As more states legalize recreational use of cannabis or marijuana—California being the most recent—questions about its harvesting, processing, and use as a food additive, against the backdrop of a complex legislative environment, come to the fore. In what is projected to be a $10 billion industry in 2018—as a point of comparison, note that ice cream is a $5 billion sector—the growth of cannabis as a food additive should therefore be of considerable interest to food manufacturers and processors.
As of January 2018, cannabis is legal for recreational use in eight states, in addition to the District of Columbia—Alaska, Washington, Oregon, California, Nevada, Colorado, Massachusetts, and Maine. An additional 22 states have approved it for medicinal use, meaning that the majority of the country now has some type of legal access to marijuana. With widespread legitimacy comes the need to plan for scaled production—a new opportunity that holds unique challenges but also great economic promise.
In Canada, where marijuana has been legal for medical use since 2001 and where recreational use as a food additive is expected to pass by 2019, early stage rumblings include an M&A deal between beverage giant Constellation Brands and Canopy Growth Corp., the largest publicly traded cannabis company in the world. Constellation wants to extract liquid from cannabis and put it into beverages, getting in on the ground floor of a new industry of nonalcoholic, marijuana-infused drinks.
From growing and harvesting to processing, packaging, and distribution, as more states legalize cannabis use, the legislative environment will need to keep up with establishing what regulations need to be in place as food verification and worker safety issues emerge.
The Start of the Cycle: Growing and Harvesting
What is known about growing and harvesting cannabis is largely because the experiment in Colorado has lasted as long as it has—more than five years have passed since Colorado Amendment 64 was signed into law, legalizing marijuana for recreational use a year later, in January 2014. Since that time, the industry has found a market for medical as well as entertainment purposes. The main focus right now is to credentialize the production of cannabis as a legitimate business.
Environmentally, cannabis requires a dry climate. Towns that have suffered severe ground water depletion could see a real resurgence, a kind of modern day gold rush. One desert community in California, where there was once a thriving community of floral, spice, and herb farms, has dried up—but now people are moving back to grow cannabis because of its ideal harvesting properties.
When cannabis comes out of the field in a growing operation, it must be tagged and marked, documenting where and when it was grown and processed. In the same vein, there will be a need for its purity to be checked once inside a processing plant, as part of a closely watched quality assurance cycle. When cannabis buds are harvested, they need to be processed in much the same way as small vegetables, though there will be refinements to accommodate the physical properties of the plant. As with specialty nuts, spices, and herbs currently, laws and regulations must be followed before it can reach consumers. Therefore, this ingredient will have to be added to the current guidelines.
Because of the changing regulatory environment, I believe cannabis processing plants will initially be attached to growing areas, rather than shipping the product across state lines. Unlike Florida orange growers shipping their fruit across the country to juice plants, the cannabis processing operation will be located close to the harvesting area. It won’t require a lot of additives, such as water for wash down; from an operating standpoint, it’s a dry harvest situation.
The Plant of the Future: Processing Cannabis
Consumption of marijuana is moving rapidly from simply smoking and inhaling it to polyphasic use as a food additive. Viewed for use in food, cannabis is just another dry, plant-based ingredient that can be added for its effect, much like Asian herbs may be included for their digestive properties. Alternatively, though, cannabis can be extracted, worked, and created in liquid format for its own unique properties.
As these subcategories take off, how do we process this product? What will the cannabis processing plant of the future look like? In order to scale, marijuana needs to move from being hand-picked or farmed in a small agricultural manner, to the plant environment. Down one stream, it will be pressed, heated, and rendered into a liquid format; down another, it will be chopped or dried and added to other products. As it reaches the level of manufacturing, production will have to scale up to supply the cookie or cereal manufacturer, for example, their key additive. There will be plant and processing implications.
In addition to increased levels of plant security around authentication, an important new challenge for producers will be handling the product itself. In its dry state as well as liquid reductions, workers could get “high” as a result of the dust and fumes. Sterilization methods, cleanrooms. and air quality will be extremely important in these plants—so added layers of air conditioning, dehumidifying, and dusting equipment must be planned for and built in. In a current plant environment where spices, herbs, seasonings, peanuts, and other allergens are processed, cleanrooms must be created to separate these ingredients out from the others. When cannabis is prepared so it could be mixed in with cookie dough or another product, it’s handled differently in that environment.
The ideal plant for the future of this industry is, first, a dedicated cannabis plant. If I were to recommend a location, it would be a growing new boom town, so that manufacturers could set up dedicated processing plants close to where the farms are located. The ideal structure would be a co-op, where farmers bring in their product to be processed. The plant would be dedicated to the special processing needs of the different farms, packaging the product for them, and sending it out. There would be specialized equipment, a sterile environment, cleanrooms, and as much automation as possible to minimize the number of people working there—because of the possible aftereffects. How the farmers want it packaged would determine the predisposition of the product before it reaches the facility.
Packaging Safely for the Next User
This brings up the question, when the product comes out, how should it be packaged? In bags, in small-dosage packaging? When flavors are processed in a flavor plant, they’re packaged in small vials. Will it be the same with cannabis? There will be a conversation in the industry as to how to best package cannabis to keep its properties, so that the next person in the chain receives it and can be assured of its purity in their process.
If cannabis follows the path of other highly regulated herbs and spices, it will be packaged in a way that the next manufacturer down the line wants to use it, and when it gets to that plant, there will be a separate area where it is strictly accounted for. At this point, it takes on the guise of a precious metal. It’s not only regulated, but its cost will impact how the ingredient is managed. One similar example of a rare and expensive herb is saffron—processing saffron is a delicate, hands-on job, and it’s put together in highly regulated doses to be handed off to the customer.
Uses and Implications of Marijuana in Specialty Foods
On a final note, there are implications of the new cannabis industry on two other growing businesses—specialty foods, and the vitamins and supplements sector. At a recent Fancy Food Show, the Specialty Food Association had to turn down several products containing marijuana that were submitted, not because of their lack of quality, but simply because of the lack of consistent national legality. We expect that to change in coming years.
Another obvious outlet for cannabis is the vitamins and supplements business, considering the debate around weight lifting drugs and their effects on the chemical makeup of the body. There will be a whole stream to market, not just in wellness, but in a GNC-type store format.
It won’t take long for cannabis processors to jump into the marketplace once the back-end functions are refined. With the enormous manufacturing and retail implications and economic opportunity marijuana presents, it seems inevitable that this is going be a part of many business plans going forward. Cookies and beverages containing cannabis are just the beginning—because consumers want to experiment with it, it’s going to be a smoking hot commodity. It’s up to everyone in the value chain to keep it safe.
Kafarakis, food industry veteran and advocate, is president of the Specialty Food Association, an umbrella organization representing entrepreneurial member companies in the food and beverage industry. Reach him at firstname.lastname@example.org or @PresidentSFA.