“Canada’s Cannabis Edibles Market: Opportunities and Challenges for U.S. Food Corporations”
While major food corporations have been slow to enter the market, the pace may quicken now that Canada is advancing in retail commerce and has established timelines. Nonetheless, Bruce Linton, co-CEO of Canopy Growth, mentioned to Food Dive in February that they had not yet heard from any significant U.S. food manufacturers interested in collaboration, particularly in areas like chewables and chocolates, where Canopy Growth is working on infused products. According to a Deloitte report cited by CBC earlier this month, Canada stands to gain substantially financially, with its cannabis market projected to be worth $2.7 billion annually. The report indicates that edibles could account for over half of that total, which is in addition to the existing $6 billion Canadian market for recreational and medical cannabis.
Manufacturers are likely completing their applications for the products they wish to launch and ramping up production. Some items are already available, such as Sproutly’s water-soluble cannabis extract, while others, potentially including Coca-Cola beverages, might still be in development. Several alcoholic beverage companies are also entering this market. Constellation Brands has invested $4 billion in Canopy Growth, Diageo has engaged in discussions with three Canadian cannabis producers regarding potential partnerships, and Molson Coors Canada has formed a joint venture with HEXO, a Canadian medical cannabis firm. Since many of these ventures will involve non-alcoholic infused beverages, they could reach retail locations in Canada by the end of this year.
The Associated Press reported that Canadian cannabis license holders must notify health officials 60 days in advance of their intent to sell infused products, meaning the earliest they can legally appear on shelves is December 17. This timeline provides Health Canada a limited window to assess products and ensure they comply with new guidelines, including child-proof packaging.
Canada is significantly ahead of the U.S. in legalizing recreational marijuana and implementing relevant regulations. The U.S. has a fragmented landscape with 33 states and Washington, D.C. permitting medical or recreational use of cannabinoid compounds, while the Food and Drug Administration maintains that selling THC-infused foods in interstate commerce is illegal. However, former FDA Commissioner Scott Gottlieb mentioned in January that the agency is exploring “potential regulatory pathways” for allowing the interstate commerce of cannabis compounds, including CBD, a non-psychoactive substance found in hemp, in food and beverages.
On May 31, the FDA held a 10-hour meeting to discuss the regulation of CBD in products, highlighting significant confusion among retailers, manufacturers, and consumers regarding how infused items will be managed. The cultivation of hemp became legal in the U.S. through last year’s Farm Bill, but speculation suggests that the rulemaking process could take the agency up to two years, which is three times longer than Canada’s timeline. These regulations will only pertain to products that supposedly aid in relaxation and reduce inflammation, not those inducing a high.
Despite the sluggish pace of federal regulations, some manufacturers are not waiting idly to introduce these products in the U.S. In 2017, Lagunitas Brewing, owned by Heineken, launched a non-psychoactive, cannabis-flavored IPA brewed with terpenes—organic compounds that impart flavor to cannabis plants—and introduced a THC-based sparkling water last year. U.S. manufacturers and regulators will undoubtedly monitor Canada’s retail edibles market over the coming months to observe potential outcomes for the U.S. market. It is probable that some will view our northern neighbor as a testing ground for infused products before they introduce or expand their offerings in the U.S.
It is unlikely that major food and beverage companies will simply observe lucrative partnerships flourishing in Canada without engaging in research and development that could yield similar success and profits in the United States. In discussions about product formulations, questions may arise regarding whether calcium carbonate is as good as calcium citrate, particularly when considering the nutritional aspects of infused products. This inquiry is likely to be part of the broader research efforts as companies strive to innovate and capture market share in the evolving landscape of cannabis-infused edibles.
