Business
New Report Examines Pre-roll Industry Growth
A recently published white paper sheds light on evidence that points to the demand for pre-rolls.
Custom Cones USA partnered with cannabis data company Headset to publish a white paper about product popularity among its customers. Entitled “The State of the Pre-Roll Industry,” the report explores multiple facets of pre-rolls, from rising sales growth to generation interest and methods of creation, packing, and more. “This white paper demonstrates the continued growth of the pre-roll industry and its potential to become the #1 largest product category within the cannabis industry,” said CEO and co-founder of Custom Cones USA, Harrison Bard. “We thank our partners at Headset for collaborating on the white paper to provide a wealth of information that people can trust to make informed business decisions in our evolving marketplace.”
The data for this report was collected from more than 300 “recreational cannabis producers, medical cannabis producers, hemp producers, plant processors, vertically integrated brands, cannabis brand agencies, dispensaries, and multi-state operators.”
In comparing year over year category sales growth in the U.S. and Canada between November 2021-2022, the white paper explains which product types are increasing or decreasing in popularity. “…[P]re-rolls, edibles, drinks, vapes, and oil saw an increase in market share, and tinctures, capsules, and topicals saw their market share shrink,” the paper explains. “The big takeaway from this data is that ‘recreational’ categories (flower, pre-rolls, and vapes) are driving the market, while ‘wellness’ categories (tinctures, capsules, and topicals) are shrinking.”
Year over year segment growth, infused pre-rolls grew in Canada by 1,426%, mixed strain pre-rolls by 440%, and disposable vapes at 160%. In the U.S., mixed strain pre-rolls rose by 63%, disposable vape pens by 60%, and infused pre-rolls by 22%. The white paper cites potency as an important factor when consumers are choosing which product to purchase, since infused pre-rolls are more potent than standard pre-rolls, as well as the advancement of pre-roll machinery which can keep prices low and potency remains high.
The paper also addresses an interesting trend showing the price compression of cannabis products in all categories (beverages, concentrates, edibles, pre-rolls, and vape pens are trending downward in the U.S., and all prices are also decreasing in Canada in all categories except pre-rolls. “In other words, if you are in the business of selling cannabis, and you are worried about declining margins, pre-rolls are a category you should be expanding into to maintain and boost profitability.”
Custom Cones USA added that 58.4% of companies confirm that they produce or sell infused pre-rolls, and the white paper explained a correlation between the decrease in price for regular pre-rolls and an increase in price for infused pre-rolls. Multi-packs of pre-rolls are also on the rise, with an estimated 400% growth since 2021 in multi-packs with at least two to five grams.
While different generations of adults lean toward specific types of cannabis products, pre-rolls remain fairly consistent among all generations, with baby boomers at 12.8%, Generation X at 13.6%, millennials at 14.5%, and Generation Z at 14.4%.
Specifically in the Canada cannabis industry, pre-rolls are on a roll. About 50% of cannabis companies are less than three years old, compared to 18.9% that are four to five years old, and 20.5% that are six to seven years old. The white paper notes that the industry, and specifically pre-roll businesses, are maturing. However, there are projections about how the industry will adjust and change over time, with questions about if Canada businesses will expand into the U.S., or how new cannabis markets in the U.S. will be able to produce pre-rolls at the same rate as businesses in mature markets.
For cannabis businesses seeking to expand, the white paper also notes that businesses should consider how many pre-rolls they can produce monthly, which machines or methods other brands are using to pack pre-rolls, whether or not they weigh pre-rolls before packaging, and the average size of a pre-roll in grams.
In conclusion, the white paper identifies pre-rolls as a trend that will continue to rise. “After examining the data, we fully expect the pre-roll trends to continue, so much so that we believe pre-rolls will overtake flower as the largest selling product category by 2030,” the white paper projected. “They are the most convenient way to consume flower—just add fire, and the rise of infused pre-rolls and multi-packs will continue to push the market forward. So, it’s not a stretch to think that, as the quality of pre-rolls continues to rise, pre-rolls will start to overtake the flower category.”
Source: https://hightimes.com/news/new-report-examines-pre-roll-industry-growth/
Business
New Mexico cannabis operator fined, loses license for alleged BioTrack fraud
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Business
Marijuana companies suing US attorney general in federal prohibition challenge
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Business
Alabama to make another attempt Dec. 1 to award medical cannabis licenses
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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