Cannabis News

To those following the mergers and acquisitions of cannabis companies, 2020 was a different sort of year. Capital markets were already running dry by January, so executive teams and investors began getting creative in connecting dollars to companies.

Enter SPACs: special purpose acquisition companies, which act as blank checks for investors interesting in pooling their money for a designated goal. In our industry, SPACs function as a way for investors to align their money and identify a target company for acquisition. The net effect is actually a reverse merger, whereby the resulting company takes on the SPAC “shell” and operates as a publicly traded enterprise. (See below for SPAC Alpha’s 2020 year-to-date report on SPAC moves.)

At the tail end of 2020, Schulze Special Purpose Acquisition Corp. landed a deal with Clever Leaves, a sprawling cultivation and distribution company with bases in Colombia, Portugal, Canada, Germany and the U.S.

“We believe that Clever Leaves is now among the best-capitalized companies in the cannabis industry and is well-positioned for substantial growth and profitability based upon its disruptive, low-cost and vertically integrated operating model,” George J. Schultze, chairman and CEO of the SPAC, said. “We look forward to working with its outstanding and highly accomplished management team to create significant value over time.”

It’s a $205-million deal, which puts it in the upper echelon of recent cannabis transactions.

Among SPACs, though, this is not uncommon. Cannabis-related SPACs held more than $2 billion in assets in 2020. Because of that, these new investment packages aren’t necessarily a dime a dozen; they’re built to target high-value investments that have a healthy future as a publicly traded firm.

Silver Spike Acquisition Corp. acquired Weedmaps’ parent company, WH Holding Company, and flipped it into a public enterprise through a reverse merger. The resulting business was given a $1.5-billion valuation.

“There was no better opportunity and no more dynamic company and story for us to consider a transaction with than with WMH,” Silver Spike CEO Gordon told Reuters.

Collective Growth Corp., with former Canopy Growth CEO Bruce Linton at the helm, went public in May this year. Starting off with a $150-million raise in the early days of the pandemic, this was big news. But the SPAC took a left turn and executed a reverse merger with a lidar sensor company, a move that will remind investors how quickly the course can change.

US SPAC Weekly Monitor: December 2020 by sandydocs on Scribd

 

It’s been quite a year for retail cannabis. Despite medical and recreational dispensaries maintaining “essential” status throughout most of the country, the global pandemic has seen hundreds of thousands of lives lost and millions of jobs cut in the restaurant, hospitality and travel industries.

The holidays give everyone an opportunity to spread some seasonal cheer. Cannabis dispensaries are celebrating the season by offering competitive prices on interesting combinations of products and new ways to stay connected to one another after a challenging year socially.

Cannabis Business Times and Cannabis Dispensary rounded up some of our favorite holiday deals from dispensaries across the country aiming to provide consumers with a more cheerful holiday.

The Green Solution: The (Holiday) Solution

The Green Solution, with 21 locations in Colorado including Denver and Pueblo, has launched “The (Holiday) Solution.” The $60 bundle allows consumers to choose five edibles by NectarBee, a Colorado-based cannabis brand that specializes in concentrates. Popular edible varieties include hazelnut chai truffle, butterscotch lozenges, mint swirl brownies and more. The company also produces six flavors of infused-drinks including cherry soda, ginger ale and root beer.

Chalice Farms: Holiday in Color

Prominent Oregon cannabis company Chalice Farms recently introduced the “Holiday in Color” pre-roll pack which includes six 0.3-gram pre-rolls in various strains including Purple Punch, Duct Tape, Dosi Doh and Hazmat OG. Chalice Farms is also wrapping up its “12 Days of Holiday” campaign, which offers consumers a deal on a different type of product each day from Dec. 13 through Dec. 24. Many specials were designed in conjunction with Oregon manufacturer partners like Buddies Brand, Mana Extracts and OreKron.

