It wouldn’t be fall without pumpkin spice, winter without peppermint, spring without strawberries or summer without lemonade. Cannabis-infused product manufacturers know this, and they’re capitalizing on popular demand among consumers to shake up their product lines with seasonal or limited-release products.
These products – from THC-infused sparkling waters to rainbow-colored sugar cookies – can be a boon for brand equity or reap community goodwill through corporate social-giving campaigns.
But special products can add 5% or more to production costs, and manufacturers typically don’t mark up the wholesale costs, said Peggy Moore, co-founder of Love’s Oven, a Denver infused-products maker that creates a half-dozen seasonal items per year.
So, before infused-product makers start manufacturing seasonal or limited-release products, they should consider:
- State regulations that might prevent them from getting a seasonal product to market.
- Added manufacturing processes that may need to be in place.
- When to rerelease a seasonal product – and when to discontinue it.
- Corporate social-giving opportunities.
“Without discipline, you could easily disrupt day-to-day operations and introduce risk for errors,” Moore said.
Plan for Regulatory Scrutiny
Before investing time and money in developing seasonal or limited-release products, identify regulatory barriers that may prevent you from getting the product to market in a timely manner.
Some states require additional testing or control studies or have strict packaging regulations for new edibles. That means you should be prepared for regulators to nix a special product that doesn’t meet state requirements.
Infused product manufacturers in Washington state, for example, must submit product-development plans and package design for new products to both the state Liquor and Cannabis Board (LCB) and the Department of Agriculture, said Oliver Stannard, director of business development for Washington’s Green Labs, the maker of Swifts Edibles, a brand that manufactures seasonal products, including a pumpkin truffle in the fall.
In such a market, timing is a critical factor in developing seasonal or limited-release products.
If an infused product maker in Washington state submits a seasonal or limited-release product for approval, it’s published in a spreadsheet that lists approved products on the LCB’s website. If a product is submitted and approved too far ahead of its manufacturing date, a competitor may see what’s being developed and – with more capital resources – could be first to market with its own version.
Washington state regulators also must approve package design. The turnaround time on approvals varies from weeks to months. If regulators have additional questions or different interpretations of product or packaging regulations, that can slow the process.
“Any hiccups are detrimental in trying to pull off a seasonal product,” Stannard said.
Factor in Manufacturing Needs
Seasonal or limited-release products typically don’t carry a high wholesale markup because retailers have a wide variety of options from which to choose. That means it’s important to dial in your manufacturing processes and keep underlying costs low to preserve revenue margins.
As a result, you must plan ahead and have an agile manufacturing team, said Julie Berliner, CEO of Denver’s Sweet Grass Kitchen, an infused product maker that released a 20-to-1 CBD cookie in July as part of a new corporate social-giving campaign.
In particular, be cost conscious and anticipate how seasonal or limited-release products fit into your current manufacturing process.
Hope Frahm, a chef at Love’s Oven, said it’s best to leverage ingredients you already have before purchasing new or seasonal ones. When you devise products that use new ingredients such as fresh fruit, make sure they’ll be available during your targeted manufacturing times and within your budget, she said.
The cost of labor must be factored in, too – particularly if manufacturing seasonal or limited-release items require manual labor or a change in automated processes. For example, the chefs at Love’s Oven manually mix, roll, combine and cut rainbow- and camouflage-colored doughs for two of their limited-release products, said Joshua Nettles, a partner at Love’s Oven.
If you specialize in baked goods, a seasonal infused beverage would require a significant capital investment or strategic partner to bottle or can liquids, Green Labs’ Stannard said – and it might not complement your product line. When considering such a large investment, consider whether profits are likely to make up for the expense.
Co-Branding Can Boost Visibility
Co-branding seasonal or limited-release products can take your brand to the next level by introducing cannabis products to mainstream consumers.
AbsoluteXtracts, a California infused-products maker, partnered with Heineken’s Lagunitas Brewing in the Golden State for a limited-release product line and a new offering that marries hops and cannabis: limited-release Supercritical Hop Blends vape cartridges and new THC- and CBD-infused Hi-Fi Hops sparkling waters.
“Integrating other companies and industries in our product line brings us into that normal business space that cannabis needs to be in,” said Dennis Hunter, a co-founder of CannaCraft, the manufacturer of a family of brands that includes AbsoluteXtracts..
The craft brewing business has many similarities to the cannabis industry. Hops are a cousin to cannabis, and both industries have grown and changed rapidly, Hunter said. Additionally, co-branding opportunities mean you can lean on partners in other industries for business advice, he added.
If there’s overwhelming seasonal demand for pumpkin pie or peppermint bark, it may make sense to rerelease the product for a limited time during another part of the year.
