Posts tagged weed news
Pay Attention to These 6 Cannabis Industry Trends


Scott McGovern

CONTRIBUTOR

Founder of crypto site Blocklr & Growth Nuts, an organic growth co.

Cannabis industry trends evolve faster than most markets. Not only haven’t regulations been finalized, but methods of consumption, investment and the geography of the market itself are in constant flux.

Though all the noise, these are the top six cannabis industry trends that entrepreneurs should pay attention to.

1. Cannabis industry trends indicate higher sales than ever.

The biggest evolution within the cannabis industry is that sales will be higher this year than they were in 2018, and investors, consumers and entrepreneurs alike should expect to see legal weed sales blossom for the next few years as the market grows annually.

The biggest of all cannabis industry trends for the next few years is the national and global expansion of the legal weed market. Despite a grinding legislative product that has gone much slower than advocates hoped or expected, both New Jersey and New York weed legalization is anticipated this year, along with states in Midwest (particularly Illinois) and other East Coast states. The global recreational cannabis market is projected to reach $31 billion by 2021. The CBD market alone could reach $22 billion by 2022 according to a Brightfield Group report.

The weed consumer demographic is growing ever more diverse. The average cannabis consumer is now middle-aged, with more women and seniors consuming weed in its various forms. This means that the market is growing and demand within the market is shifting to alternative products.

2. Products other than flower are gaining market share.

Like many trends that spread from California eastward, vaping in 2018 outpaced flower as the most popular method of consumption in California. Similarly, people curious to try marijuana but unwilling to smoke it are turning to edibles. Expect one of the most significant cannabis industry trends to be the continued shift away from flower and towards other methods of consumption.

Vapes: Vapes are one of the hottest cannabis products in 2019. In the first quarter of 2018, vape sales grew 69 percent total, according to BDA Analytics. CBD vape sales alone rose 105 percent over the same period.

Edibles: Regardless if we're talking chef-prepared cuisine, the humble gummy or anything in between, edibles of either the CBD and THC variety are also booming in popularity across all legal states. Here are a few statistics to show how much demand for these products increased in 2018:

  • CBD gummy sales grew 925 percent.

  • Chocolate edible sales increased 166 percent.

  • CBD chocolate sales are up 530 percent.

Beverages: Though classified as edibles, consumers and investors are giving infused beverages more attention than ever. The following trends indicate that beverages will become bigger in the next few years:

  • Big investors including Anheiser Bush and Coca Cola have entered into talks to invest in infused beverages.

  • Weed companies are already manufacturing products like hangover proof beerinfused with THC.

  • Beverages containing CBD for medicinal benefits are also increasingly popular, like lattes and smoothies infused with cannabis oil.

3. Massive CBD market growth.

2018 saw the rise of CBD products ranging from tinctures to gummies. In 2019, expect the rapid expansion of the CBD market to be among the most notable cannabis industry trends. With an annual growth rate of over 140 percent, the CBD market could eclipse the adult-use marijuana market by 2022. This is largely due to the passage of the 2018 Farm Bill which legalized hemp farming nationally.

With its new legal status, hemp and the CBD derived from it are now legal and lucrative to produce. Compound that with CBD’s reputed health benefits and the CBD industry is set for impressive growth.

In addition to promoting general well-being, CBD can help with difficult medical conditions according to research.

4. A flood of investment.

One of the cannabis industry trends shaping the entire market is growing investment from all sides. Large non-weed-related corporations are increasingly likely to invest in legal cannabis in the form of distribution deals, product design or investment in producers.

It's not just corporate players who are investing. Individuals looking for a way to cash in on the cannabis boom can simply purchase stocks. With eye-catching growth over the course of 2018 that has continued into 2019, weed stocks are attracting investor and media attention. This is especially true for large Canadian weed producer stocks.

Both plant-touching and non-plant touching weed businesses are listed on Canadian and American stock exchanges. This means more access to capital and bigger operations than ever.

5. Product variety and branding.

Above all, the cannabis industry trends towards a more sophisticated customer base that wants a variety of products with different effects, potency levels and prices. One manifestation is the growing demand for luxury products in both wellness-focused CBD products and a larger-than-ever adult-use market. These include items like luxury skincare products, high-quality edibles, and organic options, all of which is driving an ever sharper focus on branding. Brand ambassador is one of the most in-demand cannabis jobs right now.

The two best-known cannabinoids, CBD and THC, aren’t the only aspects of the plant attracting attention from producers and consumers alike. Terpenes, which are organic compounds that give weed its flavor and odor, are a growing focal point. Wonder why a certain strain tastes like blueberries or pineapple? These scents and tastes come from terpenes.

As the market grows in size and product diversity, people want access to products with a variety of flavors. Terpenes are easier to taste and therefore more important than ever with the rise of concentrates.

6. Legal weed spreads eastward.

The one cannabis industry trend that encompasses all the others is the expanding geography of the legal marijuana industry. Every state that legalizes instantly creates a major new industry. For example, socially conservative Oklahoma, ranked just 28th in population among the 50 states with slightly fewer than four million residents, legalized medical marijuana in 2018. Within a few months the demand for medical marijuana cards swamped state regulators, who have registered more than 3,000 marijuana related businesses.

The likeliest states to legalize in 2019,  including New York, Connecticut, New Jersey, Illinois and Minnesota, are much larger. Most other states at least considering legalizing medical marijuana, if they have not done so already, or expanding existing programs. For weed businesses, this means shifting their attention from the West to the East Coast as opportunities emerge in untapped markets.