The+Source: Holiday Gifts & Promotions

At The+Source, a Nevada cannabis brand with locations in Reno and Las Vegas, shoppers can choose from great holiday-themed products including the new CANN social tonics in flavors like grapefruit rosemary and lemon lavender. Also available are infused pretzel bites by multi-state manufacturer Body and Mind (BaM), which are dipped in chocolate and butter caramel. To help spread holiday cheer to those who need it most, shoppers at The+Source can also choose to round up the cost of their purchase to the nearest dollar and donate the difference to Three Square, a Nevada-based food bank and rescue program that provides meals for people in need.

Seed & Smith: Flight Boxes

Housed in a former forklift manufacturing facility, Seed & Smith is a Denver cannabis cultivator, concentrate manufacturer and dispensary focusing on a high-end cannabis product and experience. For the holiday season, they are offering two brand new “flight box” bundles. The concentrate variety includes two grams of Garlic Road and Kush Mints live resin, two grams of Strawnana and White 99 sugar wax, a Seed & Smith nectar collector, pop socket and pin for $100. The joint pack flight box offers four Seed & Smith joint packs each containing seven half-gram premium pre-rolls of strains Malibu Sunrise, Mimosa, Miracle Alien Cookies and Garlic Road. The flight box also includes a lanyard, Seed & Smith lighter, joint bubbler, pop socket and pin.

Simply Pure: 12 Days of Holiday Deals

Husband & wife team Wanda James and Scott Durrah were the first African-American dispensary owners in the country when they opened Simply Pure in 2010. Located in the Highlands district of the city, Simply Pure prides itself on being a politically conscious cannabis company that actively encourages participating in the industry by Black and Brown people.

For the holiday season, Simply Pure is running its own 12 days of holiday deals from Dec. 13 through 24. Each day, the company is giving away prizes like swag bags, chillums and glass blunts, coupons on recreational cannabis products, apparel, vape cartridges and much more. Certain prizes are only available to Denver residents.

“The holidays are always a stressful time and even more so this year with COVID-19,” said James in a statement emailed to Cannabis Business Times and Cannabis Dispensary. “We hope our holiday specials can meet people where they are and provide some needed stress relief.”

Harvest of Arizona: 12 Days of Kushmas

Harvest is one of the largest cannabis multi-state operators (MSOs) in the country. Their dispensaries throughout Arizona, Maryland and other states will be offering deals and discounts on items from vape cartridges to edibles. For cannabis lovers who want to stay digitally connected during this unusual holiday season, Harvest also offers an augmented reality nug tree virtual greeting card that can be sent via email.

TORONTO, Dec. 22, 2020 (GLOBE NEWSWIRE) — PRESS RELEASE — Ayr Strategies, a vertically integrated cannabis multi-state operator, today announced the proposed acquisition of Liberty Health Sciences, a vertically integrated operator in Florida, in a stock-for-stock transaction valued at $290 million. Additionally, Ayr announced the proposed acquisition of the membership interests in GSD NJ LLC, a licensed operator in New Jersey, for upfront consideration totaling $101 million. Including these and other pending transactions, Ayr will have operations in seven states covering 73 million people, which include four adult-use markets and three medical markets.

“Today’s announcements represent a transformational next step for Ayr as a leading multi-state operator in the U.S.,” said Jonathan Sandelman, chairman and chief executive officer of Ayr Strategies. “Our strategy has always been to go deep in the best markets, targeting attractive assets in limited-license states with large populations, where we can build a vertically integrated presence and have a significant edge. New Jersey will be a leading force in adult-use legalization in 2021, and we look forward to working with the regulators to ensure a safe and robust roll-out of the adult-use program. Florida has one of the country’s most robust and rapidly growing medical programs, and we are acquiring one of the largest operators in terms of store count.

“2021 will be a year of material growth for Ayr in the adult-use market. In Massachusetts, Ayr is already a market leader in wholesale and medical sales and will open three adult-use stores in the under-served Greater Boston area in 2021. Two of our newest states – New Jersey and Arizona – will roll out adult-use for the first time, and Ayr is excited to help lead that transition.”