“When you do a themed product and it becomes very popular, it’s hard to discontinue,” Hunter said. “If it hits for a bit then fizzles out, you try other innovative ideas and different products and keep experimenting with the marketplace.”
But demand isn’t always high enough to keep some infused products in seasonal rotation.
Some popular products spoil quickly if they aren’t stored, transported or shelved at low temperatures – and not every dispensary is equipped with refrigeration units to keep infused products cool.
For instance, Sweet Grass Kitchen discontinued an infused key lime pie because the summer heat made it finicky to manufacture and store.
By contrast, the company’s pumpkin pie – a similar product – is more “shelf stable,” Berliner said, and fares better during fall’s lower temperatures.
Green Labs’ Stannard cautioned infused product makers to consider market share. For example, even if your business locked down a sizable chunk of the market with a signature line of chocolates, a seasonal gummy may not steal traction from other established players – and so it may not be worth releasing.
Identify Social-Giving Campaigns
It’s popular to incorporate seasonal, themed or limited-release products as part of a corporate social-giving campaign. The practice can be a boon to your brand and a tax write-off, according to Moore of Love’s Oven.
Infused-products makers – including AbsoluteXtracts, Love’s Oven, Sweet Grass Kitchen and Green Labs – manufacture limited-release or themed products that donate all or a portion of the proceeds to charities.
For example, the majority of proceeds from Love’s Oven’s limited-release Choose Love rainbow sugar cookies and limited-release camouflage sugar cookies benefit LGBTQ and veterans organizations. Similarly, Sweet Grass Kitchen released a 20-to-1 CBD-to-THC double-chocolate cookie, with 5% of the proceeds going to Planned Parenthood of the Rocky Mountains.
If you plan to donate proceeds from a product to an organization, it’s important to identify a recipient that aligns with your brand’s values. Love’s Oven asks employees to select charitable organizations to receive proceeds from sales of various seasonal or limited-release products, Nettles said. Then, it rotates the charities to which it contributes.
“It’s a way to engage staff and make them feel in control,” Nettles said. “That’s really probably the biggest return on investment, the employee engagement.”
Planned Parenthood of the Rocky Mountains was at the top of Sweet Grass’ list, Berliner said, because of the education and health services the organization provides to girls and women.
To coordinate with the local Planned Parenthood office, Sweet Grass Kitchen worked with KindColorado, which helps cannabis companies in the state strategize how to connect with neighborhood groups and nonprofits.
Love’s Oven and Sweet Grass Kitchen use social media or news releases to announce donations to their partner organizations, which demonstrates accountability to consumers.
“Being in the cannabis industry, by nature, really allows us and anyone in the industry to make our case and fight for what we believe is right,” Berliner said. ?
Co-Branding: The Devil is in the Detail
Co-branding a limited-edition product can boost sales by appealing to the consumer bases of two popular brands.
California’s AbsoluteXtracts and Heineken’s Lagunitas Brewing did just that by partnering to produce two products: Hi-Fi Hops, a hop-flavored THC- and CBD-infused line of sparkling waters, and hop-flavored vape oils.
But before you jump at the opportunity to strike a co-branding agreement with another company, it’s important to iron out the details ahead of time. It can save you legal and financial headaches later on.
Amanda Conley, a partner at intellectual property firm Brand & Branch and co-founder of the National Cannabis Bar Association, noted that due diligence is critical.
Conley declined to comment on any specific agreement, but she offered five tips for businesses entering co-branding agreements:
- Protect intellectual property (IP). Whether it’s branding, a patent or a proprietary formulation, a co-branding agreement should be clear about who owns what. “You should both know what you’re bringing to the table and what that means, so you don’t accidentally assign rights you didn’t mean to assign,” Conley said. “Your partner also needs to know you have rights to the (IP) you say you’re providing.”
- Define who will own the new co-branded IP that will be developed under the agreement. In some cases, one party will own the new IP and the other will have a license to sell or distribute it. In other cases, parties create a joint venture and share ownership of the co-branded IP – but that can get complicated if there’s overlap between any existing IP and new, jointly owned IP, Conley said.
- Identify liabilities. If a product is recalled or deemed illegal, you should know who bears liability. Whichever party that is should be sure it does due diligence on the front end to avoid missteps.
- For limited-edition products, determine how long the product will be sold or manufactured. When the limited-edition run ends, it should be clear who owns the IP rights for the future.
- Have clear termination provisions. In the cases of regulatory enforcement or a breach in the contract, a co-branding agreement should have clear exit language. A voluntary termination provision is important, too, so you’re not locked into a partnership you no longer want to be in, Conley said.