Edibles, beverages and other “cannabis 2.0” products are the future of weed.
The U.S. market is almost split 50-50 by flower and oil sales, and Valens is forecasting that oil’s share will reach 75% or more, said Knight, the extraction company’s executive vice president for corporate development and capital markets.
“I think 2.0 is really the future of cannabis,” he told moderator Jim Kirsch of Alliance Global Partners during a panel discussion.
“I’ve never met a doctor who wants you to smoke cannabis,” Knight said. “[And] it’s more convenient.”
A Snapshot Of Cannabis 2.0
Benzinga has reported on the cannabis companies rolling out 2.0 products since they became legal in Canada.
They include Canopy Growth Corp (NYSE: CGC), which announced Tokyo Smoke Go, Tokyo Smoke Pause and Tweed Bakerstreet chocolates in December, as well as mixed distilled cannabis beverage products including Tweed Houndstooth & Soda, Houseplant Grapefruit and Houseplant Lemon. The company later announced in January that the launch of the beverage products would be delayed.
Tilray Inc’s (NASDAQ: TLRY) announced 2.0 products include the confectionery brand Chowie Wowie, the wellness brand Rmdy and the beverage brand Everie, which was developed by Fluent, High Park’s joint venture with Labatt Breweries of Canada.
Aurora Cannabis Inc (NYSE: ACB) said in December it’s rolling out CBD and THC vape and edible products including gummies, chocolates, baked goods and mints.
Knight: Cannabis Beverages Will Be 'Bigger Than You Think’
Cannabis 2.0 products became legal in Canada in October, and they could “promise some hope” to Canadian cannabis companies from a margin perspective, said Maruf Raza, a partner at the consulting firm MNP.
While Canadian cannabis companies have become multinational in just three of four years, many are still effectively startups, and they’ve suffered from hype and overhype, he said.
“We can’t ignore the fact that many of these companies have large cultivation footprints. Canada is simply not the most competitive place to grow anything,” Raza said.
Cannabis flower posted month-on-month price declines throughout 2019, he said.
“We can’t ignore the fact that all the metrics that were previously posed are now in question because they’re simply not getting the pricing they thought they would.”
In 2019, dried cannabis accounted for 92% of sales in Canada, Valens’ Knight said.
“Now it’s a huge marketplace and there’s a lot of opportunity.”
Cannabis beverages are on the horizon, he said.
While edible weed is known today for how long it takes to kick in and how long the high lasts, new technology allows for onset in 5-15 minutes and a comedown in 45 minutes to 2 hours, Knight said.
“Beer’s sold in six-packs for a reason.”
Tickets to the next Benzinga Cannabis Capital Conference in Detroit, Michigan April 1 are available now.
Cannabis Experts Urge Partnerships, Specialization
The Colorado market shifted quickly from dried flower to advanced formularies, said Jerry Kieran, general partner at Photon Partners.
“There’s so much evolution and technology that’s going to come in this space — you gotta partner.”
For flower sales, the primary competition is the black market, rather than licensed producers, he said.
Better cost control and consistent output is “the bridge” between cannabis companies and consumer packaged goods companies, Kieran said.
“Not just advanced formulary, but low-cost production.”
MNP’s Raza said Canadian companies are roadblocked by the country’s “poor” distribution networks, with a different model in each province.
The vertical integration seen in the cannabis industry is partly a result of government regulation, he said.
“The farmer is the retailer,” Raza said, adding that more specialization is needed in the cannabis industry. “How can you be good at all things?”
Photo courtesy of Aurora Cannabis.
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