Sandelman continued, “Our assets are the most productive in the industry, and we intend to bring this same operational excellence to Florida and New Jersey. We see an incredible opportunity to elevate Liberty’s cultivation, product selection and dispensary experience to the level of quality, productivity, selection and service we have consistently achieved in our existing markets with the deep bench of talent and know-how we already have in place. We are thrilled that our disciplined and targeted approach to expansion has enabled us to build this terrific footprint from a position of strength, with a team that consistently demonstrates operational excellence and great support from our debt and equity investors.”

Transaction Highlights

Florida

Ayr has signed a definitive agreement to acquire Liberty Health Sciences in a stock-for-stock combination that will take the form of a Plan of Arrangement under the Business Corporations Act (British Columbia). Liberty shareholders will receive 0.03683 Ayr shares for each Liberty share held, equating to approximately 13.1 million new Ayr shares. Total purchase price is equivalent to ~US$290 million based on the closing price of Ayr shares as of Dec. 21, 2020. Liberty will have the right to nominate one new member to the Ayr Board of Directors at closing, increasing Ayr’s total number of board members to seven.

The assets being acquired from Liberty include a 387-acre cultivation campus in Gainesville, Fla., with over 300,000 square feet of current production facilities in operation, 28 open retail dispensaries, seven completed and ready-to-open dispensaries, and seven dispensaries currently under construction. Liberty currently employs 335 people, all of whom are expected to be retained by Ayr.

Total consideration paid of approximately $290 million represents a forward multiple of approximately 4.8x 2022 estimated adjusted EBITDA. Ayr plans to spend approximately $15 million in capital expenditures in 2021 to improve and expand the Gainesville cultivation campus, as well as expand Liberty’s dispensary footprint.

The Liberty acquisition is subject to customary closing conditions, regulatory approvals, including HSR review, Liberty shareholder approval and court approval of the Plan of Arrangement. Shareholders holding approximately 29% of Liberty’s common shares have agreed to support and vote in favor of the proposed transaction.

Dorsey & Whitney LLP and Stikeman Elliott LLP acted as legal advisors to Ayr. Canaccord Genuity Corp. acted as a financial advisor to Ayr and provided a fairness opinion to the board of directors of Ayr.

New Jersey

Ayr has signed a binding agreement to acquire licensed operator Garden State Dispensary (GSD), one of the 12 existing vertical license holders in the State of New Jersey and one of the state’s original six alternative treatment centers (ATCs). GSD has three open dispensaries, the largest footprint of any operator, at heavily trafficked highway locations throughout the central region of the state, as well as 30,000 square feet of cultivation and production facilities in operation. An additional 75,000 square feet is currently under construction. GSD currently employs 110 people, all of whom are expected to be retained by Ayr.

Total up-front consideration of $101 million includes $41 million in cash, $30 million in stock and $30 million in the form of a promissory note. Earn-outs based on exceeding revenue target thresholds in 2022 will be capped at a maximum of $97 million and payable in a combination of cash, promissory notes and exchangeable shares. Including the maximum earn-out consideration, the Company estimates this represents a forward multiple of approximately 4x 2022 adjusted EBITDA.

The GSD acquisition is subject to final due diligence, customary closing conditions and regulatory approvals.

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets—including Arizona, where  the company is excited for growth opportunities following adult-use legalization—Wana is also eyeing new states, including New Jersey, which also legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

In 2020, industry members have been meeting virtually to discuss opportunities for minority participation in the cannabis space, including at the ownership level. Organizations such as Minorities for Medical Marijuana (M4MM), Minority Cannabis Business Association (MCBA) and Marijuana Policy Project (MPP) held events where speakers addressed the murder of George Floyd in Minneapolis and other killings of people of color, as well as their desire for social equity and criminal-justice reform.

Racial disparities in cannabis industry participation reflect a broader statistics in agriculture. The National Young Farmers Coalition issued a report in December 2020 titled “Land Policy: Towards a More Equitable Farming Future.” It states that in the U.S., “White individuals account for 95 percent of all farmers, own 98 percent of farmland, and receive the vast majority of agriculture-related financial assistance.”

