Business
Variety of sizes, infused joints are driving growth in marijuana pre-roll sector
Pre-rolls were once counted as part of the marijuana flower market.
But over the past few years, they have become viewed as a distinct product category.
“In terms of relative sales growth, comparing Q1 of 2020 to Q3 of this year, the pre-roll category has the highest growth,” said Cooper Ashley, analytics manager at Seattle-based data firm Headset.
Pre-rolls went from $406 million in sales and 7.9% market share in 2018 to $1.5 billion in sales and 12.7% market share so far in 2022, according to Headset data.
This change has been driven by the introduction of a greater variety of pre-rolls as well as the consumer dollars that are being spent on them.
More sizes and package varieties
Just a few years ago, pre-rolls were almost exclusively sold as 1-gram singles.
Today, there are half-gram pre-rolls, 1.5-gram pre-rolls and myriad other sizes.
They also are sold in two-packs, five-packs, 10-packs and other quantities.
Giving consumers more and different options in pre-roll sizes allows them to pair a pre-roll with the occasion.
“Smaller-sized pre-roll packs have also spread across the nation, with brands like Miss Grass, Lowell Smokes and Dogwalkers on the trend,” Madeline Scanlon, an analyst with the Brightfield Group, a cannabis market research firm in Chicago, told MJBizMagazine via email.
“In the U.S., we see a lot of two- or four-packs and still a huge number of single pre-rolls. Canadians have taken to bulk-buying pre-rolls.”
Retail product buyers and managers concur.
“The pre-rolls that move fast are the half-gram two-packs, multipacks,” said Allan Mullen, an inventory buyer for Cannabis City in Seattle, adding: “Blunts don’t move too well.”
In Michigan, many retailers are manufacturing and selling their own “house” pre-rolls.
Premiere Provisions in Big Rapids, for example, buys shake or trim from growers and then uses a Knockbox cone-filling machine in the back of the store to make the pre-rolls, which are sold up front after being manually weighed.
“It’s a lot more cost effective,” said Edwin Maguire, general manager at Premiere.
The company’s 1-gram, in-house pre-rolls cost $2 for one, $17 for 10 and $45 for a full ounce of pre-rolls. They typically test between 16% and 26% THC, he added.
Infused popularity
The growing popularity of pre-rolls also has been fueled by infused versions.
Headset refers to these products as “connoisseur” pre-rolls, which are infused with or dipped in concentrates such as wax, rosin and other marijuana concentrates.
“The trend line is just straight up. They have grown so fast in comparison to other segments within that category,” Ashley said of infused pre-rolls. “We’re looking at easily a five-times increase since January 2020.”
Lance Mathis, store manager at Inyo Fine Cannabis Dispensary in Las Vegas, said of Catacombs, a brand of pre-rolls that are infused with rosin and other concentrates: “I can’t keep them on the shelf, no matter how much I order.”
A single 1.5-gram, infused Catacomb pre-roll retails for $30, Mathis said.
“They fly so fast because they’re very consistent. They taste good. It’s just a very high-quality product, and it is priced to sell,” he said.
The falling prices of infused pre-rolls are also driving interest, Mathis added.
Stingers by AMA, another pre-roll brand that Inyo carries, once retailed for $40 but now sell for $15-$30, depending on size. Mathis said the AMA pre-rolls do well because it’s “good flower and priced to sell.”
Many businesses are taking advantage of the surging interest in infused pre-rolls, including existing companies introducing new product lines as well as entrepreneurs launching infused pre-roll businesses.
Sanctuary Medicinals, a vertically integrated multistate operator that does business in Florida, Massachusetts, New Hampshire and elsewhere, is working on its own line of infused pre-rolls.
“We definitely noticed the response that consumers and patients had to the infused pre-rolls,” said Jake May, director of marketing at Sanctuary.
“We’re thinking about what the next brand might be and how to stand out in the market.”
Companies now scrambling to create infused pre-roll brands “feel like they’re missing out on that market,” said Mathis at Inyo.
“It’s a market on its own. I’m just constantly chasing them, keeping them reloaded. Customers will come in the door and specifically only ask for infused joints. And if we don’t have them, they’re going to go somewhere else.”
Mullen of Seattle-based Cannabis City noted that pre-rolls infused with live resin are more popular than those infused with distillate—a trend he’s noticed with other products, too.
“People are more educated now about concentrates, terpenes, other cannabinoids. That’s why I think infused pre-rolls are moving so well now,” Mullen said.
“Vendors are adjusting their products and moving more toward a cannabis connoisseur customer base who are educated.”
Headset’s Ashley said that in recent years, marijuana operators have increased investments in pre-rolls.
“The level of sophistication has really increased, both in branding and in this repeatable experience,” he said, adding that successful brands include Sublime, Fuzzies and Jeeter.
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/
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.”
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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