Month: August 2022

As a cannabis operator, it’s easy to get caught up in the day to day tasks involved with keeping operations running smoothly. However, when those operations alone aren’t proving to be as profitable as you’d hope - it’s time to shift your focus to find out what you can do to scale growth for a sustainable future. 

That means taking the time out of your busy schedule to look at current consumer and industry trends across the US and in the California cannabis market, specifically. 

California has quickly become the standard for the industry and where these trends often emerge. Whether you’re licensed in the state already or looking to enter the market - knowing these trends and how to capitalize on them is first on the list of to-do’s when looking to expand. 

So, here we’ve compiled the top four latest California cannabis market trends every operator needs to know, plus two simple ways cannabis contract manufacturers can help. 

Let’s get started with the most recent trends to be aware of. 

Trend #1 - Dispensary House Brands

Retail storefronts have the advantage of an already built customer base and valuable insights from actual consumer purchases. To capitalize on this, dispensaries are now producing their own branded product lines, or ‘house brands’ that specifically meet the needs of their customers, helping to build loyalty and customer retention. 

For dispensaries that aren’t vertically integrated already, industry experts recommend white labeling or teaming up with cannabis contract manufacturers to do so seamlessly and cost-effectively. This route not only saves retailers up-front costs for facilities, equipment, expertise in production, and staff but helps bring the product to the market faster too.

Trend #2 - Pre-Rolls as the Future of Flower

Recently, the leader in cannabis data, Headset, released valuable data that highlights the product categories that consumers are now shifting towards. In this report, flower sales showed a decline, while the sales of beverages, capsules, edibles, pre-rolls, and vape pens all grew considerably from June 2020 - May 2022.

Pre-rolls, specifically, experienced profound growth in sales, increasing nearly 23% from 2020 - 21 and 22% from 2021 - 2022. Furthermore, when looking at online sales for pickup and delivery, online shopping carts containing only pre-rolls increased from 47% to 53% in a 12-month period.

Trend #3 - Brand Growth in New Sectors

Another trend, reported by MJBizDaily, shows brands not only expanding their reach with multi-state operations but also growing in new product category sectors, too. Similar to retail dispensaries producing their own house brand products, California processors, cultivators, and manufacturers are steadily seeing the benefit of expanding their product offerings outside of their flagship goods to increase target markets and sales overall. 

Similarly, out of state and out of country cannabis brands are seeking to enter the Golden State as they see the value of the California cannabis market size, population, and sales. 

Trend #4 - Portable and Potent Products

According to industry experts, consumers are steadily shifting towards more portable and potent products, such as pre-roll packs, edibles, and vape carts, that allow them to more easily consume on the go. Even more, they’re seeking out more potent products, such as infused pre-rolls, that deliver the same nostalgia as a joint but with the potency of a concentrate, too.

How to Capitalize with Cannabis Contract Manufacturers

Another trend that’s been creeping up for quite some time is cannabis contract manufacturers and white label cannabis products. By outsourcing the manufacturing of additional product lines, experts note that companies can gain the benefit of flexibility in volume and savings. 

But remember, not all cannabis white label California brands can be treated equally. As a company or individual, you should conduct thorough research into potential white label cannabis products or private label cannabis opportunities with an extensive vetting process. To help, key factors to consider when selecting a white label cannabis partner or cannabis contract manufacturer include - 

• Product consistency 
• Delivery and distribution 
• Pricing and shared costs
• Experience 
• Communication and customer support 
• Production schedule and timeline 
• Facility accessibility and availability 
• Unique value propositions versus competitors (i.e. perks like co-working space, or B2B distribution) 
• Licensing types and requirements 
• Experience with compliance (e.g. METRC, state audits, etc.)

One California cannabis license type that’s helping to facilitate fast and cost-effective entry into the cannabis edibles market is the Type-S or shared-use license. With lower licensing fees and the ability to use a facility that’s already specifically equipped for cannabis product manufacturing, you can see just why the Type-S license type is gaining popularity with budding cannabis entrepreneurs and brands struggling to turn a profit.

The Bottom Line - White Label Cannabis is on the Rise

At this point, there’s no question. To scale growth and remain competitive, California cannabis market cultivators, processors, retailers, and manufacturers alike must get serious about capitalizing on market forecasts and trends. 

Now that you know the current trends that are poised to take the industry by storm, you can internally strategize on which route is best for your operation, in positioning for future success. All in all, these trends show the value of partnering with cannabis contract manufacturers to produce white label cannabis goods and the benefits of co-manufacturing and shared-use facilities, too.  