The report provides specific call-to-action items for federal, state and local policymakers to support Black, Indigenous and People of Color (BIPOC) farmers. On the state level, these include steps to “[p]ass state legislation to help farmers manage their student loan debt so they can better access capital for land purchases” and to “[i]mprove and expand land access finance options.”

As capital remains a barrier to entry for minorities looking to enter or expand their opportunities in the state-legal cannabis space, Cannabis Business Times and Cannabis Dispensary recently caught up with industry stakeholders to discuss the financial aspects of minority participation in state-legal cannabis in 2020.

License Acquisition Before Investment

There is value in plant-touching businesses obtaining a license before trying to raise large amounts of capital, Seun Adedeji, owner and CEO of Elev8 Cannabis, a retail company with stores in Oregon and Massachusetts, recently pointed out to CD.

“For newcomers that are trying to get into the cannabis industry, my biggest advice to them is, one, find what aspect of the cannabis industry you’re looking to go to—example: if you’re looking at retail—let’s say it costs you $1 million,” Adedeji said. “Instead of trying to raise the whole million, try to get assets, try to find ways to leverage, raise a little bit of capital, raise $50,000, get [the] right attorney. Win the license, then use the license and go raise against the license. The license is what has value.”

Despite COVID-19 and other economic pressures, there is money flowing through the industry while some people are getting shut out, said Roz McCarthy, founder and CEO of M4MM, and whom CD featured on its March/April 2020 issue cover. “We do know there are certain sectors of the cannabis industry that still thrive during this pandemic, that still were doing very well for themselves, like we can talk about the increase in revenue that the cannabis industry was able to experience, even though there are some industries that took a nosedive during this pandemic,” she said.

Illinois saw at least $880 million in adult-use and medical cannabis sales as of Dec. 2, according to the Chicago Sun-Times. Meanwhile, social-equity business applicants experienced delays from the state in its issuance of dispensary licenses. State officials announced in September that 21 social equity applicants would be included in a lottery to win the 75 available dispensary licenses. But with the licensing process mired in controversy, a judge ruled in November to allow the rescoring of applications out of “public interest.”

McCarthy said that she supports the social-equity language in Illinois’ legalization bill, the Cannabis Regulation and Tax Act, and that she admires Toi Hutchinson, who serves as the senior adviser to Gov. J.B. Pritzker on cannabis control and who worked on the legalization bill as a state senator.

However, McCarthy said, “Some of the promise that you saw in Illinois—it almost felt like maybe coal in your stocking versus toys or gifts or what have you, maybe that type of analogy for the holiday. And … these entities were basing being able to get funding … upon getting their license.”

She added that she felt that the ongoing delay around the Illinois licenses “sucked all the oxygen out of the room—the opportunity. It sucked away the promise. It sucked away the excitement of seeing these new businesses come online.”

An Online Marketplace

Networking can provide invaluable opportunities for businesses. McCarthy said M4MM is set up like a chamber of commerce as well as around “advocacy, education and training,” providing opportunities for members to conduct business with each other.

McCarthy previously worked with the African American Chamber of Commerce of Central Florida and served on the board of the California Black Chamber of Commerce. “I love the fact that they had this membership-driven business-centric economic opportunity and almost like a marketplace for these minority-owned businesses, to not only do business with one another, but … for the chamber, their responsibility was to help shed a flashlight on these businesses to be able to go after contracts, to be able to look at opportunities that they can pursue that they wouldn’t have been presented with unless they were part of the chamber,” she said.

Taking a page from such chambers, M4MM is working on setting up a virtual marketplace to connect its members. “They can go on there and be able to see if there’s any businesses that would meet some of the criteria that they’re looking for,” McCarthy said. “The industry as a whole would be able to go and see these businesses and be able to say, ‘Hey, I want to do business,’ or ‘I want to learn about you’ or what have you.”

A Local Stock Exchange in Michigan

Michigan may soon make new opportunities available to cannabis operators and investors. Cimone Casson, owner of insurance company Cannas Capital and Michigan chapter president of M4MM, is working with regulators on a local stock exchange for the state’s cannabis businesses called the Michigan Marijuana Market (MMM).

