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Future Cannabis Industry Leaders Will Focus on Sustainability and Social Impact

Two-thirds of American consumers consider sustainability when making a purchase.

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The global legal marijuana market is predicted to reach $66.3 billion by the end of 2025. Many businesses and brands have emerged with the objective to secure a piece of that colossal greenback pie.

Victoriia Paliy | Getty Images

As with any new market, there will be those brands that rise above the rest. As sustainable and ethical business practices increasingly fuel consumer spending habits and investors’ decisions, significant competitive advantage is available to businesses that invest in sustainability and social impact efforts.  

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According to the CGS 2019 U.S. Consumer Sustainability Survey, more than two-thirds of Americans consider sustainability when making a purchase. They are even willing to pay more for sustainable products. In addition to consumers, stakeholders such as investors, employees, and government agencies are all pressuring companies to uphold social and environmental practices.

Investors across industries are incorporating Environmental, Social, and Governance (ESG) factors into the investment process. As ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business, businesses across all industries need to prioritize such considerations. Which means they must consider Total Social Impact (TSI). 

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Total Social Impact is the sum of all the ways a business can affect society. It takes into consideration its entire supply chain, from product design to manufacturing processes and distribution. Unfortunately, supply chains are complex. Data reported in recent years has shown that it is difficult to track these factors throughout the overall supply chain of many industries.

According to Geodis' 2017 Supply Chain Worldwide Survey, only 6% of CPOs surveyed said they have "full transparency" of their entire supply chain. Given companies need to analyze their supply chain data in order to make decisions to enhance sustainability, such a lack of information prevents those industries from meeting and setting sustainability goals. 

Can cannabis crack the sustainability code? 

Although in its infancy, the cannabis industry possesses a unique opportunity to achieve supply chain transparency. It can do this by leveraging existing traceable packaging technology used throughout the industry. In an effort to combat illicit competition from the unlicensed market, most states that have legalized cannabis have adopted radio frequency identification (RFID) tagging. These tags track the entire process from seed-to-sale.

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The process starts by inserting a blue barcode in the soil with a tag containing a microchip with a serial number. As the plant grows, the tag is placed on a branch. Then a sticker is placed on the cannabis product’s packaging before shipment to stores.

This seed-to-sale technology ensures controlled and consistent production. Beyond identifying and tracking cannabis products however, smart tag technology can be used to validate and assure that sustainable measures and responsible practices were leveraged all the way through the process. At the environmental level, such practices can include lowering energy consumption, water use, and implementing effective waste disposal, all of which can be traced through seed-to-sale tracking. 

Packaging’s accountability in the cannabis market  

In addition to leveraging traceable packaging technology to keep companies accountable for their TSI, companies must also focus on the sustainability of their products’ packaging material.

Recent data estimates 10,000 tons of packaging waste was generated by cannabis sales in the first year of legalization in Canada alone.

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While the industry continues to experience unprecedented growth, today’s record level of cannabis consumption is creating a tremendous amount of packaging waste ending up in landfills. Cannabis companies must focus on developing and implementing sustainable packaging materials. 

Countering environmental degradation through innovation 

One avenue for sustainable packaging is to incorporate renewable packaging materials. Cellophane, derived from natural resources such as hemp and wood, is increasingly becoming a biodegradable alternative to other materials.

Partnerships are also key in finding the most innovative packaging solutions that help the environment rather than damage it. One company already leading the way is Sana Packaging, a supplier of packaging made from 100% plant-based hemp plastic that just last year launched a line of packaging made from ocean plastics through a partnership with Oceanworks. 

As society works toward a greener future, all industries will be held accountable for their environmental footprints. Cannabis businesses have an opportunity to make a difference as the industry evolves. Within this decade, we will see that the dominant business and brand leaders that emerge protect consumers as well as the environment.