Edibles feast: Companies ready to grab a big piece of California’s recreational marijuana market
Adding cannabis to everything from iced coffee to breath mints, local startups are jockeying for a bite of Californias growing marijuana edibles market as the state gears up to allow recreational pot sales.
The industry that barely existed 10 years ago apart from a few bakers making pot brownies in their home kitchens now shows no sign of slowing down.
Theres a brand boom going on right now, particularly in preparation for adult use legalization here, said Troy Dayton, CEO of The Arcview Group, a research and investment services firm focusing on marijuana businesses. Not all of them are going to do well, but theres just so many different types of edibles hitting different market segments.
ArcviewMarket Research estimates Californiacustomers munched on about $180 million worth of edibles last year comprising 10 percent of the states overall marijuana sales. There appear to be dozens of medical marijuana companies in the state seekingto bring a gourmet flair to cannabis-infusedtreats that just a few years ago were merely edible.And as early asnext year, those companies will be able to expand sales to anyone over 21.
The $1.8 billion Californians spent last year in legal marijuana sales is expected to grow more than 25 percent by 2021, according to an Arcview report. And trends in other states suggest that the edibles market will continue to grow asCalifornias recreational marijuana sales start.In Colorado, for example, sales of edibles more than tripled from $17 million in the first quarter of 2014 when the state first allowed recreational marijuana use to $53 millionin the third quarter of 2016.
As it grows, Californias edibles market is diversifying, with companiesadding healthy, organic, vegan and gluten-free options to the menu, and making low-dose edibles for new patients andpeople who want to medicate while at work or at home with their kids. But as California finalizes its marijuana regulations, ediblesstartups will faceadded food safety hurdles that their peers in other cannabis industries, and in the general foods market, dont have to navigate.
When 27-year-old Stephany Gocobachi a long-time foodie visited her first medical marijuana dispensary on her 18th birthday, she was disappointed.There were no ediblesthat tasted good, or thatwere clearly labeled with their content of THC the chemical compound that gives marijuana its medicinal and mind-altering effects.
I had bought edibles that were moldy, that were stale, that had pet hair in them,Gocobachi said.
Nine years later,Gocobachi runs Flour Child Collective, a San Francisco-based startup that sells organic, cannabis-infused granola and seasonal jam with flavors like blood orange and apricot-rose. She wanted to make products usingfresh ingredients that would keep on the shelf of a dispensary while also providing a healthier alternative to pot brownies.
Now Gocobachi and her co-founder are working on expanding their 400-square-foot kitchen.But theyre postponing leasing a new space because San Franciscos marijuana regulations are still in flux and its unclear where the city will let them set up shop.
Thats the type of uncertainty everyone in the marijuana industry faces as city and state officials figure out how to regulate both the medical and recreational marijuana industry. For now, Californias edibles companies only sell to patients with a doctors recommendation. But the market is expected to balloon further when regulators set up the states recreational use framework which could be as early as next year. And edibles makers expect to face extrascrutiny over how they prepare their products so theyre safe to eat, and package them so they arent appealing to children.
VCC Brands represents an extreme example of the risks associated with the industry police raided the company last year, according to CEO and founder Kenny Morrison.He said the companywasnt doing anything illegal, but he decided to pack up and relocate the manufacturing operation that makes 100 cannabis-infused items, includingcookies, tea bags, lemonadeand hard candies, from Venice Beach to Oakland.
Christopher Schroeder, who launched Somatik in Oakland in February, still isnt sure if it will be legal to sell hiscannabis-infused cold brew coffee in its current form next year. State regulators have proposed rules that would ban the sale of edible products that contain more than 10 easily separated 10 milligramdoses of THC 100 milligrams ...