A crowdfunding solution made possible under Regulation Crowdfunding (REG CF) via the 2012 JOBS Act and the Michigan Invests Locally Exemption (M.I.L.E.) Act, MMM and aims to help people of color and others to conduct business in the space. It will be administered by MRA and could launch as soon as March 2021, Casson told CBT and CD.

To qualify, cannabis businesses must prove they are operating legally, with up-to-date licensing and permitting, and other documentation, Casson said. “In addition to that, there’s also some stays in there for the investors,” Casson said, adding that those investors must be Michigan residents. “Investors can only invest so much of their net income. The maximum amount that they would be able to invest is $10,000 per entity. No entity can be on another platform at that point so that there’s no dilution of shares.”

MMM allows people to “buy back into their neighborhoods,” Casson said, adding that ”it creates a way for a strong pathway of ownership for people of Black and Brown color because these particular businesses will be in what we consider social-equity zones, which would be the communities that were most disenfranchised.

“With this being said, we still put in some pillars to make sure that it’s not predatory, meaning that there’s a certain percentage of ownership that must be owned by someone from the community.”

Looking back on social equity developments in Michigan in 2020, Casson points to the state’s establishment of a social equity team, which is looking into numerous initiatives to increase industry participation for minorities and other people who have been affected by the War on Drugs.

“What the goal is, is really for us to let the market reflect the demographics,” Casson said of Michigan’s cannabis marketplace.

Speaking about the U.S., McCarthy shared a similar sentiment, taking a moment to applaud the diversity at Trulieve, a cannabis dispensary and delivery multi-state operator based in Florida—the same state where M4MM is headquartered—and one of M4MM’s major corporate partners.

“If you were to go inside their plant, the diversity they have inside their plant—it mirrors the diversity that you see in our country. It’s old people, it’s young people, it’s Black people, and they’re in various stages of supervisory positions and what have you,” McCarthy said. “We just want to see more of that in 2021; we want to see that the inside of these companies are looking like the communities that they’re serving.”

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets—including Arizona, where  the company is excited for growth opportunities following adult-use legalization—Wana is also eyeing new states, including New Jersey, which also legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets, the company is also eyeing new states, including Arizona and New Jersey, which both legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets, the company is also eyeing new states, including Arizona and New Jersey, which both legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

According to executives from cannabis edibles manufacturers Wana Brands and Dixie Brands, the companies’ biggest takeaway in 2020 was that edibles—and particularly gummies—could continue their steady growth, even in the wake of a global pandemic.

“Over time, the gummy has continued to be a pretty massive part of the edibles industry,” Wana Brands Chief Marketing Officer Joe Hodas told Cannabis Business Times and Cannabis Dispensary.

Edibles represent roughly 15% of sales in the legal cannabis market, according to a recent webinar from BDSA. The U.S. edibles market is dominated by candy, which makes up 67% of edibles sales, according to the webinar, and gummies are the most popular form of candy, making up 85% of candy sales.

Despite limited travel and remote working conditions due to the COVID-19 pandemic, Wana was able to capitalize on the popularity of the gummies category this year through its launch in Oklahoma, Maryland and Canada, and it plans to launch into Florida and Missouri by the start of 2021.

To conduct the necessary training with its partners in the new markets, Wana created a video series covering product formulations, SOPs and more.

RELATED: Wana Brands Enters Canadian Cannabis Market Through Partnership with Indiva

In addition to expanding to new markets this year, Wana also launched its new Quick line of fast-acting gummies in March.

“We partnered with a company called Azuca because they have a technology that allows … the cannabis molecules to be encapsulated in a way that does not get absorbed through digestion,” Hodas said. “You still digest the gummy as you would normally, but in terms of the activation of the cannabis, it goes directly into the bloodstream, so it gives an onset time for most people anywhere from 5 to 15 minutes.”

Gummies are also a major part of Dixie Brands’ product portfolio, and Andrew Floor, SVP of Marketing for Dixie’s parent company, BellRock Brands, said the company differentiates itself by ensuring the entire consumption experience is the best it can possibly be, rather than just viewing edibles products as a delivery vehicle for cannabis.

