Week in Review: Major Merger in Canada, CO Price Drop + Edibles Potency Claims Debunked

By John Schroyer

One of the biggest medical marijuana companies in Canada purchases a rival, cannabis prices tumble in Colorado, and edibles potency claims come under fire.

Here’s a closer look at several notable developments in the marijuana industry over the past week.

MMJ Merger Up North

The Canadian MMJ industry was shaken up this past week with the news that two of the biggest cannabis companies in the nation are joining forces. Tweed Marijuana announced this week that it will purchase Bedrocan Canada, a move that experts say will create a dominant MMJ force north of the U.S. border.

Deepak Anand, the executive director of the Canadian National Medical Marijuana Association, said in an email to Marijuana Business Daily that the merger “creates a massive combined force in the Canadian cannabis space.”

“Tweed and Bedrocan are quite different companies in that their focuses on the market have been quite different to date in the cannabis market,” Anand wrote. “Tweed has been more customer-focused, whereas Bedrocan is more science/pharmaceutical-oriented. Tweed and Bedrocan are certainly the largest brands in this nascent industry.”

Anand further predicted even more mergers will take place as companies seek to both consolidate their market shares and up their game to compete with Tweed and Bedrocan over the next six to eight months.

Though there’s been speculation that the merger could have even further-reaching effects if the country ends up legalizing recreational cannabis in the next few years – as one prime minister candidate hopes to do – Anand said it’s “too early to speculate” on that possibility and what could happen down the road.

But, he wrote, “It is certainly an election issue.”

Volatility or Maturity?

A study released this week found a substantial drop in prices for marijuana in Colorado between last year and this summer, which one Denver-based executive said is a sign of market maturity rather than volatility.

The study, published June 22, found that the average price of an eighth of an ounce of cannabis dipped to $30-$45, down from $50-$70 a year ago. The average ounce dropped by about $50-$100, according to the report.

“It is becoming a little bit more stable,” said Jennifer Beck, the chief financial officer of Cannabase. “Med and rec are closer in price, we’re shooting up more with holidays, doing more on weekends, but it’s more stable than these crazy curves that we saw last year. (The market is) definitely maturing.”

Recreational prices have dropped down much closer to where medical prices are at, even given the difference in tax structure in Colorado (MMJ purchases are only taxed at 2.9%, while rec is taxed at a much higher rate).

“Medical and recreational are neck and neck right now. And that’s a first since recreational began,” Beck said, adding that according to her company’s data, MMJ in Colorado is now at an average of $1,800 per pound, down from $2,100 a year ago, and rec is at $2,000 per pound, down from $2,700 a year ago.

Though some had been worried that market saturation and over-production would lead to even bigger declines in pricing, that hasn’t materialized.

Beck predicts that prices will stabilize around their current levels.

“They’re probably going to stay pretty stable. The most important thing is… people are going to become increasingly hungry to see what differentiates one product from another,” Beck said.

Edibles Inconsistency

Infused product companies in California and Washington took some heat this week with the release of a report in the Journal of the American Medical Association shredded their credibility when it comes to advertised potency.

The report found that out of 75 different edibles companies products tested, a meager 17% accurately advertised how much THC the products included. One of the most egregious examples cited was a packaged product that claimed to have 108 milligrams of THC, but only contained three milligrams.

The problem isn’t always that edibles are weaker than advertised, however: In a number of cases, the products are actually much more potent than advertised. That could be arguably as big of a problem, if not more so, given how quick much of the mainstream media was to jump onto edibles when they were involved in several deaths in Colorado.

Last year, The Denver Post commissioned testing for 13 different products, and it found similar inconsistencies.

A big difference between the two studies, however, was that the Post’s report identified which companies and products it had tested, whereas the JAMA study left the California and Washington companies anonymous. That could save the reputations and bottom lines of those companies.

But the fact remains that though edibles are extremely popular, they can also be extremely unreliable. If the industry is to truly gain mainstream acceptance, this will almost certainly have to be addressed at some point, because consistency is a cornerstone of any serious commercial product.

John Schroyer can be reached at johns@mjbizmedia.com