Until recently, mainstream consumer perception of marijuana was largely framed by pop culture references and stigma surrounding drug use. But now that nine U.S. states and the District of Columbia have legalized recreational use of the substance — and 12 more states are considering “going green” this year — this sentiment is evolving.
Rather than view marijuana as just a source of THC — the active ingredient that causes a psychoactive high — a growing number of shoppers are seeking out cannabis-based food products for CBD, a compound that’s been found to ease headaches, anxiety and joint pain.
“There’s a lot of positive public perception and consumers [are gaining an] understanding [of] what the power of cannabis is in helping people live better lives,” Shehzad Hoosein, vice president of Cannabistry Labs, said during a session at IFT18 in Chicago.
Hoosein explained there are about 35,000 businesses legally operating in the marijuana-based products space today, and the segment is expected to nearly double in size five years from now. In just the U.S. edibles market, sales skyrocketed to more than $180 million in 2016, according to Arcview Market Research reported by Forbes — a trend many industry players believe will make major waves in food and beverage.
“We think cannabinoids are going to be a new category of functional ingredients, just like probiotics, omega-3s or flavonoids,” Justin Singer, CEO of cannabinoid supplier Stillwater Brands, told Food Dive. “I believe that the wellness side of cannabinoids is far larger than the intoxication side.”
But food and drink made with cannabinoids still have a host of obstacles to overcome before breaking into the mainstream, industry experts agree.
Regulatory red tape
Aside from consumers’ negative preconceptions, regulations are the steepest hurdle for the emerging category, Hoosein said.
His worry is that the cannabis industry’s poor food safety track record and its history of falsely marketing edibles and supplements as miracle cures could draw unwanted attention — and backlash — from the Food and Drug Administration.
Last year, the FDA cracked down on four companies selling marijuana-based supplements that described their products as cancer cures, one of the most problematic — and widespread — unproven claims in the cannabis space.
“Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors,” agency head Scott Gottlieb said in a news release last fall. “We don’t let companies market products that deliberately prey on sick people with baseless claims that their substances can shrink or cure cancer.”
Because of cases like this, cannabis-based food and beverage manufacturers must be incredibly discerning in how they pitch their products' potential health benefits, or risk being viewed as snake oil salesman by regulators and consumers.
"It’s only going to take one instance of something going wrong before regulators come in and clamp down, so we need to be responsible and make sure these foods are safe,” Hoosein said.
State regulatory powers have already made it challenging for edible manufacturers to afford the licensing fees and taxes that come with commercialization, an investment that can total a few million dollars before products can be sold — and one that makes it incredibly difficult for small upstarts to survive.
Safety standards also vary wildly between the states where edibles are legal, Sanford Wolgel, a cannabis science and regulatory expert, said during a conference session.
“Both Illinois and Colorado consider a manufacturing operation or processor of edible cannabis-infused products to be a foodservice establishment — a restaurant — not a food processor. That’s a big deal,” he said.
“It’s only going to take one instance of something going wrong before regulators come in and clamp down, so we need to be responsible and make sure these foods are safe."
Vice president, Cannabistry Labs
Smoke Wallin, president of California-based cannabis manufacturer Vertical, told Food Dive that he and his team have to navigate several different regulatory standards across the states it operates in — California and Arizona, with strategic partnerships in Colorado, Oregon and Michigan. Wallin said it can be challenging, but the environment is reflective of varying liquor laws that alcoholic beverage manufacturers need to track and adhere to from state to state.
"We have to change our packaging as we go to each state to comply to those state's rules," Wallin said. "Testing requirements in California are among the most rigorous. ...Once a food or beverage is finished in its final packaging, then a testing company has to go on site, pick random samples of that batch, take them offsite, [perform] the testing, and then come back to us if it passes the test and we're allowed to sell it at retail."
Wallin said this process is onerous, but his company supports it because if the edibles industry is going to become mainstream, high standards will be needed to establish legitimacy.
Still, Wolgel argues that regulations being developed for this segment are being created by individuals who “really don’t understand the food industry,” which can cause inefficiencies as well as gaps in safety testing.
“Despite the intention of the legislative bodies and people involved in this industry ... the laws and regulations that we have in this industry fall way short of what we would consider best practices,” he said.
Susan Audino, a chemical and biological laboratories consultant, echoed this sentiment at an IFT18 conference session, explaining that her home state of Arizona does not require finished product testing for cannabis-based foods, which is common across states that allow the sale of marijuana-based products.
