Cannabis Edibles Market Expected to Quadruple to USD 4.1 Billion

May 07, 2019

NEW YORK: From candy and chocolate to infused beverages, the cannabis edibles market will hit USD 4.1 billion by 2022 according to a research report from ArcView.

Now many in the industry are stocking up on new edible offerings, including Cannabis One Holdings Inc. (CSECBIS) (OTCCAAOF), Canopy Growth Corp (NYSECGC) (TSXWEED), Koios Beverage Corp. (CSEKBEV)(OTCKBEVF), Tilray, Inc. (NASDAQTLRY) and HEXO Corp. (NYSEHEXO) (TSXHEXO).

Unlike in Canada where delays and other challenges are being anticipated ahead of the proposed October 2019 legalization, edibles are already legal and on shelves in multiple US states. Their popularity in places like Nevada, Washington, California, and Colorado has not been missed by companies like Cannabis One (CSECBIS) (OTCCAAOF), which has strategically been amassing a portfolio that includes multiple popular edibles brands. This year, the company plans to integrate a number of brands into its portfolio including Evergreen Organix, West Edison Cannabis Concentrates, Fleur Cannabis, Strainz, Bronner and Honu.

Most recently, the company announced a definitive asset purchase agreement with the owners of the popular cannabis-infused product brands Evergreen Organix and EG.O. Over the years since its inception, Evergreen has made an impact in its home state of Nevada, winning numerous cannabis industry awards, including Best Edible and Best Edible Over All at the 2017 Jack Herer Cup, and reviewed as Best Edible by Reno News Review. The quality-driven edibles line is handcrafted by culinary artists, cutting no corners in the production of the product, and having widespread retail penetration. This partnership mimics the strategy of cannabis giant Canopy Growth Corp (NYSECGC) (TSXWEED) - a large part of Canopy's success is due to intelligent acquisitions of edibles companies in anticipation of legalization.

Evergreen Organix is the second award-winning edibles addition to the Cannabis One (CBIS) (CAAOF) brand portfolio in the last month. Earlier in April, the company announced a definitive agreement to acquire select assets of Washington-based Honu Enterprises Inc.—one of few brands to win awards in multiple states and is estimated to yield US$20.3 million in annual system-wide brand revenue during fiscal 2019.

The potential for cannabis edibles is on the rise, as new states are looking to join the likes of California, Colorado, Nevada, and Washington in producing new cannabis-infused food products. Already, Michigan is bracing for a flood of marijuana-infused edibles, while medically-legal Florida is also moving closer to edibles sales. Leaders of the industry such as Tilray, Inc. (NASDAQTLRY) has been quietly acquiring edibles companies such as Natura in order to position themselves as a leader in these emerging markets.

Enhancing Pot's Value with Edibles

With the addition of these popular Nevada marques to our growing portfolio of 'Best-of-Breed' brands, (CBIS) continues to demonstrate its ability to execute on its stated strategy - Acquire popular brands in vibrant markets and leverage that consumer enthusiasm into multi-state retail and manufacturing expansion, commented Jeffery Mascio, CEO of Cannabis One.

Upon the finalization of the acquisition, Cannabis One (CBIS-CAAOF) will gain a significant presence in the Nevada recreational medical marketplace. In terms of significance, Evergreen Organix has unprecedented retail penetration levels for its brands, appearing in approximately 95.0% of State-licensed dispensary locations.

Together with Evergreen's management, Cannabis One (CBIS-CAAOF) estimates the addition of US$20.8 million in annual system-wide brand revenue through the Evergreen channel, during fiscal 2019. Much of the expectation is enhanced by the value proposition brought to the table by Cannabis One's brand portfolio presence.

Evergreen believes CBIS represents an exceptional value proposition and a valued industry partner through which to launch the next phase of our progressive state-legal expansion program, said Evergreen's President, Jerry Velarde, who will be joining the Cannabis One team as Chief Marketing Officer. Having already established a reputation centered around brand quality and consistency in the minds of cannabis consumers - we are excited to jointly announce the contribution of our Evergreen suite of brands to Cannabis One's growing 'House of Brands'.

Along with Evergreen Organix, the agreement also included the popular flower brand, Fleur — which fits with Cannabis One's other flower brand offerings that now include Fat Face Farms and Cheech's Private Stash. Acquisitions like these set Cannabis One (CSECBIS)(OTCCAAOF) up to jockey for partnerships with even larger corporations, such as HEXO Corp. (NYSEHEXO) (TSXHEXO) who recently announced a partnership with beverage manufacturing giant Molson Coors Canada back in January, to produce CBD-infused beverages through a newly formed joint venture company named Truss.

Further Market Edibles Activities

Ontario-based cannabis giant Canopy Growth Corp (CGC-WEED) has ramped up the pace of its packaging and shipping processes while anticipating sales growth in the final quarter of the calendar year as more stores open their doors and edibles hit the market. A year ahead of the anticipated Canadian legalization of edibles, Canopy partnered with widely recognized chocolatiers Hummingbird to produce a jointly made product. Given that the Canopy facility is located within a former Hershey plant in Smiths Falls, once again the site will produce chocolate. Canopy also is anticipating the launch of its joint beverage products with Corona makers, Constellation Brands.

Much like Canopy, Tilray, Inc. (TLRY) has also announced a partnership with a major beverage company—big beermaker Anheuser-Busch InBev. Together they're set to research cannabis-infused nonalcoholic beverages for potential introduction in the Canadian market once cannabis edibles are allowed.

Quebec-based HEXO Corp. (NYSEHEXO) (TSXHEXO) is also looking into producing its own edibles products, as well as anticipating potential partnerships with further Fortune 500-level companies in the food, cosmetics, and tobacco industries which could very likely have interest in entering the cannabis sector.

Koios Beverage Corp. (CSEKBEV)(OTCKBEVF) is also teaming up with well-known organizations, announcing an agreement to sponsor TedXMileHigh this June in Denver. Koios is an emerging functional beverage company with a subsidiary -- Cannavated Beverage Corp. -- focused on the CBD-infused beverage market. Koios has an available distribution network of 5,000+ retail locations after signing a strategic partnership with GNC and will leverage these for Cannavated as the markets become legal. (PRN)

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