Cannabis Market Matures Despite Uneasy Footing

What follows includes some sweeping generalizations that don’t apply universally.

Matt Reynolds1

But if you squint your eyes enough to blur the notable exceptions, and take the market in aggregate, what swims into view can only be described as quickly increasing sophistication in cannabis packaging.

The first wave of states to decriminalize or outright legalize recreational cannabis, namely the contiguous Pacific states plus Nevada and Colorado, haven’t transitioned the marijuana plant into your typical, CPG-style, branded commodity without their share of setbacks. Previously existing (read black) markets persist, and over-licensing flooded the market with product and drove prices down. Save perhaps for Nevada, today those markets are drum-tight after the initial vacuum and rush to hang out a shingle. They remain extremely fragmented even within each state, characterized by a wide array of small brands with a few employees—each specializing in vape, edibles, pre-rolls, or flower, and each clinging to a narrow patch of market share. As it stands, there’s little foot-in-the-door share to be earned by newer cannabis brand interlopers, at least not until federal laws level the playing field.

That first wave entered the recently legalized recreational marketplace well-versed in the plant’s cultivation, genetics, processing, and other elements at the start of the supply chain. But since there hadn’t been an open and legal marketplace for the product before, elements just a little downstream—packaging materials, packaging automation, marketing, logistics, and regulation—were ill-defined and in flux. Again, this is a generalization, but the first brands were often helmed by career changers or enthusiasts looking to turn their knowledge base, background, or hobby into a career.

Now there’s a new breed of cannabis purveyor in town, and it’s eyeing the second wave of legal recreational cannabis states—Illinois, Michigan, Massachusetts, and Maryland for starters—as fresh, untapped markets with space to plant some new roots. And this new type of cannabis brand has all the packaging, retail, marketing, and logistics chops that today’s traditional big brand owners have—in fact, they’re frequently the very same people.

So while the cannabis market matures at a predictable, linear rate in those saturated West Coast markets—and there’s a lot to be said about recent improvement in packaging automation there—the new wave is even further aided by the influx of big brand experience. Armed with the lessons learned on the West Coast, and with a decidedly CPG-minded approach, true cannabis brand owners are emerging. One such brand owner, Green Thumb Industries, positions itself as having the knowledge base, sophistication, consistency, compliance-readiness, and infrastructure to compete for and win licenses in this fresh territory (read the whole story on their Dogwalkers pre-roll brand here). And it has the capability of creating scale even in a fractured marketplace where the product itself can’t move across state lines. Read more on page 36 about the brand Dogwalkers and its universalized packaging system that’s only specialized to fit local laws once it’s in the local market.

Meanwhile, the massive traditional brand owners and beverage manufacturers continue to eye strategic entry points into this market. Naturally, they’d bring their exhaustive resources to bear on any cannabis packaging and retailing efforts.

So even though the U.S. isn’t there yet federally, these new cannabis brand owners, and the soon-to-step-in traditional big brands, are bound to drag the supply chain out of the uncharted “Green Rush” days of early recreational legalization, and increasingly into a sophisticated, mature, and, dare I say, sober marketplace. 

More in Issues