While companies like West Coast Ventures Corp. (OTC: WCVC) in the US thrive on the popularity of CBD edibles, cannabis candy producers in Canada face stricter regulations
Cannabis edibles is a niche market that companies have begun exploring since the marijuana legalization in Canada and the United States. First products to enter the market were sweets: chocolate, candy, gummy bears, cakes and cookies, but some companies decided to dig into the restaurant niche.
West Coast Ventures Corp. (OTC: WCVC) successfully combined the fast-casual dining and CBD sector and became America’s first CBD restaurant stock. Their Illegal Burger and Illegal Pizza restaurant offer a permanent CBD menu along with their iconic Illegal Brands CBD water. The company uses CBD sachets which allows customers to decide exactly the amount of CBD in their food. The business is very popular and the sales are high: the IB Citiset and Writer Square locations in Denver are on track to exceed $700,000 and $1 million in sales this year, and the Illegal Pizza location in Lauderdale, Florida is on pace to hit $750,000 by the end of the year.
However, despite growing popularity cannabis sweets producers in Canada face a new challenge, as their products attract children, an audience they do not target.
Brightly coloured chewing sweets, infused with cannabis, presented in animal form are among the most popular products on the black market, but Canadians should not expect to find them on store shelves soon.
The regulations on edible cannabis will come into force on 17 October, exactly one year after the federal government legalized cannabis. The new measures are intended to protect children from new products by stating that they should not be perceived as “attractive to young people”, but Health Canada has not yet revealed what would be clearly wrong in this regard.
Companies are wondering about the marketing of these candies inspired by a children’s treat. How can they be presented to the target audience, adults, without the presentation of being too much fun for young people?
THC-infused gelatin bears will not be among the new products that will become legal, but companies continue to try to meet consumer demand without the use of colorless and tasteless products.
New products will be legally available for sale as of mid-December, based on the 60-day notice required by Health Canada.
Easy to consume
According to a recent Deloitte survey, the most popular edible cannabis products among potential consumers are candy (26%), cookies (23%), brownies (22%) and chocolate (16%).
Chewing candy attracts consumption for a variety of reasons. They are more easily transportable and can be hidden in public, says Rishi Malkanis, a specialist in the cannabis market at Deloitte.
“They’re tiny. They are easily eaten. We can do it quite discreetly. It’s easier to bring to an event than brownies or other foods, or even drinks.”
According to Deloitte, the products that will soon be legal represent a market estimated at $2.7 billion per year, including $1.6 billion for edible cannabis.
The situation is similar in the United States. For example, in the first four months of 2019, 17 of the top 20 cannabis products sold in California, Colorado, and Oregon were candy.
The risks to children have been described in a recent study by the Canadian Paediatric Society (CPS) that found that a “significant number of young children” required medical care after ingesting cannabis after legalization.
From September to December 2017, 16 cases of serious events caused by recreational cannabis were reported to CPA.
In July, the Quebec government decided to adopt stricter rules for edible cannabis by prohibiting the sale of “sweets, desserts, including chocolate, and any other product attractive to minors”. The rules were subject to a 45-day public consultation before their entry into force.
According to Deloitte, the stricter rules could cause a $300 million annual drop in the Quebec cannabis market and a $40 million loss for jelly candies alone.
“It will be a significant impact,” says Malkani, who estimates that the market share for chewing candy would have been eight to nine percent.
Health Canada has not specified the colours, flavours or shapes that will be authorized.
he attractiveness of a given product for children will be determined on a case-by-case basis. Several elements can be considered such as shape, colour, flavor, name, packaging and the way it is presented, officials said at a press briefing in June.
“If a gelatin bear attracts a young person, would that be allowed? The answer is no,” said a Health Canada official.
The federal agency has announced that it will issue guidelines describing the factors to be considered, but additional details have not yet been published.