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The change of the seasons brings warm weather, but lately, this isn’t the only change we’ve been seeing. As we slough through rainy April with the hopes of soon seeing the sun, we also watch regulators shift their stance on cannabis and push for legislative change, and New York has been at the head of this charge. The CBD industry, on the other hand, is patiently waiting for their momentum to pick up, but good news could be on the way.

With the current USDA study analyzing whether hemp can be used as an alternative for cattle feed underway, and the potential for CBD to become a nutraceutical this year, you have a potent combination that could send prices soaring.

The future is exciting, and we look forward to being there with you every step of the way.

Kellan Finney

Balancing the speed of the cannabinoid industry’s growth with slow-changing regulations can be hard. On one side, the overwhelming desire for product and the ability to grow, process, produce, and sell has never been in higher demand. With more and more states coming online, the need to quickly scale or pivot is only compounding these supply chain stressors.

On the flip side, policy makers, still hesitant to fully embrace the cannabinoid industry, continue to debate the finishing touches on game-changing legislation. It’s important to remind yourself that, though this period may be frustrating for all those who want to start solidifying the space, every step forward is progress toward a new era. Try to remember that forward is forward, no matter how small of a step

Bryan Fields

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CBD industry

Note:
Figure 1. 2021 retail cannabis sales data by product category from
New Frontiers and Headset data.

Table 1. Consumer Survey data displaying preferences of CBD sorted
by use case and product type.

CBD industry

Flower continues to dominate as the leading category of products, making up over 50% of all products sold at dispensaries. According to New Frontier data, Maui Wowie, OG Kush, and Gorilla Glue are among the top three strains. Vape pens are a close second, and topicals and tinctures come in last, making up 3% of the market share for THC products. Topicals and tinctures only hold 3% of the market share for THC products.

This is in stark contrast to the CBD industry where the top product for all consumers is tinctures. We believe the difference in consumer preference is tied to the demographic of individuals consuming THC vs CBD. CBD does not have any psychoactive effects and is currently viewed as a supplement / vitamin / wellness alternative.

Due to this divergence, we advise our clients to understand which industry they want to focus on when launching a brand If your company’s goal is to own a brand which can acquire market share in both the THC and CBD industry, then we recommend launching an edible brand. Edible products show great promise and have a significant market share across both THC and CBD industries.

Launching a Brand

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Cannbinoid Monthly Update -August 2021

The cannabinoid industry continues to gain steam as Schumer rolled out his plan which would end cannabis prohibition and regulate the industry similar to tobacco. Pair this news with several other states legalizing adult use cannabis and the industry is on the precipice of extraordinary growth. The hemp CBD industry continues to consolidate as wholesale prices drop for most product categories including smokable flower. Lack of legislation surrounding the safety and legality of the molecule CBD has created obstacles that have challenged investors looking for short term gains. Given the rescheduling of CBD and classification as a nutraceutical, the industry is poised for considerable growth over the next decade. However, we must be patient, and that’s what we are here for. We look forward to being there with you every step of the way.

Kellan Finney

The draft of Cannabis Administration & Opportunity Act has been released and with it comes a multitude of potential insights for the future. While the details are likely to change, the major framework is clear for the future of the industry. Use the draft as an opportunity to alter future roadmaps and to be ahead of these changes.

Bryan Fields

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In March of 2021, the United States Department of Agriculture (USDA) granted Oregon State University ~$300,000 to fund studies focusing on hemp byproducts as a source of cattle feed.4 There are several driving forces behind this connection, including allowing hemp to be grown on cattle farms, maximizing the nutritional value of livestock feed, and providing a use for the extracted hemp biomass that is currently going to waste. At present, the cattle feed market is valued at $76.9 billion with a compound annual growth rate of 3.2%.

Cattle Feed Market Size

Cattle Feed Market Size

One percent of the total global cattle feed market equates to ~$769 million, and if hemp captured that market share, it would boost the CBD hemp industry’s annual revenue by more than a 29%. Approximately 130,000 acres were planted last year, and assuming that there are 165 pounds of hemp per acre, that represents ~21,450,000 lbs. or 10,725 tons of CBD hemp..6 The North American region alone consumed 27.7 million tons of beef cattle feed.7 Turn a waste product into an opportunity.

By adding revenue through a waste stream, you’re creating a sustainable, mutually beneficial relationship.

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RETAIL

The ship that blocked the Suez Canal, the Ever Given, is being held by Egypt until a fine of nearly $1 billion is paid, and this spells trouble for the retail sector of the cannabinoid supply chain.

The cannabis industry is arguably the least environmentally-friendly industry, particularly when it comes to consumables. Everything purchased at a licensed dispensary, including vape pens and CCELL cartridges must come in plastic, child-proof containers. All of these packaging materials are sourced from China, and limited access to these supplies could springboard into a price jump for consumables. This is particularly true for cannabis companies that have already been struggling to make ends meet, as they’re now faced with an increase in their cost of production with no way to make up for their losses. Losing access to the exact SKU of containers previously ordered is also a potential roadblock cannabis companies may encounter.

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Analysis of the Cannabis Pre-Roll Market

Pre-Roll Market Size

PRE-ROLL MARKET SIZE

Additional data from Headset* provides more insight into the current state of the industry. It’s clear that certain factors associated with differences in sales volume between states can and should be examined.

The above chart outlines the correlation between average price per unit and overall market sales data. Based on this chart, there does not seem to be a correlation between annual pre-roll sales and unit price. When viewing the results of the correlation, there does not seem to be a direct relation between annual pre-roll sales and unit price. California and Massachusetts, where the unit price is the highest out of any states, also boast the first and third largest markets by sales, respectively. Washington on the other hand has the second largest pre-roll market and has the lowest average price per pre-roll unit.

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