“Yes, we want to make sure we have the right potency levels and the right flavors in place, but then it’s also about, what’s the shape of the gummy?” Floor said. “What’s the size? How’s it going to be coated, and is that complementary to the flavors in the gummy?”

Floor said Dixie’s gummies experienced “fantastic growth” in 2020 despite this year’s challenges.

“We had the momentum, and then we rode the wave of increased purchasing and consumption of cannabis products,” he said. “For us, 2020 was primarily about making sure we could keep up with demand. It wasn’t about cutting corners. It wasn’t about finding a way to increase productivity at … the expense of the quality of our products. It was about, how do we integrate with the industry? How do we make sure we are doing everything we can from a safety perspective, from a supply perspective, to help our customers maintain their business and their supply for their consumer base, as well?”

According to Floor, “edibles are on fire,” and not just in newer and rapidly growing cannabis markets, such as California, but also in more mature markets like Colorado.

“We’re not even hitting our tipping point yet,” Floor said. “As the canna-curious start moving in, it’s the edibles and the gummies that the people are looking for. It’s an exciting product segment to be in right now.”

Dixie has expanded its edibles product line from its home state of Colorado and into Michigan and California, and the company plans to launch in Oklahoma and potentially Maryland next year.

Dixie’s THC gummy flavors, which include Sour Smash, Tropic Twist, Citric Blast and Berry Blaze, are meant to align with trends in the broader candy market, not just the cannabis market, Floor said.

“We don’t want to look at what everyone else is doing from a flavor perspective and put that into the market,” he said. “We want to open up new markets and bring new flavors into play. We are constantly looking at and keeping our finger on the pulse of consumer trends and behaviors outside of our industry.”

In January, Dixie will launch a new spicy mango flavored gummy to continue providing variety to its customers.

“They don’t want the same thing all the time, so I think providing variety and keeping the flavors on the cutting edge of consumer palates and consumer trends is the smart thing to do,” Floor said.

More Growth Means More Innovation

Edibles sales grew roughly 24% year-over-year from 2019 to 2020, according to BDSA’s webinar, and looking ahead to 2021, the Dixie and Wana teams don’t expect the popularity of gummies to slow down at all. 

As it expands, Hodas anticipates that the market will continue to break out into two distinct categories: value brands and premium brands.

Photo courtesy of Wana Brands

“I think that’s going to be a good thing for the gummy market as a whole because there will be price compression, and I think the ability for brands to identify with consumers against their strengths and differentiate from one another is going to be critical,” he said.

Wana aims to be a premium brand, Hodas added, and innovation remains a primary goal as the company heads into next year.

“With the launch of our Quick products and with a number of our products that we have in development that we hope to launch in 2021, innovation is going to be a huge, huge tentpole for us,” he said.

While it continues to innovate and grow in its current markets, the company is also eyeing new states, including Arizona and New Jersey, which both legalized adult-use cannabis in the 2020 election.

Wana will also continue its push for diversity and inclusion in the industry, building upon its Cannabis for Justice website that launched in September with resources for cannabis companies to broaden their understanding of social justice and systematic racism, and tools to make their companies more inclusive .

“We made a decision that this is a path we’re going down,” Hodas said. “Our customers don’t have to see eye to eye with us on that. They can make decisions as to what products they purchase, but we’re going to continue to focus on that into 2021, as well.”

The company also has its eye on the possibility of federal legalization, especially since the U.S. House voted to pass the MORE Act earlier this month to deschedule cannabis.

“I think cannabis for the foreseeable future, and not too much longer, will continue to be this game of ping pong until the new administration comes in and things begin to settle down,” Hodas said. “My hope and belief is that some good, hard work will go into figuring out, what is that path forward? And I think we’ll see some clarity there.”

And in the meantime, Wana will continue to evaluate its customers’ needs and meet those needs with product innovation.

