Several Canadian pot companies are poised to enter the US cannabis market through a safer and effectively proven pathway paved by CBD sales.
Since most states have allowed the sale of marijuana for medical use and about 17 states added recreational use, the cannabis market has attracted suppliers from several countries, including Canada.
However, since the importation of cannabis is still regulated by the federal government, classifying it as a felony within its jurisdiction, the marketing and sales strategy remains limited for out-of-state firms.
In response to this predicament, Canadian brands and distributors are considering focusing on CBD instead of the whole cannabis itself.
CBD, short for cannabidiol, is an essential substance found in marijuana and classified as a cannabinoid. It is the second most prevalent active ingredient in marijuana, next only to THC.
Before the US market frenzied on the legalization of pot, CBD has been defined as a critical substance found in medical marijuana.
Possessing medical marijuana with a physician’s prescription has long been decriminalized. In short, CBD sales had already become established when cannabis was still considered illicit.
Nonetheless, with the expected saturation of the cannabis market, CBD may not do well enough on its own. In addition, CBD alone cannot provide the sensation of being high.
Although it is commonly used to treat anxiety, insomnia, and several chronic pains, it cannot supply the cloudiness that appeals to consumers when buying cannabis.
On the other hand, the main active ingredient of marijuana, known as THC (tetrahydrocannabinol), primarily induces psychological effects.
Considering only 16 states have allowed recreational use that mainly utilizes THC over CBD, the preference for Canadian pot firms between the two is quite apparent.
To top it off, CBD sales are allowed in the US, as stated in the 2018 Farm Bill.
Furthermore, the Food and Drug Administration is set to regulate ingestible CBD. Thus, suppliers are simply waiting for the final decision.
Canadian Competitors on the Same Path
Due to the limited marketing strategy, several Canadian pot firms followed the footsteps of those ahead of them to penetrate the booming cannabis market. As a result of this shift, these firms expect CBD sales to increase to $ 16.8 billion by 2025.
Cannabis extractor Valens Co. employed a CBD strategy after purchasing the Florida-based Green Roads in cash and stock amounting to $40 million and pledging $20 million when they achieve sales goals.
According to Valens CEO Tyler Robson, their company’s strategy begins with establishing a cannabis presence through CBD and works their way towards supplying THC-based products once it becomes legal in the US.
On the other hand, other companies who have also begun focusing on CBD include retailer High Tide Inc., Canopy Growth Corp, Tilray Inc., Aurora Cannabis Inc., and Cronos Group Inc.
While the CBD pathway is the safest approach Canadian Pot suppliers can take, it does not guarantee a surefire place in the US cannabis market.
With 1,500 brands already offering commoditized products in the US, the competition continues to increase.