The ancillary cannabis business space is attracting many well-established players from other sectors who view this as the time to take a strong position in the cannabis space.
Casa Verde Capital, Snoop Dogg’s venture capital firm, is an example of a firm focused on a portfolio of ancillary cannabis businesses that don’t come in contact with the plant.
Established firms from other sectors are able to adapt their existing processes to fit the cannabis supply chain without having to overcome steep learning curves.
Packaging is one of these sectors. A report by Zion Market Research puts the global cannabis packaging industry at $20 billion by 2025.
In an effort to integrate with the cannabis industry, representatives from the packaging sector put together the Cannabis Packaging Summit, an event that will focus on bridging the gap between big players in the two sectors, with special attention placed on regulation, education and industry best practices. The event will be held Feb. 11-12 in Anaheim, California, adjacent to WestPack, one of the country’s largest yearly packaging events.
Big Packaging Enters The Cannabis Space
Peter Schmitt, the Summit’s co-founder, told Benzinga that up until now, a lack of clarity in the descheduling of CBD products has been holding the “normal packaging companies” from entering the space.
Although no exact figures have been extracted yet, Schmitt — who’s a packaging veteran — estimates that today about 80% of cannabis packaging solutions come from cannabis-specific providers instead of mainstream packaging companies.
“Once CBD is descheduled, hang on to your hat. That ratio will flip quickly,” he told us.
With cannabis continuing its slow march toward legalization, regular providers of food, pharma and medical device packaging solutions are starting to become more comfortable with the industry.
Big names in packaging like Sonoco Products Co (NYSE: SON), Constantia Flexibles, O.Berk, Klöckner Pentaplast and MG America will be participating in the summit.
“What we’re looking to do with the summit is bringing together that expertise, the producers and the packagers, to better understand, develop and partner on safe and compliant packaging of cannabis,” said Steve Everly, the Summit’s brand director, in a conversation with Schmitt.
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Regulation, Compliance And Other Challenges In Cannabis Packaging
“This is not a climate anymore of baggies and jars. I’m not saying that that’s completely prohibited at this point. But the barrier to entry is now going to become so much more important when the [federal government] takes a stronger stance on what that regulatory environment is going to look like,” Everly said.
For Schmitt, the packaging industry has already come up with solutions to most of the challenges that the cannabis industry faces, whether it’s anti-counterfeiting, child protectionor intelligent packaging.
An Opportunity Or Threat For Cannabis Packaging Companies?
Big packaging firms taking over the cannabis market could become very disruptive for smaller cannabis-specific companies that might not be able to compete with the technology and cost-effective solutions of the larger players.
Yet Everly and Schmitt said that big packaging companies entering the industry will not necessarily result in smaller players being left out. While larger firms are able to offer big volumes at high speeds, smaller companies can adapt more quickly and develop personalized solutions for the specific needs of artisanal operators.
“More than anything, we see larger packaging companies entering the cannabis space as an opportunity for us to partner with companies like that,” said James Eichner, CSO and co-founder of Sana Packaging.
Sana is a provider of sustainable packaging solutions for cannabis businesses that uses hemp-bioplastic and reclaimed plastics to manufacture environmentally responsible packaging products.
Eichner, who’ll be participating in the Summit, said big packaging companies are merely testing the waters, but he doesn’t expect them to become fully involved in the cannabis industry until federal legalization occurs.
Publicly traded global conglomerates will err on the side of caution and avoid the potential liability of dealing with a criminalized substance, he said.
But, when they do become involved, Eichner expects it’ll be to the favor of small cannabis-specific packagers.
“These larger packaging manufacturers, ultimately what they want to do is manufacture packaging. I don’t know how interested they will be in creating a brand that’s cannabis-specific and marketed to the cannabis industry.”
Bigger packaging companies will partner up with smaller cannabis-specific companies, in Eichner’s view.
„I think we’ll see a lot of larger packaging companies acquiring cannabis packaging companies or working with them directly to distribute their products.”
Hemp Bioplastic: When Cannabis Becomes The Packaging
Hemp has great potential to become a commodity in the packaging industry — not only for cannabis products, but for every possible kind of packaged goods.
Yet the cannabis industry is becoming the ideal testing field for this innovative packaging material.
“You really have two kinds of plastics: synthetic and organic,” said the Cannabis Packaging Summit’s Schmitt, who often explains to people that plastics can also come from natural, plant-based, non-synthetic sources.
Bioplastics are materials that can be used in the production of plastic without alteration to the equipment and infrastructure used to produce petroleum-based polymers. They offer the same benefits as regular plastics in terms of usability, but are biodegradable and environmentally friendly.
The 2018 Farm Bill opened the field for hemp to become a leading agricultural commodity, and hemp is poised to take a major role in the development of biodegradable bioplastics.
Some companies are even developing hemp bioplastics from the byproduct of hemp-CBD operations. It only makes sense for cannabis companies to want to use its byproduct in the development of packaging solutions for their own merchandise.
For Sana Packaging’s Eichner, making cannabis packaging from its byproduct is the ultimate goal, but for now, the hemp industry does not have a developed infrastructure to provide the consistency needed in the production of plastics.
“The hemp industry is definitely growing and becoming a lot larger year by year. But in the grand scheme of things, it’s still a really small industry with very limited infrastructure,” he said.
Everly and Schmitt both agree that sustainable plastic alternatives have a great market potential, and said consumer behavior towards sustainable practices is shaping these tendencies.
“There is a new buyer that has agreed to accept a higher level of cost for what that packaging actually means to the environment,” Everly said.
This is especially true in the cannabis market, where consumers tend to gravitate toward the use of natural products that have a low impact on the environment.
Eichner said the cannabis industry is two to three times more willing to pay for sustainable packaging materials than traditional industries.
For Schmitt, hemp packaging has great potential for its sustainable, digestible properties.
Every challenge requires specific solutions, and in some cases, digestible products can become a hazard, he said. Some of these cases involve child safety and situations in which the contained product should not be exposed to the environment.
Photo by Alexander Isreb from Pexels.
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