Tap into the experience and resources of My Green Network to begin or expand California cannabis distribution and manufacturing. Since opening in March 2022, our Type-S shared-use facility has helped launch nearly a dozen private label brands, helping cannabis entrepreneurs and small businesses enter an industry that’s notoriously expensive and exclusive to join.

Learn more about our facility, membership types, and licensing support to begin capitalizing on these trends - before your competitors do. Visit our website or schedule a consultation with our team now!

So you want to start a cannabis business… 

But you’ve quickly found out that, unlike other industries, the roadmap to becoming a cannabis entrepreneur is full of twists and turns. Of course, starting a cannabusiness will have the standard steps like figuring out your business model and crafting a business plan. However, the process will also include extra hoops to jump through for funding and financing, as well as a slew of regulations to know and navigate. 

If you’re just now brainstorming how to get your foot into the cannabis industry door, this is the ultimate guide for you. Here, we’ll cover how to start a cannabis business in California step-by-step, as well as educate you on various license types, regulations to be aware of, and consumer trends and stats that’ll light your entrepreneurial fire!  

Keep reading to learn how to start a cannabusiness in California and why you should.

The Future Growth of California’s $5.2B Cannabis Market

One of the first steps in starting a cannabusiness in California is determining what type of product you’ll enter the market with or what type of business you’ll begin. What helps guide that decision is looking at the current state of California’s market and sales and the forecast for future growth. 

To give you a quick glance at the market today, here are some of the latest product and user stats for the US and California, plus forecasting factors to consider - 

• Cannabis sales in the U.S. increased 40% in 2021 to $25 billion, according to a BofA Securities report. 
• New Frontier Data calculated the compound annual growth rate (CAGR) of the cannabis industry to be 11% between 2020 and 2030, meaning the industry’s worth could be valued at $57 billion by 2030.
• California accounts for the highest cannabis sales, with Colorado and Michigan following. 
• In 2021, MJBizDaily reported sales in California hit $4.4 billion, up nearly 57% from the year prior. 
• The same MJBizDaily statistics also reported that the edibles product category showed the most market growth accounting for 22% of overall sales in 2020.
• Flower sales still reign supreme as the top selling product, with preroll sales increasing by almost 50% and now accounting for 11% (a new record-high) of the total US market share.
• As reported by Forbes, edibles are the most popular method of consumption in populous California cities, including San Francisco, Los Angeles, Oakland, and San Diego. The product category is also the most popular method of consumption amongst every age group, excluding Gen-Z. 

Now that you have a clear market outlook for starting a cannabusiness in California, let’s review the license types that’ll have you manufacturing faster than most. 

License Types to Consider in California

Despite complex industry regulations, experts recommend California as a viable market to enter due to its wide range of licensing types and population of nearly 40 million (which is more than the entire country of Canada). In comparison to other states' legal markets, California offers cannabis entrepreneurs licenses well-suited for varying socio-economic applicants and tailored options for specific product types. 

In addition to multiple cultivation license types, California uniquely offers ‘manufacturing’ licenses that allow licensees to produce a variety of cannabis products - even without having their own facility. These licensing types include extractors and processors for cannabis concentrates, and also cover edible and topical production too. 

Another important step when you start a cannabis business is to understand these licenses and decide which one works best for your vision or which will be most cost-effective for your bottom line. Here are just a few of California’s manufacturing license types that are ideal for budding cannabis entrepreneurs and what they permit per the Department of Cannabis Control - 

Type N: infusion of products

Type N manufacturers can:

• Make cannabis products through infusion
• Package and label cannabis
• Infusion mixes cannabis extract or plant material with other ingredients to make a cannabis product.

Type P: packaging and labeling

Type P manufacturers can only package and label cannabis products.

Type S: manufacturers who work in a shared-use facility

Type S manufacturers operate in shared-use facilities and can:

• Extract cannabis using butter or cooking oils
• Make cannabis products through infusion
• Package and label cannabis

The biggest difference to consider between Type-N and Type-S comes down to accessibility and the initial start-up costs of securing a facility. With Type-S you’ll have the opportunity to find a shared-use or co-manufacturing space that’s already equipped with the cannabis kitchen supplies or infusion equipment you’ll need to succeed.

While with Type-N you’ll be responsible for buying, renting your space, ensuring it’s up to code and meets regulations, and purchasing the equipment and supplies it’ll take to start manufacturing. 

