Opinion: How cannabis brands can drive innovation as functional products

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Image of a woman struggling to sleep with an alarm clock in the foreground
Austin Stevenson
Austin Stevenson

Within the past two years, growing public health concerns and the proliferation of personal wellness products have created more health-conscious and proactive consumers.

Recent market research indicates that 70% of consumers currently use food products for specific functional benefits to support their mental and physical well-being.

As more consumers prioritize their holistic health, this presents a timely opportunity for the cannabis industry to create tailored formulations that cater to these evolving and varied preferences.

Considering how cannabis will only become more accessible in the years to come, brands have the ability to develop full-day product experiences that showcase the plant’s diverse applications.

Moving forward, brands can shift their focus away from conventional THC and CBD products and harness the power of relatively untapped terpenes and minor cannabinoids.

Embracing cannabis’ latest role as a functional product and creating customized offerings to support sleep, performance and rest can make the industry more approachable to new audiences and open the door to more scientific research around the benefits of the plant.

Formulating for sleep

Millennials currently represent the largest share of cannabis consumers in the United States, and brands should pay close attention to their lifestyle habits when developing new products.

Notably, millennials experience extremely high stress levels and struggle with sleep disorders.

As a result, millennials use sleep aids more often than their baby boomer and Gen X counterparts.

To reach this niche-yet-growing demographic, brands should consider formulating products with specific cannabinoid ratios, terpenes and functional additives specifically designed to optimize sleep.

Our company’s research teams have found minor cannabinoids such as CBN and CBG especially effective when paired with terpenes such as nerolidol and linalool, as well as functional ingredients such as holy basil and magnesium.

Pairing these cannabinoids with terpenes might lead to products that help consumers gain much needed rest.

If mainstream sleep-market growth continues to increase by nearly 6% annually and reach $46.5 billion by 2025, brands must find creative ways to translate this demand within the cannabis sector.

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Carving out the market 

Consumers are not only seeking out products to help them relax, but they are also looking for offerings that enhance mental and physical performance throughout the day.

This is reflected in the rising demand for energy drinks – a market projected to reach $99.62 billion in five years.

This level of growth comes as no surprise when considering how these products are marketed for everyday activities ranging from studying to working out and even gaming.

While this is a relatively new frontier within cannabis consumer packaged goods (CPG), recent studies have identified minor cannabinoids such as THCv that can increase energy metabolism.

Additionally, terpenes such as beta-caryophyllene, limonene and pinene can enhance focus, increase energy and improve cognitive function, respectively.

These energizing cannabinoids and terpenes will be especially valuable in the future as fewer consumers purchase sugar-sweetened beverages.

Brands that seize this opportunity could introduce an innovative category of new products that propel cannabis into the mainstream spotlight.

Embracing ‘Cali sober’

Of course, holistic wellness requires a balanced lifestyle, which means consumers are also shopping for products that can help them unwind after a hectic day.

In many cases, cannabis-infused beverages have become a go-to nightcap.

Approximately 45% of adults reportedly opted for cannabis over alcohol during the height of the pandemic.

Since then, cannabis beverages have steadily grown in popularity, and recent innovations in emulsion technology, along with more consumers seeking healthier ways to decompress, will continue driving this trend.

Consequently, cannabis brands can develop new products featuring specific terpene blends that can deliver a similar relaxed buzz.

Products high in terpenes such as myrcene and limonene might create both relaxing and euphoric experiences.

Ranging from cocktails to tonics, infusion technology has made way for the development of sweet, invigorating beverages along with low-calorie drinks that appeal to a variety of consumer lifestyles and dietary preferences.

Minor cannabinoids and terpenes are the future

Over the past decade, the U.S. cannabis industry has demonstrated its potential as the next CPG sector.

However, those who have invested their time, effort and energy to develop the space into what it is today cannot become complacent or stagnant.

Instead, companies must look toward the future and directly address growing consumer demand for everyday functional products.

Achieving this goal will require market leaders to shift their focus to terpenes and minor cannabinoids that can create novel cannabis experiences.

This is a valuable opportunity that cannot be overlooked, especially considering how the terpene market is expected to grow at a compounded annual rate of 6.4% in the next five years.

Cannabis has a myriad of functional and holistic wellness applications, and brands must make a concerted effort to showcase these benefits to the mainstream, health-conscious consumer.

Austin Stevenson is the chief innovation officer at cannabis ingredient manufacturer Vertosa, based in Oakland, California.