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Edibles Are Gobbling Up the Cannabis Market

The tasty morsels are increasingly popular. Just make sure you don't eat too much.

Opinions expressed by Entrepreneur contributors are their own.

Edibles are cooking up a storm.

Suzanne Kreiter | Getty Images

In 2016, over $180 million was spent on weed-infused food and drinks in California. According to statistics from Arcview Market Research, that figure constituted 10 percent of the Golden State's cannabis sales. When you consider the fact that California boasts the largest legal weed market in the United States, that's a pretty impressive figure.

And it's not just California that is swallowing a big chunk of edibles sales. In Washington state, edibles sales rose 121 percent last year, according to cannabis analytics firm Headset Inc. Then there's Colorado, where edibles sales tripled between the first quarter of 2014 and the third quarter of 2016, soaring from $17 million to $53 million!

A discrete and smoke-free alternative to other methods of cannabis consumption, edibles command much higher prices than dry flower and they generally account for 25 to 60 percent of cannabis dispensary profits. So what exactly are edibles and why are they so popular? Let's dig in.

Related: 5 Things You Need to Know About Edibles


Edibles 101

Edibles producers will generally create their products by infusing weed into an edible product using butter or cooking oil. This cannabinoid-rich mixture can be combined into pretty much any recipe. Because edibles can be created with specific dosages, the consumer can control his/her desired effect.

While some edibles might be made with Indica strains (known for their couch-locking effect) others are made with pure Sativa strains (known for producing uplifting, cerebral effects), Hybrid (a combination of the two), or pure CBD.

An individual’s unique biochemistry, gender, age, weight and various other factors will influence the psychoactivity produced by THC-infused edibles. However, not all edibles will make you feel “baked.” Edibles infused with CBD only will not produce psychotropic effects, otherwise known as that "high" feeling.

Once ingested, the edibles' effects will generally be experienced within 30 minutes to one hour. Consumers can expect to feel cannabis’ therapeutic effects for a few hours when they consume weed, as opposed to smoking it. This is because of something called 11-hydroxy-THC. Once you chow down on an edible, much more Delta-9-THC (tetrahydrocannabinol) travels to the liver than it would if you were to smoke or vape the green stuff. It is inside the liver that the psychoactive compound THC is transformed into 11-hydroxy-THC, which is highly potent.

Related: 5 Things You Should Know About CBD


Why People Like Edibles

An emerging field of scientific evidence is proving cannabis’ therapeutic properties. In fact, some doctors are prescribing some cannabis edibles to relieve the symptoms of diseases like epilepsy and autism. Experts believe that cannabis edibles can amplify the distribution (and consistency in distribution) of THC, CBD and other cannabinoids across the brain and body. 

Moreover, cannabis edibles appeal to people who don't want to smoke the plant, increasing the potential target audience. Based on data gleaned from the Centers for Disease Control and Prevention (CDC), the smoking rate among adults in the U.S. reduced from 20.6 percent in 2009 to 16.8 percent in 2014.

Convenience also comes into play. Being able to chow down on a cannabis edible anywhere and at any time provides consumers with choices and for most, paying $5 to $10 or more for a dose is a reasonable amount of money to fork out.

The ease of use, product diversification options and undeniable appeal of controlled dosing are some of the most obvious perks associated with edibles. So popular are edibles that they are surpassing raw flower sales (actual weed), which last year constituted less than 50 percent of all legal cannabis sales in the U.S. 


High-Profit Margins

Numerous brands are dabbling in the edibles sector, in all shapes and sizes such as chewy gummies, indulgent candies, crunchy cookies, savory treats or decadent chocolates. There is edible gum, honey, olive oil, even cannabis-infused almond milk. 

Although the price per dry gram tends to vary, the average is $36. However, the figure may range from $20 to $50. The average profit margin is close to 92 percent for producers who have mastered the art of (and combined) vertical integration, cultivating, processing and manufacturing practices into their cannabis production operations.


A Solid Investment

Since edibles command higher prices and margins compared to dry cannabis, producers can better sustain their per-gram revenue. This is true, even if the price of wholesale flower sinks as a result of supply issues.

With that in mind, investors ought to bite a chunk out of the swelling cannabis edibles industry if they are serious about making a profit. Moreover, with organic-loving Millennial consumers making up a huge portion of the cannabis market, edibles producers can continue to entice this particular target market with non-carcinogenic methods of consumption, just like cannabis edibles.

Related: Cannabis Edibles Market Set to Quadruple in U.S., Canada to $4B