“We don’t think of ourselves as a CPG company,” Hodas said. “We think of ourselves as a cannabis company, and I think that’s a big difference. We’re not looking to, what’s our next flavor? Or, are we going to get into chocolates? We’re looking at this as delivery systems, and what is the best delivery system that allows us to respond to our patients’ needs? And I think that’s going to drive our innovation pipeline for 2021.”

Floor said Dixie will continue to focus on bringing more exotic flavors to market to keep up with what he views as an important consumer trend.

“I think you’re going to start seeing the gummy elevate from old school sweet shop flavors into more mature, … adult flavor trends,” he said.

Floor also sees microdosing as another important trend heading into 2021.

“Right now, 10 mg [of THC] is the equivalent of a standard drink in the adult beverage world, but that’s still a lot for a lot of people, especially when you start thinking about the canna-curious and people who are looking to come into the category,” he said. “So, bringing those individual unit dosages down so that the consumer can be in more control of the effect that they’re feeling is one aspect of it.”

And while Floor said it is important to appeal to the canna-curious consumer who may be trying cannabis edibles for the first time, the industry is also slowly becoming more sophisticated, and more experienced consumers are demanding more from products.

“Let’s understand what they’re looking for and let’s make sure we’re delivering what they’re looking for versus just doing what we’ve always done,” Floor said.

Like Wana, Dixie aims to continue improving upon its products as it heads into 2021, and the company remains focused on R&D and exploring new technologies to meet consumers’ everchanging demands.

“I think it comes back to ensuring as deep an understanding of consumers as we can get,” Floor said. “I think we understand where they are now, but we also want to understand where they’re headed, so we can give them the flavors they want, the potency levels that they want and the entire consumption experience that they’re looking for.”

DETROIT, Dec. 16, 2020 /PRNewswire/ — PRESS RELEASE — Gage Cannabis Co., a cannabis brand and operator in Michigan, has announced it has secured a minimum investment of US$20 million from funds advised by JW Asset Management, LLC as part of the company’s Regulation A, Tier 2, equity financing.

JW Asset Management’s investment will provide Gage with resources to accelerate the expansion of its retail and cultivation footprint, pursue accretive acquisitions, and help position and solidify Gage as the leading cannabis operator in the state of Michigan. JWAM has been an active investor in the cannabis sector since 2014, investing in many of the industry leaders, including TerrAscend Corp., where Jason Wild’s strategic involvement and support has been instrumental in driving tremendous value for shareholders.

“JW Asset Management is widely recognized as one of the premier investors in the cannabis sector. Their participation provides Gage with a strong balance sheet that enables us to further establish our brand in one of the fastest-growing cannabis markets in the United States,” said Fabian Monaco, president of Gage. “We are confident in executing on our 2021 goals, driven by the growth of both the cultivation and dispensary arms of our business. We are fortunate to have developed a strong relationship with JWAM and are grateful for their support as we capitalize on the opportunities ahead in Michigan.”

Wild, founder and president of JWAM added, “Gage has rapidly established a strong footprint in Michigan and I’m thrilled to participate in their growth. I’m confident that Gage’s experienced team will continue to execute on the opportunity ahead.”

Gage’s Michigan footprint has grown significantly since their first retail opening in the state in September 2019. Today, the company supports five provisioning centers (dispensaries), three cultivation facilities and one processing facility across the state of Michigan, with plans to double its retail footprint by the end of the first quarter of 2021. Earlier this month, Gage had its first harvest at its flagship Monitor Township cultivation facility with a second harvest scheduled for this week.

The first tranche of approximately US$10 million of the US$20 million commitment from JWAM has been received by the company. Gage expects to receive the remaining funds prior to year end 2020. In consideration for JWAM’s participation in the offering (US$1.75 per share), the company has agreed to issue an equivalent number of warrants to purchase subordinate voting shares of the company. Each warrant shall entitle the holder to purchase one subordinate voting share in the capital of the company for US$2.60.

Go-public Plan in Q1 2021

The company continues to pursue a go-public transaction which it tentatively expects to complete by the end of Q1 2021. Additionally, the company confirms that general public access to the offering will close on Dec. 16, 2020. Gage encourages interested investors to visit www.GageInvestors.com for more information.