The EU’s Novel Foods, flower’s grip on market share, and stale cannabis events.
By Kaitlin Domangue
Novel Foods in the EU
This is an interesting subject for me to talk about because it doesn’t involve the U.S. market. It also involves hemp-derived CBD, which isn’t my usual focus.
I do talk about international markets, but given that I am an American, the American cannabis market has a huge impact on the global market, and we are currently the most robust market in the world: most of my content leans American. 🤷♀️🇺🇸
“Novel Foods” is a policy in the European Union, however, it opens a bigger discussion about the U.S. cannabis market.
Novel Food is food that has “not been consumed to a significant degree by humans in the EU before May 15th, 1997, when the first Regulation on novel food came into force.” Chia seeds are an example.
CBD was added to the Novel Foods catalog in January 2019. CBD brands with products in the European Union had approximately one year from February 2020 to gather data proving a safe product. 🇪🇺
It cost brands approximately £30K – £80K to get approved and around 24 months of waiting time. The application process involved product testing, gathering lab data, testing the manufacturing process, completing forms, etc.
I worked with a brand getting their Novel Food Certification and it was a huge undertaking. Their entire team felt a massive sense of accomplishment when the application was finally submitted.
On June 7th, the EFSA announced they could not establish the safety of CBD as a novel food because of data gaps and concerns over potential hazards from consuming CBD. The process is paused until further notice.
What I’m Thinking 🧠
Even though hemp-derived CBD is permissible under American federal law, the FDA does not regulate CBD products like the European Union is trying to do. They do crack down on false advertising and medical claims, though.
On one hand, it’s frustrating that the American market doesn’t have standardized regulations for CBD. On the other hand, the federal government’s hands-off approach might prevent what’s happening in the EU from happening in the U.S. CBD market.
Flower’s grip on market share
There’s a lot of talk about smaller cannabis product categories and their eventual dominance over total market share.
And even though cannabis consumers are in an experimental phase, flower has been the reigning product category queen (not king, sorry y’all – bud comes from the female plant 👑💁♀️) forever.
Tbh, I’ve always believed flower will reign supreme as long as people are buying cannabis. Flower is cost-effective, potent, delicious, and versatile.
However, flower’s tight grasp on market share could be fading as we enter a more-mature era of legal cannabis. In 2021, flower made up less than 59% of total sales. In December 2019, flower represented 69% of total sales.
Flower represents 70% of total sales in Alaska and 69% in Montana, compared to 57% in California and 58% in Oregon. The maturation of California and Oregon’s markets is the most likely explanation for the variance.
Interestingly enough, Alaska and Oregon legalized medical cannabis just two years after California did in 1996, but their laws didn’t allow retail sales.
California’s law did allow patients to access regulated products, so the state (and its consumers) has had a 15+ year headstart on the rest of the country. Flower might not cut it for the Western U.S anymore.
What I’m Thinking 🧠
Flower will always be a force to be reckoned with. The category should never be ignored. It serves as a standalone product AND it’s the foundation of every single other cannabis product on the store’s shelves.
It’s the industry’s most important category. But, consumers are moving away from it. I think for a variety of reasons including the potential health ramifications of smoking and the fact that cannabis flower is hard to dose.
Each state serves as its own cannabis ecosystem. General trends are the same from state to state, but as we dive deeper into the data, category performance depends on a variety of factors unique to each individual market.
I think that’s a trend we can expect to continue, even 10 years from now.
Cannabis events can be better
Jason’s post highlights a recurring problem in cannabis: events often aren’t worth the cost.
It’s noticeable when an event is worthwhile. The industry buzzes about it for weeks. At The Green Paper, events are a foundational unit of business and one thing we’ve heard is that events are stale.
Almost every event is the same repackaged talking points & the same handful of speakers. I’ve listened to some speakers completely stray away from the topic at hand and instead gloat about themselves and their accomplishments for 20 minutes straight. It’s frustrating.
(Also, if you’re near STL – come to my event this Friday! It’s free & we’ll be talking about the potential transition from medical to recreational in Missouri during the upcoming midterm elections – no stale convos here :-))
Jason is right when he says most conferences are industry-only. There aren’t many consumer-focused events, even when some promise to be a mixed bag.
Some operators don’t take away anything from even industry-only events because it’s such a broad focus. Manufacturing equipment distributors and dispensaries don’t crossover enough for every sector to attend the same 3-day long events.
I’ve written about this issue before and said, “Larger events like MJBizCon cast a wider net. While this approach isn’t bad by any means, it can be hard to zero in and really spend time on a particular topic. Larger panels usually have to limit the number of questions asked by audience members, too, preventing natural conversations that would otherwise be in place.”
What I’m Thinking 🧠
In my opinion, tailoring the events to meet a specific audience is the best way to create a successful event.
The Cannabis Marketing Association’s recent event generated tons of positive feedback. It might not be as big as events like MJBiz, but they aren’t trying to be.
Events like CMA’s and The Green Paper are focused on providing value to that audience, not attracting the most attendees.
But it looks like there’s a need to tailor businesses even more. Brands are clearly missing the opportunity to connect with consumers. And in growing categories like beverages, meeting the consumer is crucial.