While THC-based foods and edibles present all sorts of challenges (mostly of health and legal nature), CBD (cannabidiol), which has no psychotropic effects, appears set to become the next miracle ingredient, according to many in the food industry.
Opiates killed 47,600 people in 2017 in the United States, according to the Centers for Disease Control (CDC). That year, the epidemic was declared a “public health emergency” by President Donald Trump.
Marijuana, legal in 34 US states and in Washington for therapeutic use, is also legal for recreational use in ten of these states, as well as in the American capital Washington, DC (and, starting next January, in the state of Illinois as well).
Cannabis and its derivatives are big business in the US. In the state of Colorado, for example (the first US state to legalize marijuana for recreational use), a small company by the name of West Coast Venture Group (OTC: WCVC) recently made headlines when it became America’s first CBD restaurant stock. CBD (Cannabidiol) is a phytocannabinoid discovered in 1940. It represents one of some 113 identified cannabinoids in the cannabis plant and accounts for up to 40% of the plant’s extract.
WCVC’s Illegal Burger Writer Square location in Downtown Denver serves a “CBD infused” menu of items and is expected to generate over $1 million in sales this year while a second location (Denver CitiSet) is on track to exceed $700,000 in sales in its first full year of operations.
During the course the last fiscal year (2018), West Coast Venture Group earned $3,054,623 in revenue and witnessed consistent year-over-year growth. And the company expects this trend to continue well into 2019 and 2020. The first quarter of 2019 already saw year-over-year revenue growth of 21.55% in what is traditionally known as a slow slow quarter in the restaurant industry.
To further kickstart its growth, the company also recently announced the launch of its Illegal Pizza franchise, and it opened its first location on June 19, 2019 in Fort Lauderdale, Florida. This location is expected to generate around $700,000 in revenues within the first twelve months of operation, and it will mark the first of many Illegal Pizza locations across the country.
In Quebec, even though the Legault government has announced that it wants to restrict the distribution of cannabis edibles in Quebec, edibles will be sold legally in Canada starting mid-October 2019. And the entrepreneurs who salivate in anticipation of this new market have no intention of giving up their spot at the buffet line.
Fortune smiles to the bold, as the saying goes. So Mélissa Thibeault is going all in this fall by converting Candara Foods, the chocolate and cereal bar factory co-founded by her stepfather 30 years ago, into a marijuana delicacies factory. “Two shifts a day, seven days a week, we could produce 30 million units a year,” enthuses the 33-year-old entrepreneur during a visit to the chocolate factory in Montreal’s Anjou district.
That morning, thousands of rice protein chocolate bars followed one another at the back of the production line. The brunette , a HEC graduate, is proud to showcase the plant’s state-of-the-art stainless steel facilities, as large as half a Walmart Supercentre: “You don’t make boboches on the corner of a table!” she says, showing the chocolate box rejected because it did not meet the house’s stringent quality criteria.
Except that business is not going well enough. She is therefore relying on pot to give the company a new boost, inspired by what she observed during a business trip to California, an American state where edible cannabis is legal. Using a product sold to the “Société québécoise du cannabis” (SQDC), she made a magical chocolate sample “à la mitaine” in her own kitchen. Her guinea pig was delighted. “It’s a new era, we’re pioneers!”says the young woman, who has been president of the “Conseil québécois du cannabis edible” (CQCC) since February, which brings together some 20 companies such as Gusta Foods, a manufacturer of deli meats and vegan cheeses, and Groupe Tomapure, a specialist in the trade of ready-to-eat fresh fruits and vegetables.
Indeed, Canada will soon become one of the first places in the world to allow the manufacture and sale of cannabis-based food: beer, candy, cakes, juices and tutti quanti, whatever tickles the imagination of the manufacturers. Officially, legalization will enter into force on October 17, at the same time as the legalization of two other categories of cannabis: extracts – hashish, spray liquid -, as well as products for topical use – body cream, shampoo, make-up, etc. But it will take until December for consumers to find them on the shelves of licensed merchants across the country due to an administrative delay imposed by Health Canada.
