It’s cannabis legalization, otherwise known as ‘Cannabis 2.0’. Exactly one year after the legal adult-use marijuana marketplace opened for business, Canada legalized the production and sale of edibles, extracts and topicals effective October 17.
Canadian cannabis companies have been busy preparing for this moment. While Health Canada revealed the final regulations for these types of products in June, products should be available in stores and online by mid-December.
As part of the regulatory requirements, licensed producers were required to submit proposed products for approval 60 days before releasing them into the marketplace. Health Canada has a strict 10-mg THC limit on cannabis solids and beverages, and a 10-mg THC limit on ingested extracts (like capsules) with a maximum of 1,000 mg of THC per package. Topicals and inhaled extracts and concentrates have a 1,000 mg THC limit per package.
Meni Morim, CEO of Namaste Technologies, a global online cannabis retailer, said that regulations related to edibles and topicals would focus on stringent quality testing and dosage. “Because concentrates and edibles will be a brand new form of cannabis to millions of Canadians, both regulators and retailers will need to dial in on the explanations and conversations around ingesting and dosing,” Morim told Cannabis Business Times. Namaste Technologies has been busy preparing for the launch of the edible and topical product market.
“We’re acquiring all necessary licensing and certification needed to conduct compliant, quality cannabis extraction,” Morim said. “We’ve also started bolstering our inventory of biomass and raw oils, such as distillates and winterized CO2 oils, to make a range of 2.0 products. We’re doing everything we can to make sure we have a full line of top-quality products and accessories to offer our patients by mid-December.”
Others see the legalization and regulation of these additional products as a way to help the legal marketplace compete with the black market. Daniel Stern, CEO of CannMart, a licensed producer, said in an interview with Cannabis Business Times that there are three ways to beat Canada’s thriving illicit cannabis industry, and it’s through product quality, product pricing, and product availability.
In the year since cannabis (the flower, anyway) has been deemed legal, prices have fluctuated. Wholesale pricing has dropped as more licensed producers enter the marketplace, and that means the legal stuff is aligning — at least price-wise — with black market price points. Many anticipate that this is a trend that will most likely continue as more and more products become available.
“The provinces have done a fairly decent job of growing retail availability,” Stern said. “As the provinces continue to open new stores, we’ll see greater availability, which will allow us to compete with the illicit market even more.”
CannMart prepared for the regulatory changes and increased sales, marketing, and production operations staffing before Cannabis 2.0 took effect. The company is focusing on getting another site, CannMart Labs, up and running to increase the company’s overall productivity.
“Since extracts are processed, their quality will be equal or greater to their illicit market counterparts,” Stern said. “In the illicit market, a lot of companies are using fillers like glycerin, MCT oil, or vitamin E acetate, while licensed producers are held to a standard and only have 100-percent distillate, which allows us to put higher quality products right out of the gate.”
The lower price point doesn’t mean that all is rosy in the land of cannabis, however. There are growing pains while Canada continues to roll out legalization, and some claim the overhead costs are prohibitive. Despite that, long term plans are in the works. “Our long-term plans for 2.0 will be based heavily on how the market evolves and performs in general after legalization,” Morim says. “Our goal is to provide top quality, cutting-edge products to our patients, so we plan on listening very closely to what cannabis patients want.”
As Cannabis 2.0 continues into 2020, companies are paying close attention to what consumers want and strategizing to respond quickly to market demand. Industry players are keying up to launch products rapidly, and their strategy includes watching sales trends, consumer demands, branding, and partnership opportunities.