Edible Manufacturing a Key to Cannabis Market Growth
November 19th, 2020
Exclusive, Top News
It’s been about a year since Canada, following up on the national legalization of adult-use cannabis, allowed ingestible (edible and drinkable) products on the market. It took a few months for some products to hit the shelves and find traction, but both supply and demand have been trending upward lately. According to market research firm Mintel, 59% of Canadians reported using and/or being interested in using cannabis. Importantly, 32% of non-users indicated an interest in trying cannabis and 48% of them listed edibles as the most intriguing format when asked to rank product categories. Overall, 66% of non-users open to cannabis use indicated an interest in edibles.
In many ways, edibles are something of a gateway for curious but inexperienced consumers to try cannabis, and they could be the key in unlocking the full potential of the legalized cannabis market. On top of opening new markets, cannabis infused ingestibles return on average higher profit margins than smokable products do. One company, City View Green Holdings Inc. (CSE: CVGR) (OTCQB: CVGRF), has recognized this trend and is building a business focused on the production, distribution, and sale of cannabis-derived edibles.
City View Green’s Plan
City View Green recently submitted its evidence package to Health Canada, one of the final steps before anticipated approval, for a Standard Processing License. The company has completed the first 12,000 square feet of its 40,000 sf automated processing and manufacturing facility in Brantford, Ontario. Utilizing best in class equipment and processes, the facility is designed to produce 100,000 pieces of edibles every eight hours when fully operational. Cannabis infused chocolates, baked goods, gummies, and chews are all on the menu.
In late April, 2020, City View announced the closing of an asset purchase transaction with Infusion Works Inc. The deal effectively merged the two companies under City View’s umbrella, bringing Infusion Works’ intellectual property, extraction and manufacturing equipment, executive team, and business relationships with it. Infusion Works had been laying the groundwork for full production of cannabis infused foods, perfecting extraction techniques and recipes while establishing contacts with existing licensed producers that may be interested in creating edible brands.
When licensed, City View Green will offer white label manufacturing and packaging services to those existing producers. The company anticipates hitting the ground running, with a deal lined up to manufacture and package edibles for a prominent international licensed producer once the license is secured. Many cannabis producers do not have the expertise, machinery, space, or proper license to manufacture cannabis infused foods, but they most certainly have interest in selling edibles due to the broad appeal and attractive margins.
City View Green is also planning to create and market its own brands of edibles. To that end, the company owns a 27.5% stake in Budd Hutt Inc., a cannabis retail cafe chain with 52 locations in the works. City View plans to use Budd Hutt shelf space to launch its own brands, while also leveraging the relationship to add distribution for its white label partners.
Does It Make Sense?
As the cannabis industry matures and gains legitimacy with a broader range of consumers, some of the old business axioms start to exert themselves. Offering high quality, consistent products with low cost of manufacturing is important, and City View utilizes automated state-of-the-art equipment to achieve those goals. Branding and packaging are critical in creating consumer appeal and ensuring regulatory compliance, and City View has assembled a team of food and consumer packaged goods experts to tackle that end of the business.
With the industry’s growth there is increasing room for specialization. Many licensed producers have maximized their space, capital, and expertise in building cultivation operations, but with the advent of ingestibles and cannabis-derived products they see a more lucrative opportunity lying just beyond their reach. Contract manufacturers that specialize in extracts, formulations, manufacturing, and packaging can provide the bridge to those more profitable products and fill out a more complete product portfolio for licensed producers. This type of arrangement allows each party to focus on what they do best, helping to lower costs and maximize profitability while ensuring quality and consistency of product.
Deloitte estimates that edibles and other alternative cannabis products will end up generating $2.7 billion dollars of revenue annually in Canada. “The edibles market alone is estimated to be worth at least $1.6 billion a year in Canada, with cannabis-infused beverages adding a further $529 million,” said Jennifer Lee, a partner and Deloitte Canada’s Cannabis National Leader, and Consumer Advisory and Analytics Practice National Leader. “According to our research and stakeholder interviews, much of this economic boost will be on top of current cannabis product spending. The introduction of cannabis-infused edibles will clearly threaten the alcohol industry as consumers are using the product for similar usage occasions.”
These projections are very good news for City View Green as it solidifies its position right in the middle of these emerging trends. Keep an eye out over the next couple of months as the company executes its vision and moves into the commercialization phase.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
Follow Us on Social Media
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.