When New York legalizes it will be the single largest recreational market in the country. This will translate to big dividends for the businesses who capture even a small part of that market first. Keep in mind, starting a cannabis dispensary can be more profitable in newer markets than in already saturated ones.

Above all, the most significant among all cannabis industry trends are continued growth and change. Prepare for more shifts, and more opportunities, in legal weed.

In a first, L.A. sues unlicensed cannabis dispensary, seeking millions

By JAMES QUEALLY

APR 17, 2019 | 5:10 PM

The city of Los Angeles is seeking millions in civil penalties from an unlicensed South L.A. cannabis dispensary accused of selling marijuana contaminated with pesticides, a move officials said Wednesday is intended to crack down on widespread illegal pot sales.

The dispensary, Kush Club 20, was selling cannabis tainted with paclobutrazol, a fungicide frequently used to make golf turf more dense and verdant, which is classified as a Type II toxic chemical by the U.S. Environmental Protection Agency and is not approved for use on cannabis in California, a lawsuit filed Monday by the Los Angeles city attorney’s office said.

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“Customers patronize illegal shops at their peril, and undermine businesses who play by the rules — and whose product is tested to protect buyers’ health,” City Atty. Mike Feuer said in a statement.

Only 181 dispensaries have temporary city approval to sell marijuana in Los Angeles,according to the Department of Cannabis Regulation. But hundreds of illegal dispensaries have popped up across the city as an attractive option for those looking to buy marijuana while skirting the state’s 15% tax on legal marijuana sales. Regulators, however, have warned that those shops might traffic in unsafe wares or counterfeit versions of popular marijuana brands and cultivators.

“We apparently as a community care a lot about whether our romaine lettuce is contaminated, and we should. We care a lot about whether we can safely eat at Chipotle,” Feuer said at a downtown news conference. “Marijuana buyers should at least exercise that same degree of caution.”

In addition to shutting down the Kush Club 20 dispensary, the lawsuit seeks a civil penalty of $20,000 for each day that illegal activity occurred at the property in the 5500 block of Central Avenue in South L.A. Feuer said the business had been operating for about a year, meaning the city could seek up to $7.5 million. The daily civil penalty has yet to be “tested in court,” Feuer said. The city has used criminal statutes to punish illegal dispensaries in the past because they often result in quicker resolutions.

But some city leaders hope the overwhelming financial burden the suit could bring will deter bad actors from setting up shop without a license.

“We are sharpening our tools and we’re laying the basis to deliver what the voters expect from us ... a legal regulated market with appropriate built-in controls,” City Councilman Marqueece Harris-Dawson said.

Defendants named in the lawsuit include High Spirits Enterprises, LLC; its “organizer,” James Smith; Kush Club 20; Amy Sahadi Diaz; and Michael Lerner, who is described as the CEO of the limited liability corporation tied to the property. None of those named could immediately be reached for comment Wednesday. The suit also marks the first targeting of real-estate brokers and property owners linked to illegal cannabis sales who are alleged to have known that the land was being used for an illegal purpose.

“We’ve alleged the brokers and the business operators and the property owners knowingly omitted the true use of the property from the lease,” Feuer said. “In this case, the lease says that the use is for a church.”

In the last year, the city attorney’s office said it has filed 217 criminal cases involving illegal marijuana dispensaries or delivery services, naming more than 800 defendants. At least 113 illegal storefronts have been closed, officials said.

The decision to seek the civil penalties from Kush Club 20 marks the first attempt to reach into an illegal vendor’s pocket. During a contentious discussion at last week’s City Council meeting, several council members expressed frustration with what they saw as inadequate enforcement of the city’s cannabis regulations.

Asst. City. Atty. David Michaelson said seeking monetary penalties against those charged with operating an illegal dispensary is often “time intensive.” Winning a judgment and the target’s ability to pay the fine is also uncertain, he said. Michaelson said last week that the city had not sought to recoup civil penalties against any of the more than 800 defendants it had brought illegal marijuana cases against in the last year.

Los Angeles Police Department officials said they had also cracked down on illegal dispensaries recently. After the City Council passed an ordinance last month that allows the Department of Water and Power to shut off utilities at unlicensed dispensaries, detectives moved to shut down more than 20 locations in the San Fernando Valley, said LAPD Det. Vito Ceccia of the Gang and Narcotics Enforcement Bureau.

Similar actions are expected in South L.A. later this month, he said at the council meeting.

High Spirits Enterprises was incorporated on April 4, just four days before the city attorney alleges Kush Club 20 began its illegal operation, according to filings with the California Secretary of State. State records show that another limited liability corporation linked to the address, 5527 S. Central, LLC., was formed in December 2016.

The United Cannabis Business Association, which advocates on behalf of legal marijuana business operators and has been vocal in pushing the city attorney’s office to step up enforcement against unlicensed dispensaries, issued a statement Wednesday praising the lawsuit.

“The UCBA and the City Council have been urging the City Attorney about the potential dangers of pesticides in untested products (including Paclobutrazol) and the reckless behavior of landlords who indulge in fraudulent leasing schemes,” executive director Ruben Honig said in a statement.

Honig said that he expects the “lawsuits will deter other illegal enterprises that endanger the public and poison the community.”

Times staff writer Emily Alpert Reyes contributed to this report.