your strengths,” he says. “Don’t worry about what your competitors are doing as much as you’re worried about what you are doing. That served us well when we started as a medical edibles manufacturer and dispensary, and we’ve remained true to that.”
Understanding costs
Having a thorough understanding of manufacturing costs, labor, inputs and tax liabilities seems like step number one for most businesses. But in the cannabis space, where each of those components is fluctuating and not standardized the way a similar food business would be, it’s something many companies have struggled to get a hold of.
Echoing Murray’s thoughts on the subject, Canna Provisions chief operating officer Erik Williams says companies need to drill down on understanding expenses — especially for vertically integrated companies that are not only supplying their own retail operation, but also competing for market share with other retailers and manufacturers.
“If you’re not really focusing on how you are getting the best price per gram of everything you’re growing, that’s taking your eye off the ball before you get into the chat,” Williams says.
Optimism
Although cannabis is going through its first real economic downturn since the earliest adult-use markets opened more than a decade ago, Azuca CEO Kim Sanchez Rael believes better fortunes are on the horizon for companies that survive.
“I know ‘23 was a really hard year, but from where I sit in the value chain of cannabis, I’ve never been more optimistic,” she says. “We’re on the front end of working with partners and brands on new product releases and new innovations in edibles and beverages. The velocity is higher than I’ve ever seen it, in terms of the desire to move more products into these premium categories.”
Topicals
Aside from the edibles trend, Stein sees topicals as an under-developed category that still has room for growth.
“Topical products don’t yet get the appreciation they should in terms of their efficacy,” he says.
A strategy he likes is to have salespeople give the topics to their parents or grandparents and see how they like it. More often than not, they’re sold.
“There are some things that are just waiting to be fully discovered,” Stein says, “and topicals is one of those key opportunities.”
Healthier edibles
Just as health-conscious consumers are becoming a bigger demographic in most food categories, cannabis buyers are taking aim at the way edibles are manufactured and seeking alternatives to the high-fat, high-sugar products of yesteryear.
“Low sugar is definitely king in that category of priorities,” Candy Pros CEO Susan Hallak says.
Color is another factor that might not be as obvious. Starting in 2027, California will impose a ban on Red Dye No. 3, which the U.S. Food and Drug Administration already banned from cosmetics, but continues to allow in foods, despite being a known cancer risk.
“I think that’s going to pique some people’s interest, and we’re already starting to get inquiries about preparing and adjusting for that,” Hallak says. “None of our products have Red Dye No. 3, but I think it’ll make people extra sensitive to artificial dyes across the board.”
Health-conscious consumers
Flower, pre-rolls and concentrates might be the center of the cannabis universe, but for medical patients and those who don’t like to smoke for any number of different reasons, edibles are the go-to format for cannabis consumers.
“I’m actually one of those consumers,” says Cameron Clarke, the CEO of Sunderstorm and the Kanha brand. “I don’t like to smoke. I’m very health conscious and fitness oriented, so I use our edibles, and it works really well for me. I think for a lot of medical patients, smoking is a challenge for them too. I think what we’re seeing in the edibles market is a long-term trend toward growth, because a lot of new consumers that are coming into the market at adopting edibles, especially the seniors.”
Federal legalization
The prospect of federal legalization is something every cannabis professional is keeping an eye on, but everybody is preparing for it in their own way. It’s difficult to plan for something knowing it might happen within a couple of years or it may be a decade before major changes happen.
“I have tried really hard to put the blinders on,” says ButACake CEO Matha Figaro. “We honestly don’t know how it’s going to affect our business. But everything in cannabis moves so slowly, so I have to focus on getting products out the door today as opposed to thinking about what might happen when federal legalization comes. If and when it comes, that’s a big undertaking as a small business to think about.”
Dosages
Most states have set potency limits on edibles, with many recreational markets narrowing in on 10 milligrams of THC per serving as the preferred maximum dosage.
Some states, such as Florida, have considered potency caps that extend to flower and concentrates for their impending adult-use legalization. Even in Washington, one of the long-standing adult-use markets, lawmakers have considered introducing a THC limit on extracts.
Shawn Magill, CEO of The CBG Gurus, thinks that’s a terrible mistake, particularly in the edibles sector where many consumers have medical needs, demonstrating “the education and lack of self-control in some politicians and consumers.”
“Education must be integral to every cannabis establishment and marketplace,” he says. “While 100 milligrams [of THC] per serving may be overkill for some patients, for others this is the minimum they need to get though the day — 5 milligrams just isn’t going to cut it, and prescriptions or over-the-counter pills are not a better or truly viable alternative.”
Magill says this is an issue that needs to be discussed on a broader scale.
“Patients should be able to reliably shop within the recreational market for the medicine they need, and not have to be forced to turn to the illicit market,” he says.
Product types
In the earlier days of legal cannabis, companies were infusing every type of edible food product imaginable, but as the industry has matured, gummies have become the overwhelming favorite. According to data from BDSA, the candy category — including gummies — account for 77% of all edibles sales.
“Over the past eight years, I’ve seen some interesting trends in the world of edibles. The options have evolved from products like ‘potcorn’ and infused honey to ice cream, patches, suppositories, hot sauces, beverages and even an infused Keurig coffee cup,” says Suzy Tracy, the corporate marketing and sales manager for Halo Infusions. “It seems with many products that have come and gone, edible consumers tend to gravitate back to the popular choices — gummies, chocolate, baked goods and no-sugar options like tinctures and capsules.”