Tripp Keber's company, Dixie Brands Inc., is considered a pioneer in regard to marijuana or THC-infused products, which includes edibles, topicals, concentrates and sublinguals. The marijuana-infused edibles market is booming, and has staying power, according to industry thought leaders such as Keber, who is on the board of the National Cannabis Industry Association; and Denver-based Mountain Medicine's Jamie Lewis, who also serves on the board.
Are pot-infused edibles ready for mainstream manufacturing? Not so fast — marijuana is still illegal at the federal level. There isn't a federal food regulator overseeing these edibles. What's more, there are safety issues in regard to dosages, as well as potentially poorly produced items due to the lack of oversight. Given the risks, and there are many, are there opportunities for ingredient manufacturers to co-brand with marijuana-infused edibles companies?
Stick to the facts
In six years, Denver-based Dixie Brands has gone from operating from a kitchen to operating from a 35,000-square-foot food manufacturing facility. And last year, Mountain Medicine became the first cannabis company to attract a mainstream ingredient manufacturer, Highland Bees Inc. of Longmont, Colorado, to co-brand a line of products including honey sticks, sesame honey bites, honey fruit leathers (similar to fruit roll-ups), and a coffee drink.
The numbers tell the story when it comes to the market potential. According to data recently released by the Colorado Department of Revenue, the state legally sold nearly $1 billion worth of medical and recreational marijuana last year.
"Although the final tally is not in, I am going to suggest that 52% to 55% was comprised of the sales of infused products," Keber, CEO, Dixie Brands, told Food Dive.
"It (marijuana) is illegal on a federal level so I am not quite sure we are ready to talk about how mainstream manufacturing is going to work, unless it is state by state," Kara Nielsen, culinary director, Sterling-Rice Group, told Food Dive. She points to challenges, such as with dosages and making sure the products stay out of the reach of children.
Food safety is paramount, Nielsen says, and yet the lack of federal oversight, opens the door for many issues.
"You could be making bad food that could get people sick, just from the food part and not even having anything to do with the active ingredients," Nielsen says. "Are they working with food scientists? Are they using standards that are recognized by the food industry?"
Mainstream ingredient manufacturer jumps in
Lewis, Mountain Medicine's owner-operator, is a Le Cordon Blue Culinary Arts program trained chef, and applies an artisan and culinary touch to her company's line of marijuana-infused edibles. She also sources ingredients locally.
"I have had many conversations with many companies across the state and Tim Brod (Highland Bees) was the only one that was willing to go out on a limb and trust that this could be good for his company," Lewis told Food Dive. "He has the belief that this is an industry that will emerge; he is looking at the long-term picture."
Highland Bees consists of a couple hundred bee hives in and near Boulder County, Colorado. The honey is raw, unheated and creamed to prevent further crystallization.
Due to the fact that Brod and Lewis are not manufacturing the infused edibles and beverages together on site, Brod hasn't had to do anything different in regard to manufacturing, and didn't have legal hurdles to jump through. He notes Lewis has to meet regulations in regard to running a commercial kitchen, as well as follow cannabis industry regulations.
Where are the opportunities?
Nationally, legal sales of marijuana grew to $5.4 billion in 2015, up from $4.6 billion in 2014, thanks to the expansion of adult use market sales, according to the executive summary of The State of Legal Marijuana Markets, 4th Edition. The full report by ArcView Group and New Frontier will be published later this month. The adult use market grew from $351 million in 2014 to $998 million in 2015, an increase of 184%. Among innovative product developments to watch, the report names edibles among its top five opportunities.
Lewis says when it comes to edible products, the industry is at the beginning stages in regards to how the products are understood and manufactured. She believes marijuana-infused product manufacturers will mirror any other food manufacturing company. "It will be large or small manufacturing facilities that will be producing a lot of what we see on the shelves now at Whole Foods, except it will be infused with cannabis."
Keber, whose company produces four marijuana-infused product lines for human consumption and one wellness product line for canines, says that in 2014, marijuana went mainstream. In his experience, in the beginning, he couldn't get anyone to sell him flour or sugar because people were concerned how the federal government was going to react. Today, his ingredient vendors are dramatically different from those serving the company in the past.
"In any given month, we manage more than 100 active relationships with vendors," Keber says.
This year, Dixie Brands plans to launch an oral dissolvable film product, similar to Listerine strips. Keber says there is a trend in consumer adoption of brands in the marijuana-infused marketplace, which creates customer loyalty and confidence.