Sweet Profits in THC-Infused Edibles
Here’s an indicator that can’t be ignored. At weekend parties with family and friends, I’ve increasingly noticed that attendees causally ingest (and proffer) high potency THC marijuana edibles, as if they were conventional treats.
At these garden parties and barbecues, it’s no big deal for even senior citizens to cop a buzz with a marijuana gummy or candy bar. Richard Nixon’s “War on Drugs” is over. Nixon lost.
The evidence isn’t just anecdotal. Edibles are a fast-growing source of revenue and profits for the cannabis industry. According to a report from Custom Market Insights, the global cannabis edibles market generated $20.47 billion in annual sales in 2021 and is expected to reach $197.74 billion by 2030, for a compound annual growth rate of 32.04%.
Below, I’ll steer you toward an investment opportunity that taps this outsized growth.
Before the wave of marijuana legalization accelerated in recent years, buying and ingesting edibles could be a dodgy proposition. Whether it was unregulated products gussied-up to look like legal versions, or homemade brownies wrapped in tin foil, the THC potency was a crap shoot.
Hence the frequent occurrence of edibles consumers unwittingly getting far higher that they intended and ending up in the emergency room. Anyone who has taken more THC than they wanted (and maybe you’ve experienced this yourself) can tell you that it can be unpleasant.
However, as marijuana legal reform gains ground and pot use increasingly enters the consumer mainstream, we’re seeing greater standardization and proper labeling in the edibles space, which in turn is making edibles more popular and socially acceptable.
Marijuana isn’t just getting legalized; it’s getting woven into the daily fabric of consumer life. Edibles consumption tends to soar over the holidays; they’re becoming as American as apple pie. For investors, understanding the commanding role of edibles is crucial to pinpointing the broader trends influencing the growth of the marijuana industry.
According to a new report released June 13 by New Frontier Data, edibles are gaining ground as the favorite and most frequently used form of marijuana among consumers while more traditional methods of consumption are declining in these areas.
In 2022 17% of consumers said that edibles were their most frequently used form of cannabis and 22% said it was their favorite form. In 2023, that percentage climbed to 21% and 25% respectively, while the use of flower in a hand pipe or one-hitter or as a joint (staples of pre-legalization consumption) fell in both categories.
Testing and labeling of regulated products gives consumers confidence that the edible they are consuming is the dose that’s designated on the label. This greatly reduces the chance of overdose.
What’s more, as more casual consumers enter the market, low-dose options are getting popular, which are harder to find in a flower market still largely focused on high THC.
Also driving the popularity of edibles is the advent of fast-acting products. Among the more daunting barriers to edible acceptance was the fact that it took anywhere from one to two hours for the high to kick in, which made them inconvenient for busy or impatient consumers.
However, the formulation of edibles that produce a physical effect in 10 to 15 minutes are emerging on the market. This feature is attractive for those using cannabis as a substitute for alcohol or a prescription pain reliever.
Edibles also are increasingly popular because they’re discreet and give off no smoke or smell, which is ideal for consumers as they increasingly use cannabis outside of the home and in public situations.
This is especially prevalent among younger consumers, who unlike their older peers are resistant to the vagaries of the illicit market. In addition, smoking cannabis flower is perceived by younger consumers as unpleasant and smelly. For all consumers, THC potency is the number one issue before buying a marijuana product (see chart).
Source: New Frontier Data
For older consumers (especially baby boomers), this is not a deterrent to use. However, for younger generations, it makes manufactured products a more appealing alternative.
As the New Frontier report states:
“With cannabis-friendly hotels, consumption lounges, and other opportunities for social consumption emerging, it will be interesting to see if they make accommodations for smoking, or if edible use will be bolstered by the rules around consumption in public places. Many states already have strict laws against smoking in public, which might make edibles even more attractive as the desire and comfort with use in public increases.”
As cannabis cements its status as a consumer staple, some pot stocks are superb investments. But many others are not. You need to conduct due diligence. That’s where my publication, Marijuana Profit Alert, comes in. By applying my proprietary screening methodologies, I discover for subscribers the most attractive plays in the psychotropic revolution.
In fact, in my latest issue of Marijuana Profit Alert, I pinpoint an edibles-oriented stock that’s projected to jump in price by at least 100% over the next 12 months. To learn more, click here.