To quote Kenneth Morrow in his piece “What to do with Surplus Cannabis” from Cannabis Business Times’ August 2020 issue:
Health Canada, the federal agency that oversees the country’s cannabis producers, reported that as of April 2020, licensed producers (LPs) held in excess of 600,000 kilograms of unpackaged dried cannabis and an additional 46,413 kilograms of packaged flower. (This is not counting what is being held in stock by distributors and retailers) … I spoke about this surplus with multiple Canadian sources (who asked to remain anonymous), all of whom explained to me that the overstock cannabis held in storage by Canadian LPs is over a year old. They expressed that most of it would be considered undesirable to potential customers … If I were hoarding old cannabis, I could investigate the possibilities of profitably extracting or isolating alternative cannabinoids and research all potential alternatives for various applications. Otherwise they will end up disposing of it or turning it into compost because customers in the current adult-use cannabis market will not buy it, nor will it pass testing standards.
Cannabis producers in Canada and the U.S. alike may have read these proposals for the use of surplus cannabis and thought they sounded extremely appealing. With cannabis inventory still far outmatching (legal) demand across the continent, utilizing surplus stock before its shelf life is up would be ideal. And now, the move represents an even more important tactic in a time when many are facing financial constraints and calls for increased revenues.
But if manufacturers are to invest in the development of products that tap into this inventory, will consumers respond? Are these products, in fact, appealing and in demand? The short answer is: they appear to be, insofar as consumers know they exist.
- 11.6% of consumers were aware of CBN in Q2, versus 10.1% in Q1.
- Among consumers with insomnia, figures went from 13.7% to 15.1% from Q1 to Q2.
- CBG awareness was 9.2% in Q2, versus 8.2% in Q1. Awareness is roughly double that among medical users.
Furthermore, consumers have indicated a keen interest in a variety of minor cannabinoids, with 42-45% of those aware of each cannabinoid indicating they would be likely or very likely to purchase CBD and THC versus 29% for CBN and CBG, were it to be available. There is disproportionately strong interest among regular users in Canada—particularly experienced medical patients.
Though it is tough to make the argument that minor cannabinoid products will make up a significant part of major cannabis players’ portfolios given their relative obscurity even among cannabis users, these products do have their place.
As Morrow mentioned, they may offer benefits not experienced with THC or CBD-dominant products, that appeal to various consumer segments—particularly medical patients.
Minor cannabinoids also offer an interesting point of differentiation in crowded markets, especially those with highly restrictive frameworks for labeling and promotion. When companies are unable to create flashy ad campaigns, social media pages, logos, or even particularly appealing product formats, shapes or flavors (as current Canadian legislation prohibits), they typically can highlight minor cannabinoids, a unique selling point. While conveying information on these cannabinoids’ qualities to prescribing doctors, budtenders and, ultimately, the consumer will require effort, educating the public on cannabis is a task that many in the industry are already undertaking and can expand upon.
Ultimately, though consumer awareness of CBN and other minor cannabinoids is limited, if companies can effectively build awareness and tap into the consumer groups the cannabinoids and their qualities will uniquely resonate with, they do offer a distinct window of opportunity for those with far more product than they can possibly store or sell using traditional methods.
Published at Wed, 09 Sep 2020 21:05:00 +0000