BOULDER, CO — Cannabis has been hailed as the new “it” ingredient in the food world, and much has changed in the nearly 10 years since Colorado and Washington became the first states in the US to legalize the recreational or “adult” use of marijuana in 2012. What was once limited to small mom-and-pops selling pot brownies to niche clientele on the West Coast is now a rapidly expanding national market — with the potential to grow exponentially in the next decade. But there is still a lot of grey area when it comes to this nascent arena.
During the 2020 elections, five new US states (Arizona, Mississippi, Montana, New Jersey and South Dakota) legalized medical or adult-use cannabis bringing the total to 15 (plus Washington DC) where cannabis is legal for recreational use and 34 for medical use. A handful of others are expected to commence sales in 2021.
The edibles category, which includes chocolates, gummies and baked goods, accounted for 15% of the US cannabis market in 2020, according to Forbes magazine.
Catch phrases like “CBD-infused this” and “hemp-based that” have been all the buzz — especially in health and wellness spaces — and there’s no denying that sales are booming. Amid the potential disruption caused by the COVID-19 pandemic (or perhaps in light of it), US cannabis sales increased 46% in 2020, growing from $12.1 billion in 2019 to $17.5 billion in 2020 per data from BDSA, a Boulder, CO-based cannabinoid market research firm.
“The industry not only survived, but it also thrived, and legal cannabis gained considerable ground, exceeding our expectations in several markets,” said BDSA CEO Micah Tapman. In fact, the firm forecasted US cannabis sales will grow considerably in the next several years to reach $41.3 billion in 2026.
“As more states begin to legalize, we see a lot of opportunity to grow our business in markets that have up until this point been untapped,” said Peggy Moore, CEO and partner of Denver-based Love’s Oven, which began selling cannabis-infused baked goods for medical use in 2009. Since then, the company has stretched the brand’s reach across Colorado and into other states where recreational use has been legalized. Plus, it has expanded into fruit beverages, chocolates and concentrates.
The edibles category, which includes chocolates, gummies and baked goods, accounted for 15% of the US cannabis market in 2020, according to Forbes magazine. For baked goods, sweets like cookies and brownies remain the most popular — familiarity in the delivery of an unfamiliar ingredient has up until this point been the most successful — but as restrictions relax nationwide and consumers become more knowledgeable, Moore said there is opportunity explore more unique flavors and offerings.
Despite the projected growth in sales and increased interest in normalizing cannabis as an ingredient in the baking industry, there is still a lot of confusion in the marketplace due to public misconception and complicated state and federal guidelines.
“Education is imperative,” said Ethan Hart, president of Custom Foods, a DeSoto, KS-based bakery that produces a diverse portfolio of frozen and par-baked dough products including hemp-based pizza and cookie doughs. “There is still a big knowledge gap regarding the differences between hemp and marijuana and the differences between CBD and THC,” he said. “The more we can educate, the more we can dispel some of the misconceptions, market effectively and grow the category.”
All varieties of the Cannabis Sativa plant (including hemp and cannabis) contain cannabinoids that interact with the human body’s endocannabinoid system. The two best known are CBD (cannabidiol) and THC (tetrahydrocannabinol). CBD is the non-psychoactive that has been associated with a number of health benefits and often used as a therapeutic for relaxation or pain reduction, whereas THC is the psychoactive that produces a high. Both hemp and cannabis plants contain CBD and TCH, but the quantities vary by plant. The 2018 Farm Bill cleared the way for legal cultivation of industrial hemp in the US, but CBD is not yet legal in food products on the federal level.
There’s a lot of opportunity in terms of educating the consumer, which is paramount, according to Moore. “The industry as a whole is still finding its way, and some businesses are doing it better than others. Most of the education is occurring at the store level because that’s where the curious buyers are, although some larger stores and chains are doing well.”
Although this market might currently seem a little like the Wild West, those who embark early on this new frontier could come out ahead.
“For any bakers looking to expand into cannabis, I’d encourage them to go in with eyes wide open,” Moore said. “You’ve got to be adaptable, nimble and fearless.”