Ten survival tips for THC-focused companies aiming to survive the CBD product boom
Two new rivals have surfaced in the cannabis industry: THC and CBD.
Executives at some THC-focused cannabis companies are growing concerned they will lose profits and market share to CBD-only businesses peddling infused lotions, drinks and edibles.
Those worries come at a time when the market for cannabidiol (CBD) is exploding, with more and more consumers becoming aware of the purported health benefits of CBD derived from marijuana and hemp. That awareness is driving up sales of CBD products and posing a potential threat to THC-focused companies.
What’s a THC-driven business to do?
Several industry analysts said educating consumers about the nuances of CBD and THC – as well as the interplay between the two – would help ensure the two cannabinoids can coexist and continue to support a company’s bottom line.
Others advised that focusing on product safety, high-quality CBD offerings and the whole-plant experience will all go a long way toward inoculating a THC-focused business against any threat – real or perceived – from consumers’ growing appetites for CBD-infused products.
Marijuana Business Magazine surveyed roughly two dozen cannabis executives and industry analysts to seek advice on how THC-focused businesses should react to the rise of CBD. Here’s a sampling of their responses.
1. Focus on health issues consumers want to solve and offer products that cater to their needs.
“If you’re a THC-based company worried about losing market control to CBD products, I suggest you vacate the opinion that 30% THC bud means you’re the hottest thing on the corner and instead do some market research on what health issues people are looking to solve. Create products that produce the outcomes they are looking for. Just wait until we start to truly isolate CBG, CBC and beyond. The idea that THC is king will fall by the wayside, if it isn’t starting to already. – Sam Chapman, co-founder, New Economy Consulting, Portland, Oregon
2. Determine what consumers want, regardless of whether it’s THC- or CBD-related.
“THC-based producers would be wise to learn more about consumer attitudes, behaviors, wants and needs, then provide products the customer wants, whether it’s CBD- or THC-dominant. Competition won’t stop, and the only way to protect yourself is to be proactively preparing for the future. – Karen Freese, cannabis consultant, San Francisco
3. Provide consumers with safe, effective products.
“Since all THC-infused products (including those with CBD) must be tested for contaminants and residual solvents, consumers know that the CBD in those products has been vetted and is safe for consumption. On the CBD-only side, there are no such regulations that I am aware of. That means the CBD in those products can be sourced from China or other markets with less rigorous standards. Testing has already shown that heavy metals and other contaminants are often present in imported CBD. Ironically, there is a real risk that people are taking a product for their health that may contain substances that are dangerous for their health.
“So, for me, the action to take is more about educating regulators on the risks of allowing an unregulated CBD market and less about protecting THC companies. The studies that are available indicate there is a beneficial synergistic effect when there is some THC in the product, which can be at levels low enough to avoid psychoactivity. So, I think the long-term issue is the efficacy and safety of the product. Let’s have both sides make the best and safest products they can, and may the best solution win.” – Nancy Whiteman, co-founder and co-owner, Wana Brands, Boulder, Colorado
4. Lower operating costs by using a membrane-based extraction system.
“With the federal (marijuana) ban still loosely in place, the market is hot for pesticide-tested CBD. Isolate is worth more than THC extracts in many areas. Because CBD is relatively cheap to process, with hemp costing about $50 a pound, the profit margins are enormous. However, once CBD is legalized, we can expect a crash in the hemp-CBD market just like THC products experienced.
“In expectation of a race to the bottom on CBD, Toucan Farms’ facility in Oregon will employ a new membrane-based extraction technology that can process hemp and cannabis for a tenth the cost of hydrocarbon or CO2 extraction methods. Our process moves large volumes of plant material at scale at low cost and skips many of the costly steps to purification. Being on a 3,000-acre farm, we can grow what we need efficiently and process material with minimal transportation costs. – Steve Fuhr, owner, Toucan Farms, Shelton, Washington
5. Carry high-quality THC and CBD products.
“Since all products with THC are only allowed to be sold through state-licensed dispensaries, and THC and CBD work well together, our philosophy at The Source is to carry the highest-quality CBD products alongside our full selection of marijuana products.” – Andrew Jolley, owner, Nevada Organic Remedies and The Source, Las Vegas
6. Educate consumers about the benefits of using cannabis-derived CBD products that contain THC.
“Personally, and as a shop, we are doing everything we can to educate customers about the difference between what we sell and what they can buy mail order. I believe that an educated customer is going to choose CBD from cannabis, with a small amount of THC, every time. There’s unfortunately a lot of quackery on the internet, and as part of the cannabis community, it’s important that we all do what we can to give people accurate, useful knowledge so they can make intelligent, informed decisions.” – Bob Ramstad, owner, OZ. Recreational Cannabis, Seattle
7. Don’t get overly stressed about competition from CBD products, because there are more important issues to consider.
“The THC-based market has a whole lot of other problems to concern itself with – such as a lack of interstate commerce, over-the-top taxation and banking roadblocks – and competition from the CBD-based market shouldn’t be too high of a priority for most companies. (They offer) similar and related products but different supply chain, different set of regulations and a different market. If there was more collaboration between the two, one would support the other’s effort. But at this point, it’s apples and oranges.” – Avis Bulbulyan, cannabis consultant, Los Angeles
8. Offer products containing the best genetics and educate consumers about the “whole plant experience.”
“We focus on meticulous genetic selection. We pheno hunt (looking for the best genetics within the same strain), and data tells us which genetic and chemical varieties to continue cultivating in production runs. Our goal is always to maximize the genetic potential of each chemical variety. If we are maximizing the genetic potential, we are efficiently manufacturing a product that turns out consistent in taste, feel and effect.
“Companies like us making products with THC will do well if they focus on product consistency and consumer education. Products with just CBD extracts are great, but what about a whole-plant product with a cannabinoid profile that includes 5% THC, 2% CBG and 15% CBD combined with 1% myrcene and 2% beta-caryophyllene? There will always be a place for companies that can consistently provide that dynamic experience as well.” – Matt Sampson, owner, North Coast Growers, Anacortes, Washington
9. Focus on boutique products including single-origin extractions such as live resin.
“We see the value that each compound brings to the cannabis experience and well-being. By crafting boutique experiences that only come from THC-dominant genetics and extractions, THC-based products will ensure their place in the market. Single-origin extractions like live resin are quite popular as a result of the full-spectrum experience that comes from terpene-rich extract. The nation is quickly becoming more open to cannabis. And soon, hemp-derived CBD, cannabis-derived CBD as well as high-potency THC products will be readily accessible nationwide. Most importantly, new research will continue to uncover the medical benefits that can come from these plants.” – Matt Woolley, executive director, Legion of Bloom, Santa Rosa, California
10. Convince regulators to allow retailers to sell CBD-only products alongside THC products.
“What the THC market can do to protect itself is lobby the regulatory agencies to allow dispensaries to sell (CBD-only products.) It is ludicrous that the entities involved in laying the marijuana road brick by brick are not allowed to walk on it while every other fleeting business is driving a semi down it.” – John Andrle, owner, L’Eagle Services, Denver
These responses have been edited for length and clarity.