However, Quebecois may have difficulty getting their hands on many of the new products authorized by Ottawa. The reason is that the caquist government announced at the end of July that it wanted to restrict distribution in the province. Basically, if the regulation is adopted in September, there will be no more topical cannabis, and no more foods that could potentially cater to children, such as sweets, cakes and chocolate.
“That won’t stop us from selling in other Canadian provinces,” explains Mélissa Thibeault. She will move forward with her project at any cost, hoping also that the federal government will eventually suspend the ban on international recreational cannabis exports (medical exports are already allowed). Many countries – such as New Zealand and the United States, where the substance is still illegal at the federal level – are considering legalizing cannabis.
The entrepreneur nevertheless intends to fight, alongside the members of the CQCC, to convince Quebec to soften its position. “We share the authorities’ desire to protect the population,” she said. But their approach creates a climate of terror around cannabis. We stigmatize instead of sensitize. “Julien Fortier, a lawyer with the SGF Group, lawyers and cannabis consultants in Quebec City, also feels that the government is going at it a little too hard.” A dark chocolate truffle is not as attractive to children as Smarties are,” he observes. Producers and customers would be less penalized if Quebec regulations took this nuance into account. Right now, we’re throwing the baby out with the bath water.”
If business people like Mélissa Thibeault are so motivated to turn the tide, it is because legalization will create a huge money machine. At least that is the prognosis of Deloitte, a consulting firm that estimates the market for cannabis edible products and beverages at $2.3 billion per year in Canada, according to a report released in June. In the United States, where jar-infused foods are allowed in 10 states, sales reached $3 billion in 2018, and are expected to more than double by 2020, according to the Chicago-based marketing company Brightfield Group.
“We are witnessing the birth of the most important and sophisticated industry we have ever seen,” says Sébastien St-Louis, co-founder of Hexo, near Gatineau. His company, which until recently specialized in the cultivation of cannabis plants, is worth $2 billion on the stock market. “But in five years, it will list at five billion,” he says. It is because the manufacture of edible products, in which the company is an active participant, opens a market that will exceed that of alcoholic beverages. More than half of the Canadian population wants to try non-inhalable cannabis products, according to our in-house surveys.”
In December, the company will market, in partnership with Molson Coors, an alcohol-free beer infused with cannabis – a product that is not subject to the restrictions envisaged by Québec City, and which can therefore be distributed in SQDC branches (no other establishment is allowed to sell cannabis and its derivatives in Québec). “It gets you the same buzz as alcohol… minus the calories and hangover of the next day,” says Sébastien St-Louis, who doesn’t hesitate to test his own products. “The pot to sleep in is wonderful.” Then will come vaporizing liquid and jujubes. “We have many projects underway, including a sparkling cannabis-based water that cuts hunger. I recruited some of the best researchers in the world – scientists who used to work for Kellogg’s and Coca-Cola, for example.”
“People in the agri-food sector are rushing to conferences about edible pot. Some of them fly in by helicopter!” says Sylvain Charlebois, a food policy specialist at Dalhousie University in Nova Scotia, who gives presentations on cannabis.
During a training session in Saint-Hyacinthe last June, one could see the interest of big names with a well-established reputation – representatives of Lassonde juices, Metro Brands and Bonduelle vegetables, for example. “Many are here, out of curiosity, to take the pulse,” explains one of the event organizers, Jean-Patrick Laflamme, Vice-President of Public Affairs and Communications for the Conseil de la transformation alimentaire du Québec. “If the market is as booming as expected, no one wants to miss the opportunity.”
Deloitte Consulting estimates the market for cannabis edible products and beverages in Canada at $2.3 billion per year.
The restaurant industry, particularly in Toronto and Vancouver, also does not spit on the large sums of money that edible cannabis could generate. The latter is even among the hottest culinary trends of 2019, according to American and Canadian surveys of hundreds of chefs. In American states, where cannabis is legal, it is still not allowed to serve marijuana dishes in restaurants, but connoisseurs enjoy them in licensed consumer establishments and private events with guest chefs. There are even TV shows dedicated to potty cooking, such as the American cooking competition “Cooking on High” on Netflix and the Dutch series “High Cuisine”, broadcast on the Videoland platform.
