Organic and Fair Trade Standards for Cannabis?

Columns - Guest Column

June 5, 2018

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In May, the Cannabis Certification Council (CCC) launched the “What’s in My Weed?” (WIMW) campaign, which pushes people to draw parallels between how they consume food and how they consume cannabis. “Your strawberries are organic,” it says, “what about your weed?”

To date, cannabis consumers don’t enjoy the ubiquitous availability of organic products in dispensaries like they do when they go to the grocery store or even the liquor store. Part of the problem is the lack of a clearly identifiable label that both consumers and the industry can trust. Another part is that some state regulatory environments fail to adequately protect consumers from noxious pesticides and don’t recognize the value that a state-supported organic program can provide.

Even in the face of these daunting challenges, the biggest missing element in this equation is simple: consumer demand. Studying the evolution of the Organic and Fair Trade movements in the food and beverage industries reveals that consumer education created consumer demand, which in turn has led to explosive year-over-year growth for more than a decade.

This demand has led to an incredible premium for organic produce, as noted by the Giannini Foundation of Agricultural Economics. It found that “between 2007-2012, the average price for a pound of conventional strawberries was $2.22, and the average price for a pound of organic strawberries was $3.22. This means that the average premium was $1 per pound, or 45 percent over the retail price of conventional strawberries.

Berries are hardly an outlier. According to Nielsen research, organic eggs enjoy an average of 122-percent premium pricing over non-organic eggs. An array of other products see benefits ranging from 20 percent to 90 percent.

The market case for Fair Trade production is not quite as strong, though research consistently shows consumers will pay a premium for Fair Trade Certified goods, such as coffee and chocolate.

The WIMW campaign is designed to speak to consumers who are paying a nearly 50-percent premium for organic goods. Its website features a clearinghouse of information on certifications and process validations that are currently offered in the cannabis industry. Perhaps most importantly, the website also features tools that allow consumers to contact local growers and product manufacturers and voice their demand for clean cannabis.

We already are seeing executives from the beverage, pharmaceutical, food and biotech industries join the Green Rush at the helm of plant-touching companies. What we haven’t seen is the natural development of nonprofit organizations serving to set and enforce standards like we have in those other industries. The WIMW campaign is a central location created for consumers to find and demand clean cannabis. These executives coming in from other industries, as well as other cannabis business executives, will be under increasing pressure to support traditional structures that allow for independent, third-party certification of products, so consumers can be assured they are receiving what they intend to buy.

Cannabis Business Times photo illustration

What Standards Will Mean for Cannabis

With Canada still to come online and the United States still a (growing) series of cannabis-regulation islands, there are still no uniform standards for cultivation, sourcing, worker safety and treatment, and much more. The CCC has been a voice for Organic and Fair Trade production, working to educate the industry about the benefits of each practice and the consumer about the need to demand it. The sooner universally recognized standards for clean-cannabis cultivation are in place, the sooner producers will begin to realize the market benefits that come with those standards.

One of the drawbacks of organic cannabis cultivation is the startup costs. But those upfront expenses incurred by switching to organic production can be mitigated by implementing the process in stages (one room or variety at a time) and can be offset with premium pricing to help fuel category growth. Scale producers, like coffee manufacturers or produce growers, typically offer both conventional and organic products, allowing for dual market share. There is no reason to believe cannabis will be any different. Even with the various state market structures, every retail environment eventually will be expected to have Organic and Fair Trade products available. Standards will help drive stability in clean cannabis production, as well as better product and brand differentiation in the industry, which will also serve to mature and mainstream the cannabis market.

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Why Organic and Fair Trade?

Both Organic and Fair Trade standards have come to rise as the result of deep-rooted movements.

These standards will be among the first to filter into cannabis and have a direct impact on the market value of products certified against them. Certainly many groups seeking to drive adoption of various best practices exist. However, an element that has been critical to both the Organic and Fair Trade movements has been missing from prior efforts: consumer education.

The good news is that large swaths of consumers already insist on organic production, are determined to consume ethically and—critical to businesses—are largely willing to pay a premium for the production of such products.

The CCC is committed to developing and implementing those standards and to educating the industry and the public about the need for them. It is working with partners inside and outside the industry to create two certification labels—“Organically Grown” and “Ethically Produced”—that consumers can easily understand and that will create more immediate value behind the products that feature these labels.

If cannabis is truly to be treated as a medicine, as safe for recreational use and as generally positive for society—robust, universally recognized standards must come in to place. Organic and Fair Trade are a natural fit and should become standards early in the industry’s rapid development because of the clear and defined value they create in other markets.

Ben Gelt is a founding board member with the Cannabis Certification Council (formerly the Organic Cannabis Association), and offers strategic consulting on business development, executive advising, investor relations and public affairs.