SANTA MONICA, Calif. -- Established brands such as Ocean Spray and Whole Foods Market rubbed elbows with cannabis entrepreneurs in Santa Monica, Calif., on Dec 1., to learn the ins and outs of doing business in the cannabis space at the first Cannabis Forum for Food and Beverage.
Attendees experienced four hours of education on legal cannabis hosted by BevNET, a beverage-oriented media company, and Nosh, which covers the natural, organic, sustainable and healthy food industry. The education sessions and networking opportunities revealed an industry beset by regulatory hurdles yet hopeful for the future.
Click through for everything convenience-store operators need to know about legal cannabis today and what was discussed at the conference …
1. CBD legality
Cannabis laws vary state by state, but most states allow the sale of cannabidiol (CBD) products as long as the active ingredient is derived from hemp. CBDs do not get users “high"; it's the chemical known as tetrahydrocannabinol (THC) that does that.
Hemp is cannabis with almost all of the THC removed. To legally be considered hemp, the plant must have less than 0.3% THC dry weight, according to Cassia Forman, attorney with Vicente Sederberg in Los Angeles.
2. Cannabis legality
The U.S. is likely two years away from allowing cannabis (the product with THC) sales on a federal level, according to Jessica Lukas, vice president of consumer insights for BDS Analytics, Boulder, Colo. But that comes with a caveat.
“We do anticipate a federal legalization in 2021, but we’re still assuming that means a state-by-state right to choose, so this is not a light switch,” Lukas said.
Lukas pointed to dry counties, that is, where alcohol sales are still illegal, in Texas and a few other states as examples of what this change in legal status might look like for cannabis, comparing projected cannabis laws to existing liquor laws.
3. CBD is big
About 15% of the U.S. population has consumed hemp-based products or CBD edibles, according to Lukas. Even those who reject cannabis are open to trying these nonpsychoactive products, she said.
Furthermore, she talked about CBD’s popularity and trends. “Gummy candy is the biggest [sales] driver in the candy category, and frankly the candy category is the biggest driver of edibles,” said Lukas. However, plenty of education is needed before these products reach the general population. “Consumers do not know the difference between THC and CBD,” she said.
4. Business case: Sprig
Los Angeles-based Sprig is one example of a consumer-facing business that has successfully marketed a line of CBD beverages.
Sprig is available for sale in nine states: California, Nevada, Washington, Illinois, Texas, Vermont, New York, Florida and Pennsylvania. Sprig sodas are available in more than 1,000 c-stores.
CEO Michael Lewis said the company started with a line of THC beverages before launching CBD beverages in June 2018. He described the CBD line as “functional beverages” and suggested customers drink them after working out, before going to work or before bed.
5. Don't call it marijuana
“The term marijuana has fallen out of favor,” said attorney Forman. Instead, many in the industry are referring to the plant as cannabis. Forman said marijuana is associated with prohibition and the war on drugs. However, she said there are some outliers, as states such as Colorado still refer to cannabis as marijuana.
6. Alcohol is still more popular
In Aspen, Colo., cannabis stores outsold liquor stores in 2017, said Forman, as an example of a thriving market for cannabis. Last year, she said cannabis stores made $11.3 million in sales, while liquor stores only made $10.5 million.
That's an exception to the rule, however. She qualified the numbers with the fact that most alcohol sales in Aspen occur on the slopes, in bars or in restaurants. To illustrate her point, restaurants and bars in Aspen made $129.7 million in alcohol sales in 2017.
7. Vocabulary word: terpenes
One unfamiliar word heard frequently during the conference was terpenes.
Terpenes are “little tugboats” that direct cannabinoids to the correct receptors in the human body, said Will Kleidon, founder and CEO of Ojai Energetics, which specializes in CBD oils.
Kleidon said that, as with grapes in wine, terpenes vary from season to season. He described them as essential oils that also affect the smell and flavor of the cannabis plant. Terpenes are present in all plants but are of particular interest to cannabis growers looking to differentiate their products.
8. By the numbers
Lukas with BDS Analytics shared a torrent of numbers and statistics with attendees. Here are a few that stood out:
- More than 50% of the population age 21 and up has used cannabis in the past.
- Of those who consume cannabis in some fashion, 72% prefer inhalable products, 23% prefer edibles and 5% prefer topical products such as creams and lotions. Of the customers who prefer to inhale cannabis, 72% prefer flower, or smoking.
- Lukas said BDS predicts concentrates—which include vapes and edibles—will be the main business for cannabis by 2022.
- A full 64% of people in the United States agree that cannabis has medical benefits.
- While 23% of adults 21 and older in legal medical or recreational states have consumed cannabis in the past six months, about 38% would try it again and 39% would not consider it in the future.
- Of those who consume cannabis in the United States, 30% do so for both recreational and health reasons.