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The Evolving Cannabis Market Offers Limitless Opportunities

It's no longer just about flower and joints.

Opinions expressed by Entrepreneur contributors are their own.

This year in the cannabis market, we’ve seen an explosive growth in vapes -- slim accessories that heat oil so the user is only inhaling vapor, not smoke. Vaping products now account for up to 19 percent of market share in some states.

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That’s just one sign of how quickly the cannabis industry is diversifying its product offerings.

As a newly legal industry, the cannabis industry continues to sort out exactly what it is and who its customers are. The data shows legal cannabis users are wealthier and better educated than the tired stoner stereotypes of yesterday, which means the products they want will be different, too. As more states legalize cannabis, and as scientists invent better technology for extracting THC and CBD oil from plants, it’s a sure bet that the list of cannabis-infused products will only grow to better serve current users and attract new customers.

Cannabis is a massive market. Today, there are 35 million consumers, who spend around $1,500 each per year on cannabis products. The industry is expected to generate $75 billion in sales by 2030.

Related: Marijuana Industry to Create 283,000 Jobs by 2020, Report Projects

Explosion of new products

New products are making their way into the market in droves, challenging expectations and prejudices along the way. Vapes are one way the industry is evolving. The sleek devices have more appeal to suburban parents and young professionals than the traditional joint. They’re small and discrete, so there’s no need to be furtive, and they simply don’t have the same stigma as a pre-roll. Colorado alone had an 80 percent increase in vape sales from first quarter 2017 to Q1 2018. In California, 32 percent of all cannabis/extracts sales so far this year were vapes.

Versatile distillate oils (they can be used for vapes, skin products, edibles or sublinguals) with high concentrations of THC or CBD, will help create vast new markets for cannabis infused products. Companies are pouring money into refining processes that can create concentrated and potent distillates up to 99 percent pure that are virtually odorless and tasteless. That means they won’t overpower delicate facial moisturizers and perfumes, or interfere with the flavor of breath mints and energy drinks.

Distillates that are flavorless and scent free will lead to a swell of innovative new products. They will allow companies to experiment with different combinations to create pain relieving super medicines, anti-inflammatory makeup or anxiety-reducing dog treats, as well as a myriad of adult-use products. There’s even cannabis-infused beer coming to a bar near you.

Related: Hangover-Proof Beer Infused With THC and CBDs? Cheers!

Packaging and marketing changes

The evolution of products is only part of the equation in a maturing cannabis industry. As the customer base expands into the suburbs, users will demand more sophisticated packaging and marketing. Right now, marketing can be tricky. Thirty states have legalized some form of cannabis use by adults. But at the federal level, it’s still a Schedule I substance, which is defined as “a drug with no currently accepted medical use and a high potential for abuse.” That means cannabis is equated with heroin and LSD. So big advertising platforms like Google aren’t keen to post ads for cannabis products. Until cannabis is legalized by the federal government, there will be a need for marketing workarounds to get the word out and differentiate products.

So newbies and experienced users alike are depending much more heavily on brick-and-mortar locations than might be expected in these days of the retail apocalypse. Consumers need help understanding how and when to use edibles, sublingual tinctures and creams -- and what the effect will be of each. They’re more comfortable browsing the dizzying array of new products in person. Then there’s the fact that it’s still illegal to ship cannabis-infused products across state lines, so e-storefronts aren’t really an option right now.

The newness and sheer variety of products makes branding vital. Customers want to quickly understand what they’re buying. Will this make me happy? Relaxed? Sleepy? Most customers don’t want to learn the ins and outs of different strains of cannabis. Branding will also benefit the entrepreneurs selling cannabis products by giving them a way to differentiate themselves. NPR recently aired a feature on “gourmet ganja” and the entrepreneurs making cannabis-infused foie gras and “stoner souffles." Branding cannabis products as aspirational or luxury will go a long way toward dispelling any lingering stigma.

Related: 5 Things You Need to Know Before Opening a Dispensary

Sales and distribution

Where there’s sophisticated packaging, marketing and branding -- and massive profit potential -- big business won’t be far behind. While the cannabis industry so far has been populated by small, independent entrepreneurs, big time alcohol distributors, in particular, are poised to exploit the growing legal market. In fact, the largest wine and spirits distributor in the U.S. recently secured exclusive distribution rights for a Canadian company’s cannabis products.

For these big firms, there’s a measure of self-preservation involved. An April report by Cowan, a financial services firm, said that people are starting to substitute cannabis for alcohol. The company said lower-end beer was the most threatened by legal cannabis. They’re probably right. Last year, cannabis sales in Aspen, Colorado, outpaced alcohol sales for the first time.

Entrepreneurs in the cannabis industry have the chance to reinvent supply chain, retail spaces and sourcing to best fit this emerging industry. In any number of areas, legal cannabis offers tantalizing opportunities and, like the industry itself, they will only continue to grow.