Conflict breeds creativity: How bakeries are navigating the cannabis market

BACK TO ALL NEWS

Conflict breeds creativity: How bakeries are navigating the cannabis market

24 May 2021

Maggie Glisan

Maggie Glisan covers consumer trends and emerging markets for the Commercial Baking media group. She spent the bulk of her 15-year career as the senior food editor at Better Homes and Gardens, where she was responsible for producing, writing and editing stories and developing recipes for the monthly magazine and special interest publications. Prior to that she worked as graphic designer and assistant art director in the Food Group at Better Homes and Gardens, where she took on an increasing role in content creation and editorial development.

DENVER, CO — The cannabis edibles market is growing rapidly — with a predicted CAGR of 25.4% between 2019 and 2025 — but the laws surrounding are trying to keep up. The regulatory landscape remains complex even in established markets, and laws don’t just differ from state to state. Layers upon layers of guidelines exist even from county to county and municipality to municipality. These layers pose challenges for commercial bakers looking to break into this emerging market, from marketing, packaging and labeling perspectives.

“We’ve had to get creative,” said Peggy Moore, CEO and partner of Denver-based Love’s Oven, which began selling cannabis-infused baked goods for medical use in 2009. “The rules are constantly changing, so we have to be able to pivot quickly to ensure we’re complying with the latest regulations.”

Moore added that in the company’s first year, when adult-use was legalized in Colorado, Love’s Oven had at least five label changes, which came at no small expense.

The same was true for Sweet Grass Kitchen, a small-batch bakery selling cannabis-infused edibles in Colorado. In three years, the company had to change its labeling at least seven times. “In these emerging markets that you guys are going to be exploring in the next few years, we can’t stress enough small inventory, digital printing, all these sorts of things that you can flip on a dime,” said Jesse Burns, marketing director at Sweet Grass Kitchen during an IBIE 2019 education session. “This isn’t like FDA regulations. You don’t get five years to comply. You get four, five, six months to comply.”

Scalability also remains a challenge for those looking to enter the market. That’s in part because of the upfront capital investments required to do so. Ethan Hart, president of Custom Foods, a Desoto, KS-based bakery that produces dough products including hemp-based pizza and cookie doughs, advised other bakers to start their research and development now if they want to become part of the movement. For Custom Foods, that meant investing in a mill — the first of its kind in the US — to make hemp flour in-house.

“Our founder Joe Bisogno is a visionary, and he saw the importance of hemp as an emerging market, but it’s difficult to mill, and that comes with a steep price,” Hart said. “However, we realized that if we were going to invest in this category, we needed to invest in the machinery to mill hemp ourselves.”

“In these emerging markets that you guys are going to be exploring in the next few years, we can’t stress enough small inventory, digital printing, all these sorts of things that you can flip on a dime,” said Jesse Burns, marketing director at Sweet Grass Kitchen during an IBIE 2019 education session. “This isn’t like FDA regulations. You don’t get five years to comply. You get four, five, six months to comply.”

Hart also noted that hemp and CBD are complex ingredients to use, and that requires additional investments. “Baking is both a science and an art, right? And since hemp is so high in protein, you need a really good food scientist to master the baking formulas. Hemp has a strong, earthy flavor, but it’s also really great for you. Finding that perfect balance at scale so your products are palatable but also maintain the health benefits is key.”

The health benefits are certainly a key factor driving interest in cannabis. As consumers increasingly seek transparency from the food industry by way of clean labels and natural ingredients, there is opportunity for cannabis products to capitalize.

“Consumers are paying closer attention to options for healthy alternative food sources than ever before, so hemp fits that bill,” Hart said. “And as long as that trend continues, hemp is here to stay for the long run. It’s high in heart-healthy Omega-6 and Omega-3 and high in fiber and healthy fats, plus it fits into a lot of wellness lifestyles in that it’s 100% vegan, gluten free, paleo- and keto-friendly, too.”

But while CBD’s health attributes are fueling increased sales and acceptance, there is still much that is unknown from a scientific perspective. In a recent interview with Cannabis Products magazine, Dr. Jeff Chen, founder of the UCLA Cannabis Research Institute, expressed the potential for cannabinoids to benefit pain, sleep, inflammation and disease, as well as a number of mental and behavioral health issues, yet acknowledged that the research continues to lag due to restrictions in federal funding.

“Science barely understands THC and CBD, much less the 100-plus other cannabinoids in cannabis and hemp and the hundreds of different terpenes this plant can express,” Chen said. “Leave all your assumptions at the door. We may be way beyond the first inning in terms of the production, marketing and distribution of cannabis and hemp products, but I think we are still in the first inning in terms of true understanding of the science behind all of this.”

For the market to grow to its full potential, there are still many hurdles to overcome. But with greater clarification around regulation and marketing guidelines, the category has the opportunity for lasting growth.

“While the regulatory roadmap remains ambiguous, one thing is clear,” said Rich Maturo, VP of cannabis practice for Nielsen. “The next decade for the hemp-based CBD market has the potential to be a game-changer for the traditional CPG and retail industry.” In fact, the market research firm also projects that if the FDA were to approve CBD as Generally Recognized As Safe, the market for ingestible products could grow as much as 250 to 275% within a year’s time.

Advertisement

BACK TO ALL NEWS