Edibles Producers Catering to California’s New Cannabis Hungry Consumers November 15, 2018 - Baystreet.ca Sales in cannabis-infused edibles products have been on the rise in adult-use legalization markets, with sales projected to surpass $4.1 billion by 2022. According to BDS Analytics and Arcview Research, the edibles market will be led by “Big Brands”, which today includes recently-IPO’d PLUS Products (CSE: PLUS), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED), CannaRoyalty Corp. (OTC: ORHOF), MariMed Inc. (OTC: MRMD), and The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF). Within the regulated cannabis industry, cannabis extract-based products are the fastest growing segment. New delivery options such as edibles tend to attract new customers in the market, especially those completely new to cannabis—outside of the more generally known smoking method. CALIFORNIA LEADING THE WAY In California, where adult-use legalization began in January of 2018, the upward trend for edibles appears to be playing out like that of longer established legal markets such as Colorado and Oregon. Due to its long history of medical legalization, California has driven itself to have nearly 250 brands of edibles. Among brands available in California, PLUS™ Sour Watermelon Gummies and PLUS™ Blackberry & Lemon Gummies are the #1 and #2 best-selling branded products, according to Q3 2018 retail sales data from both BDS Analytics and Headset.io. Those and other products have made PLUS Products the #1 best-selling cannabis-infused edibles brand in California. Companies like PLUS are better positioned to attract a mainstream customer base, through cannabis-infused edibles. From the BDS report, PLUS unit sales have grown 97% between Q2-Q3 2018. This surge in growth improved PLUS’s edibles market position ranking from #4 to #1 in retail value of sales. “We are grateful to the California consumers who have made PLUS the leading cannabis product in California, the largest and most competitive cannabis market in the world,” said CEO, Jake Heimark in his company’s latest press release. “This has been a big year for Plus Products as we expand our portfolio and look to broaden our geographic reach and we remain committed to offering our customers products they can trust that provide consistent experiences in delicious formats.” The state of California is expected to grow to $5.0 billion in 2019 legal sales, making it the largest cannabis market in the world. In comparison, the entire country of Canada is only expected to yield $2.7 billion in 2019 legal sales. Edibles have grown as a % of total retail sales as well, in both Colorado and California—growing from 12% to 16% of total sales, with still an upward trend continuing. Economically, prices for edibles are staying more stable, whereas concentrates and flower prices have dipped since Q2 2015. According to BDS Analytics’ Green Edge, total legal cannabis retail sales in Colorado, between Q1 2014 to Q1 2018, sales for branded products grew 71%, whereas non-branded products only grew 64%. The market is evolving, with the biggest growth coming in the branded selections. These brands are creating new categories, sub-categories, and methods of consumption. EDIBLES GOING GUMMY Plus Products currently sells to over 200 licensed dispensaries and delivery service customers, through a distribution partner. As well, an expanded product line is currently in the works. Plus Products currently produces six infused gummy SKUs. For the holiday season, PLUS recently announced a limited edition Cranberry Shortbread flavor for its cannabis-infused gummies. Pairing disciplined manufacturing with thoughtful branding is a strategy that is working for PLUS. Since the move into its current facility, PLUS has consistently grown its market share, most recently through taking the top 2 spots in the edibles market, in terms of retail sales. Having gone public in October, Plus Products has been on a steady growth pattern since entering the California edibles market. In December of 2017, PLUS moved to its current 12,000 sf manufacturing facility in Adelanto, CA, which has an annual production capacity of $50 million. Since officially launching its IPO in October, Plus Products has made progress towards expanding its production capacity. The first order of business is to expand its food manufacturing square footage from 12,000 to 40,000 sq ft. Currently the company has production line capacity for two lines, however the upgrades schedule will bring an additional three lines. ADDITIONAL EDIBLES OFFERINGS Canopy Growth Inc. (TSX: WEED) (NYSE: CGC) When it signed a strategic partnership deal with leading liquor branding company Constellation Brands, Canopy Growth set the cannabis sector on fire, with the prospects of packaged goods and expansions into edibles and beverages. The partnership expects to remain a world-leading brand, through offering several products from foods, drinks, to even pet products. CannaRoyalty Corp. (OTC: CNNRF) CannaRoyalty got its start making royalty streaming deals in Canada. However, the company's major operations are now in the U.S. CannaRoyalty has since become the largest cannabis distributor in California, which claims the largest marijuana market in the world. The company also markets several of its own brands, including cannabis edibles, flowers, and vapes. MariMed Inc. (OTC: MRMD) MariMed designs, builds and then leases medical cannabis production facilities to customers. The company offers consulting services to its clients, to assist existing businesses expand, and helping new businesses obtain necessary licensing. MariMed also distributes its own lineup of cannabis products, including Kalm Fusion and Betty's Eddies. iRollie also provides custom product and packaging for companies in the cannabis industry. The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF) Earlier in June, The Green Organic Dutchman Holdings announced it would add a 287,245 sq ft purpose-built facility on its Valleyfield property capable of producing 40,000 kgs of premium organic cannabis. This facility will be dedicated to TGOD’s Beverage Division and increases the Company’s fully-funded capacity to 170,000 kgs. Disclaimer: Nothing in this article should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. 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