“Edibles… are not subject to the same requirements and regulations as other food, pet food and animal feed in our country,” Audino said. “I have a 30-acre alpaca farm with 45 head. My alpacas have more security and safety in the food that they eat than my neighbors down the street who are using cannabis.”
“Despite the intention of the legislative bodies and people involved in this industry… the laws and regulations that we have in this industry fall way short of what we would consider best practices."
Cannabis science and regulatory expert
In order to ensure the long-term success of this budding segment, edible manufacturers will have to be vigilant in their safety operations, branding messages and consumer education, Hoosein argued.
These preventative measures, Wolgel said, also include preparing for future FDA regulations by developing airtight production practices and product standards.
“Really smart, forward-thinking companies are going to say we need to start thinking now about best practices and gold standards such as FDA regulations,” he said.
Solving the consumer's dilemma
But playing inside regulatory lines and developing safe products isn’t enough to guarantee the mainstream success of CPG edibles, panelists agreed. Consumers also need to feel in control of their marijuana experience, and to know that a product’s effects will be consistent time and time again, Singer said.
Singer also stressed that manufacturers need to develop products and marketing that will appeal to shoppers who have never interacted with marijuana before.
“It's really important to put these ingredients into form factors that don't require people to self-identify as a drug user. You can't get somebody who's thought of marijuana as a drug their entire life and has identified themselves as not a drug user to smoke a joint,” he said. “If you put it into a form factor like tea, where they're already drinking it for functional reasons, that doesn't make them feel like a drug user [to] try it. And suddenly that gets them over that mental hump and then it just becomes about, 'Does this help me or not?’ ”
At present, Hoosein feels that the edibles market isn’t hitting these targets.
“For us in food, we’ve mostly been concerned with taste, texture, aroma, are my customers being satiated. ...Now we’ve got to start thinking about efficacy. How are they feeling after a half hour, forty-five minutes… Is it meeting a certain biochemistry, is it meeting a certain profile on top of the taste?” he asked the audience at an IFT18 panel.
Both Singer and Hoosein agreed that consistency is one of the biggest consumer complaints in the marketplace, as well as demand for faster-acting marijuana effects.
“With edibles specifically, it can take 45 minutes to an hour for an edible to kick in. Nobody wants to wait that long,” Hoosein said.
Companies like Singer’s Stillwater Brands are working to solve this problem by developing micro-doses of both THC and CBD in their cannabis-based products. Stillwater, for example, delivers 2.5 milligrams of cannabinoids in its products, compared to an industry standard dose of 10 milligrams, which can intimidate first-time edible consumers.
"For us in food we’ve mostly been concerned with taste, texture, aroma, are my customers being satiated. …Now we’ve got to start thinking about efficacy."
Vice president, Cannabistry Labs
The delivery method of these micro-doses is also key, Singer said. His brand’s water soluble technology allows consumers to feel the effects of their edible at three different points of digestion: under the tongue, through the small intestine and through the liver, meaning consumers can experience the cannabinoid's impact as soon as 15 minutes into drinking a Stillwater beverage. This is a marked departure from traditional edibles, which are fat soluble and only take effect once the ingredient has reached the consumer’s liver.
The promise of this precision is drawing both experienced users and newcomers seeking natural wellness solutions to the segment.
“People don’t want to smoke things anymore. Combustion is dirty and smelly. It’s also imprecise — you don’t really know when you inhale a substance how much of it is actually absorbing into your lungs,” Singer said at the panel. “The beauty of an edible is, if done correctly, it delivers a precise dose. No more, no less than what [is advertised] on the container.”
Hoosein said that the companies that will dominate this space will begin solving for future consumer demands now, and develop even more targeted uses for cannabinoids in food.
“Can we imagine ourselves 10 to 15 years out, and know what we think the consumer is going to want and can we figure out how to make that?” he asked. “How do we get to that point of transformation? We’ll be able to control on-set effects, maybe even [so consumers] can turn it off and turn it on again, we’ll have optimal dosing that’s very precise and targeted efficacy… that can address joint pain or nausea.”
Hoosein said that in order for this nascent industry to get from point A to point B, it will have to elevate the existing talent pool in this space and partner with industries such as pharmaceuticals to create meaningful innovations.
“My theory is that the solutions... are out there and that they will come from different industries," he said. "The technology and the science exists, but if we can bring it together from different industries, we can create something new. With the cannabis industry, there is no paradigm to stick to. Everything can be created from scratch."