Papa’s Got a Brand New Bag of Weed

The global cannabis packaging market is expected to more than triple by 2027, with North America accounting for 80% of that market. For founders looking to enter the cannabis market, packaging could be the way to "secure the bag!"

Papa's got a brand new bag (of weed)

The global cannabis packaging market is set to explode as more countries begin to legalize and formalize the industry. North America should account for over 80% of the global cannabis packaging market by 2024.

*Source: Yahoo Finance

As packaging regulations evolve with the industry, there will be opportunities to provide specialized products and services:

1. Advanced packaging technologies: As the market becomes more regulated, we will likely see more stringent requirements for safety (i.e. tamper-proof and child-resistant packaging) and stay-fresh features (negating the need for preservatives).

2. Contract packaging and equipment leasing: If this ~100 page document is anything to go by, packaging and labeling requirements will be complex, from font type and size to warning statements. This presents an opportunity to provide packing services and equipment to producers, many of whom are small companies currently packaging and labeling by hand.

3. Materials: Different cannabis products use different types of packaging. Some will become more important than others as the industry evolves. For example, cannabis concentrates in vape cartridges are expected to be the most common format for legal cannabis, which means that demand for specialized glass packaging will increase.

4. Digital security: Cannabis companies like Akerna and KushCo are already partnering with, and investing in, anti-counterfeiting firms to enhance packaging with advanced digital security features. One example is the use of unique device identifier (UDI) codes that can be validated and tracked (by producers and customers alike) at each stage of distribution.

Mary Jane is on the move

Cannabis distribution is also set to explode. We spoke to Vince Ning, founder and CEO of Nabis, a distributor that ships ~10% of all cannabis products in California.

In the nearly four years since Ning started the company, Nabis has grown a portfolio of 100+ brands, which collectively ship ~$300M worth of cannabis products per year.

There are three areas where Ning sees white space in the cannabis distribution niche:

1. D2C Delivery: Cannabis delivery is expected to be the fastest-growing cannabis sub-market. The proportion of cannabis delivery and curbside pickup sales soared during COVID, and are still 10% higher than pre-pandemic levels. It's not surprising that Uber wants its piece of the pie.

2. D2C software: There are opportunities to create plug-and-play software solutions that help brands and dispensaries create a D2C experience for their customers, whether it be from a logistics angle, or enabling brands to market better.

3. Data consolidation: There are plenty of players both upstream and downstream (e.g., from raw materials to POS providers) with datasets that could be combined and leveraged to help brands grow faster. According to Ning:

One of the biggest things right now is providing the next layer of depth to the industry by connecting everyone's disparate data silos.

What do you think of these opportunities in cannabis? Please share in the comments!