“The plant itself tastes awful,” said Jean Soulard while he was preparing his cookbook entitled “Le cannabis en cuisine” (Flammarion Québec, 2018); it’s not like cooking with basil! In the book, he proposes salmon with sorrel, fried foie gras, gazpacho and sabayon in oil and cannabis butter. “In fact, it tastes the way it smells,” says the former chef of the Château Frontenac. “It is essential to chop the casserole and steam it in a daisy for an hour to mask its invasive pungency.” And even after this operation, there is still a bitterness that a fine palate can detect.
But Jean Soulard still sees it as a business opportunity for restaurateurs, relying on the enchantment of the many guests with whom he has tested his recipes. “I’ve had offers to prepare these kinds of dishes at private dinners, but it’s not my thing. However, I look forward to seeing how the food industry and consumers will react this fall.”
However, entering the edible pot industry is comparable to Heracles’ work. “Entrepreneurs perceive the upcoming legalization as an Eldorado, because of the success stories of Hexo and Cronos Group,” says Patrick Khouzam, general manager of the corporate finance team at MNP, an Alberta-based professional services firm with many clients in the cannabis industry. “We read that the owners have become billionaires, and it makes you dream. But not everyone who has the desire can pull it off. There are a lot of barriers to entry.”
The main challenge is to obtain the appropriate licenses from Health Canada, which sets the rules of the game for the industry. When applying for a license, the company must demonstrate that its plant is ready to operate tomorrow, in compliance with standards for safety, ventilation, storage and contaminant management, among other things. Strict standards that require the installation of expensive equipment, such as cameras, throughout the building, and sophisticated cleaning and ventilation systems to ensure that volatile drug compounds do not inconvenience employees and neighbors.
In addition, an established processor, such as a pastry processor, cannot produce its pot cakes in the same building as its regular cakes. He must build a separate one, to prevent consumers from embarking on an unintentional bad trip.
“It’s ridiculous to ask that people to invest millions of dollars without any guarantee that they will get their license,” says Sylvain Charlebois. Serious entrepreneurs are throwing in the towel for this reason, which will please the black market, he predicts. “Illegal business will take advantage of this to expand. That is exactly what the federal government wanted to counter at the base.”
However, the food security specialist believes that the authorities will relax the rules when cannabis is socially accepted. “The moral barrier will eventually fall with the rise of new generations, who accept and appreciate cannabis more than older ones [60% of users in Canada are between 15 and 34 years old].
But it is precisely the consequences on the health of young people that are of huge concern to the Quebec government. Especially since edible products can have an even harder impact on the body than smoking a joint. Their effects can even be frightening, depending on the amount of THC ingested – the active ingredient responsible for the famous high. Some experts believe that this tenfold reaction may be due to the fact that when it enters the liver, some of the THC is transformed into an even more intense psychotropic agent, 11-hydroxy-THC. The buzz also lasts a few more hours, because the THC absorbed by consuming food stays in the blood longer due to the slow digestion process.
“The food processing industry sees edible cannabis as an incredible windfall, except that there are people who end up in emergency rooms following psychosis,” says Normand Voyer, a chemist specializing in the effects of natural products and a professor at Laval University.
American researchers who analyzed emergency room visits to a Colorado hospital over a two-year period found that 10.7% of marijuana-related hospitalizations were attributable to edible products, yet these products accounted for only 0.32% of cannabis sales at the same time. The authors also observed that ingested pot was more likely than inhaled pot to cause acute psychiatric discomfort – panic attacks, hallucinations, paranoia – as well as poisoning and cardiovascular symptoms.
“The problem with cannabis foods is that their effects are only felt after 60 to 90 minutes,” explains Normand Voyer. People think the product was not strong enough for them and use another serving, multiplying the amount of THC in the body. “Determining a safe dose is also very difficult because the absorption of cannabis varies from one individual to another depending on their genes. A product can even trigger different reactions from one day to the next in the same person, depending on their mood. Cannabis experts recommend that marijuana should not be used during anxious or depressive episodes, for fear that the drug will exacerbate distress.
“I also do not recommend this experience to cardiac patients, because cannabis can cause the heart to beat up to twice as fast as its normal frequency, and lead to unconsciousness following a drop in blood pressure,” says Philippe Sarret, professor at the Faculty of Medicine and Health Sciences at the Université de Sherbrooke.
