- Edlong will form a joint venture with Radient Technologies to create and market cannabidiol flavor systems for food, beverage and pet food. The flavor and ingredient maker plans to combine its expertise with the Canadian company's background in extracting, purifying and manufacturing CBD ingredients.
- Edlong, one of the only global flavor companies specializing in dairy, is based in the U.S. but has distribution partners in Canada and Asia. The company also works with the dairy-free, vegan, plant-based, organic, non-GMO and allergen-free markets.
- Radient, headquartered in Edmonton, Alberta, said its proprietary extraction and downstream processing platform allows for higher quality and consistency levels than other methods. Its scientific team develops cannabinoid ingredients meeting manufacturing challenges such as standardizing strength and potency and improving the taste and shelf life of beverages and edibles.
As the market for the trendy substance grows, more ingredient companies are working on ways to produce cannabis. Edlong President and CEO Laurette Rondenet said in the release CBD is a "dynamic category that is clearly poised for growth," so it makes sense for the flavors and ingredients firm to partner with a company that extracts, purifies and manufactures CBD ingredients.
The segment's revenue potential is significant. Spending on all cannabinoids, including marijuana and its psychoactive THC derivative, is projected to grow to $4.1 billion by 2022 from $1.5 billion last year, according to a report from BDS Analytics. The potential audience is also promising. A 2018 study from A.T. Kearney found 40% of U.S. consumers said they would be willing to try a cannabis edible.
The timing for this joint venture is good since Canada is allowing retail sale of some CBD-infused products in December. However, regulatory complexities remain on this side of the border because the U.S. Food and Drug Administration hasn't issued rules for use of CBD in foods and beverages — despite congressional pressure to do so. Some state laws allow CBD-infused products, so some consumers are already trying these items without FDA action.
Given the geographic reach of Edlong and Radient, it's likely the new joint venture will focus on marketing ingredients and infused products in countries where health and safety regulations allow them. While no specifics were shared about initial products and timelines, it's possible the first ones to emerge from this partnership could involve dairy since that's a prime area for Edlong's flavors and ingredients business. Other efforts could be in other beverage categories and perhaps CBD-infused pet products.
Edlong is not alone in this pursuit. Competitors are positioning themselves to seize market share in the CBD ingredients arena. Oregon-based Socati has introduced two CBD ingredients and plans to customize hemp-derived ingredients for the CPG market. And China-based Layn Corp. recently expanded into CBD with a $60 million investment, including a U.S. factory to process the ingredient.
CBD products from similar joint ventures are poised for market introduction in Canada. Truss Beverage Co., a joint venture between Molson Coors Canada and cannabis producer Hexo Corp., is partnering with Flow Glow Beverages to distribute CBD-infused spring water in that country in December. AB InBev and Canadian cannabis company Tilray plan to launch non-alcoholic CBD-infused beverages in Canada by the end of the year under the Fluent Beverage Co. brand. Constellation Brands also expanded its investment in Canopy Growth to 38% last year, spending about $4 billion on the world's largest publicly traded cannabis company.
Although some partnerships are already formed, there will likely be more demand for CBD ingredients as more companies explore launching products. Edlong could be primed to work with more companies in the future if the flavor maker can beat out its competition and launch high-quality CBD ingredients.