Edibles:

The edibles market is seeing rapid growth throughout the country, and nowhere is this growth better demonstrated than in California. California’s edibles market is growing fast and, with recreational legalization on the horizon, it is set to explode. This rapid growth will force companies throughout the supply chain, from dispensaries to cultivators, to adjust what they do in order to adapt to market changes and remain successful.

To give a sense of how fast the state’s edibles market is growing, consider that the retail edibles category is currently about 26 percent of the overall flower retail category. However, by 2019, that percentage will rise to almost 75 percent. That’s a tremendous increase in the amount of cannabis that will be used as input into edibles manufacturing.

To capture this increased market, cultivators and processors will need to understand the changing dynamics among consumers and, subsequently, the cannabis supply chain. First, edibles consumers are a picky bunch. They have high expectations for their edibles, and they’re willing to pay to get it. Based on a recent survey conducted by cannabis market research firm Brightfield Group, more than a third of California edibles consumers are willing to pay significantly more for their preferred THC content, CBD content and organic products.

This trend in consumer preference will only grow as more consumers enter the market and expect the same choice and customization they have in other consumer goods.

This is an important patient group for dispensaries and manufacturers, too. Nearly half of patients medicate on a daily basis, and it is the frequent users that drive the majority of sales volume and, thus, revenue. Also, California edibles patients are wealthier than others. Nearly one in four has a household income of over $100,000. So, this wealthier, discerning consumer base will challenge the market to work harder to cater to their demands.

Manufacturers already are rising to this challenge. In each state and each product category, some manufactured brands are breaking away from the pack, and becoming far and away market leaders as the market consolidates. These companies are professionally run and, in many ways, organized just like any other fast-moving consumer goods (FMCG) company with teams in charge of sales, marketing, R&D, a comprehensive network of distributors, efficient factories and a set group of suppliers. California is no exception with companies like Cheeba Chews, the highest-selling edibles brand in the state, leading the way. As these manufacturers grow, so too will their bargaining power with suppliers and what they demand in the product they purchase.

So, now is the time for companies to act to capture this market. The industry is still fragmented, and regulations continue to slow consolidation, but the market is maturing quickly. The companies that align their businesses with these changing dynamics will be the ones that are still successful four years from now.