To his knowledge, and according to several sources consulted, it is not possible to die from an overdose of this drug, unlike opioids and cocaine, for example. The risk of developing an addiction is also lower than it is for most other addictive substances, such as alcohol and nicotine. But you can spend a (very) bad quarter of an hour – vomiting every 10 minutes for two days, hallucinating, delirium… Philippe Sarret also points out that psychoses increase the risk of developing mental illnesses, such as schizophrenia, and that regular consumption from adolescence is associated with irreversible damage to the brain.
Public health authorities are concerned that edible products may lead to the commoditization and increased use of cannabis, as these derivatives may attract new segments of the population: those who were not attracted to the previously inhaled pot, or who prefer to use marijuana without attracting attention.
Mélissa Thibeault, who hopes to make her first cannabis chocolate bars on March 2020, says she understands these concerns. She herself underwent a “long process of acceptance and reflection” before embarking on this venture. “But the truth is that edible products already exist on the black market, she argues. Right now, people are buying stuff that doesn’t meet any quality and safety standards. We will create responsible products that follow the strict rules imposed by Health Canada.”
Among other constraints, beverages and foods sold in Canada must contain a maximum of 10 mg THC per package and a maximum of 5 mg THC per single serving. For example, two cookies in the same package could each contain 5 mg, for a total of 10 mg; but if there is only one cookie in the bag, it cannot exceed 5 mg. Illegal granola bars and brownies sometimes contain 100 times more, according to web searches.
Canadian regulations also require curious hand-resistant bags and prohibit mixtures of alcohol and cannabis in the same product, as well as mixtures of nicotine and cannabis.
We have a chance to build this industry the right way, so we won’t do just anything,” says Jonathan Morrison during a visit to C3 – the World Cannabis Innovation Centre in Vaudreuil, which he has been developing for three years. His dog Winston, a cheerful golden doodle who follows us step by step on the guided tour, knows every inch of this complex, which looks like a secret military base, built in the early 1970s. On the site, almost as large as the Olympic Stadium esplanade, there is a 12-story concrete tower, three other buildings with large labs, secure warehouses, underground passages, all surrounded by a 1.8-meter fence, with a security post at the entrance.
“We have the ability to transform everything that happens in the cannabis space in Canada,” says the president of C3. About thirty shoots have taken place here, including “X-Men: Days of a Past Future, and the Helix” series. “These films always feature nasty megalomaniacs who want to conquer the world,” he jokes. “We’re going to try to turn the tide and be good guys.”
Its objective is to establish partnerships and host companies interested in manufacturing cannabis products. “We are a center of gravity, a springboard for people with good ideas,” he explains. The facilities could accommodate 20 to 30 processing activities at the same time, in addition to plant nurseries. About 20 McGill University researchers are also preparing to move there to conduct their cannabis studies.
The businessman understands the concerns about edible cannabis but believes that they are partly based on a lack of knowledge. “We have to look beyond THC-based recreational products; the market for CBD, another active ingredient in the plant, will be much larger,” he predicts.
This cannabinoid, which has no psychotropic effects, is the next miracle ingredient, according to many in the food industry. Because of its apparently anti-inflammatory, relaxing, anxiolytic and pain-relieving qualities. “It could be made into kombucha-type beverages,” says Jonathan Morrison, who measures the full potential with aging consumers. Recently, Canadian cannabis producer Canopy Growth teamed up with Martha Stewart, the American diva of “living at home”, to create a range of CBD-based edible products, some of which will be designed for dogs to help them manage their fears.
“The beneficial effects of CBD on inflammation and anxiety are still a matter of hypothesis,” says pharmacology researcher Philippe Sarret. But with legalization, we will finally be able to conduct clinical studies. Apart from THC and CBD, cannabis contains about 100 other cannabinoids whose properties are not well known. “He himself hopes to obtain a license from Health Canada to explore the pain-killing properties of cannabis.
“Quebec has everything it takes to become a world leader,” says Jonathan Morrison. An extremely well-organized agri-food structure, quality products, expertise in cannabis cultivation, the cheapest electricity… We are champions. Let’s not let this opportunity slip away!”
(Featured image by DepositPhotos)
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