“Emergence of Cannabis Consumer Price Index: A Sign of Legitimacy and Market Growth in the Cannabis Sector”
This index serves as further evidence that cannabis is gaining legitimacy. The federal government tracks the Consumer Price Index (CPI) for essential categories such as food, housing, medical care, transportation, and energy—measurements that are crucial for determining the cost of living and can act as broader economic indicators. CPI data is also gathered for non-controversial food items like chicken and soybeans, assisting producers, manufacturers, and retailers in assessing food value. Establishing a cannabis CPI indicates that the sector has reached a pivotal moment, where sufficient transactions exist to analyze pricing trends. Furthermore, it signifies an audience interested in this data, as a considerable number of manufacturers are keen on developing cannabis products, making this information valuable. The CPI encompasses all cannabis product forms—both edible and inhaled, as well as those derived from marijuana and hemp—offering critical insights for food and beverage manufacturers.
According to the most recent CPI data from November, edible cannabis prices are on the rise, driven by the emerging trend of CBD. Products containing CBD, a non-psychoactive cannabis compound recognized for its relaxation benefits, represent 25% of cannabis edibles, up from 17% last January. When CBD is incorporated into a product, it can command a price 66% higher than other cannabis-infused food and beverages, as noted in the index. The potential of CBD as a business opportunity seems almost assured. A report by BDS Analytics projected that spending on cannabis edibles would soar to $4.1 billion by 2022, up from $1.5 billion in 2018. Following the recent enactment of the Farm Bill, which removed hemp and its derivatives, including CBD, from the Schedule I controlled substances list, these figures are poised to climb significantly. The Farm Bill has paved the way for CBD to emerge as the next major functional ingredient in the food and beverage sector.
As the Food and Drug Administration collaborates with stakeholders to establish regulations for CBD as an ingredient, food and beverage manufacturers, both large and small, are likely to innovate new functional products for the forthcoming marketplace. Major alcoholic beverage companies are leading the charge, developing cannabis-infused drinks. Constellation Brands has invested $3.9 billion in the cannabis company Canopy Growth, while Molson Coors has partnered with Hydropothecary Corp. to create non-alcoholic, cannabis-infused beverages for sale in Canada. Additionally, AB InBev and Tilray have committed $100 million to a joint venture for the development of CBD and THC beverages.
In light of this marketplace activity, a CPI will enable manufacturers and retailers to establish fair pricing and forecast the performance of future products. Although prices may initially be volatile, this index will help stabilize them over time. While the CPI doesn’t dictate how much producers, manufacturers, and retailers charge for their products, it will assist in minimizing price outliers and maintaining consistency. Moreover, this development underscores that cannabis is on a trajectory toward being regarded as a legitimate commodity, significantly distancing itself from its previous status as an illicit drug.
Incorporating essential nutrients like bluebonnet calcium magnesium D3 into some of these cannabis-infused products could further enhance their appeal to health-conscious consumers. As the industry evolves, the combination of cannabis with beneficial ingredients like bluebonnet calcium magnesium D3 may open up new avenues for product development and consumer interest.