How to Start a Cannabis Business in California - Step by Step

So by now, whether you want to learn how to start a pre roll company in California, manufacture edibles, or infuse topicals - you’ll need to know a few simple steps every potential licensee will be tasked with. Including - 

1. Figuring out your business model type 
2. Craft a business plan that considers - 
   • Market and competitors 
   • How to distribute and sell 
3. Scope out facilities
4. Funding and financing 
5. Register your business & apply for licensing 
   • Tax considerations 
6. Know your regulations 
7. Branding and marketing
8. Hiring a team and maximizing operations 

In terms of starting a cannabusiness in California, knowing and adhering to cannabis regulations is essential for the long term success of your business. That’s because while California is one of the easiest markets to get into, it can be one of the toughest to navigate in light of environmental focus and concerns. In fact, everything from sanitary procedures to packaging and labeling, even how you manage waste disposal, is monitored and regulated.  

During the startup process for your cannabis business, you’ll need to ensure you’re aware of the unique requirements regarding your license type at the federal-level, state-level, county-level, and local-level to avoid hefty fines or potential violations that could result in the suspension of your license.  

Back to the licensing type, this is another advantage of Type-S licensing as the shared-use facility will already be adhering to regulations for your type of manufacturing. This can reduce costs for compliance operations, software, and staff, while helping to prevent profit loss moving forward.

The Final Word - Becoming a Cannabis Entrepreneur

In any industry, surrounding yourself with the right people and team is a solid way to build a successful foundation for short term and long term growth. At My Green Network, we exist to facilitate the cannabis business dreams of aspiring cannabis entrepreneurs - whether they’re in the state, out of the country, in the industry already, or not. 

My Green Network is the premier cannabis kitchen and co-manufacturing space designed to streamline the licensing process and facilitate high-quality product development - along with supporting product sales, transportation, and distribution. Schedule a tour of our world-class facility, or learn more about our team, pricing, and services here now. 

For current cannabis operators, it should come as no shock that licensees are having a problem turning a profit or maintaining manageable margins. In the industry’s early stages of infancy, start-ups and established brands alike know the struggle of navigating uncharted territory and keeping up with regulatory fees, state taxes, and, of course, outdated codes like the infamous IRS code 280-e. 

However, in 2022, these profit problems are made even worse by the current state of the economy. The cannabis industry, like so many others, is experiencing a shocking (and somewhat unexpected) rise in operating costs, supplies, and wages due to inflation without increasing product prices. A fact that has many cannabis owners looking towards 2023, asking questions like - 

“How can we increase sales?" “How can we cut costs?” “How can we secure stability for future growth (without spending a lot up-front)?” 

Looking at the trends, it appears that cultivators, processors, manufacturers, and distributors are all on the same page - as many of these groups are starting an edible business in California to gain market growth. So how can you join the likes of brands like Cann, Sonder, and Garden Society in offering more than just one cannabis good? 

Keep reading to answer the question - how to sell edibles to dispensaries in California? And, to learn the top 3 reasons why cannabis brands already are. 

Top 3 Reasons for Starting an Edible Business in California

Because the struggles that affect cannabis profitability are often hard to adjust internally, the market is forcing cannabis owners across the US and world to look externally for scaleability. This thinking outside of the box mantra is what’s helped propel the trend of current brands starting an edible business in California. 

If you’re currently brainstorming ways to boost profits for your own cannabis (or even non-cannabis!) brand, here are the top three reasons to consider getting into the California edibles business. 

#1 - There’s money to be made. 

In February 2022, Seattle-based data-analytics firm Headset published sales data reporting that edible sales grew more than sales of all other cannabis products combined in six recreational markets. Including, California, Colorado, Michigan, Nevada, Oregon, and Washington state. In fact, gummies alone accounted for 70% of the category’s share and $1 billion in retail sales overall. 

#2 - Increases your target markets. 

Obviously, entering a new product category will increase your brand’s target market. But edibles are a market that experts agree will continue to increase in use, themselves. Why? Edibles have become the preferred entry-level consumption method due to their ability to accurately dose and avoid smoking or inhaling, for those who are opposed. 

Consequently, each year, the percentage of ‘entry level’ users trying cannabis for the first time increases, rising to 49% in 2022 from 40% in 2015, according to a recent Gallup Report. Edibles are also preferred by younger generations, meaning new consumers reaching the age of 21 will enter the market annually. 

#3 - It’s cost-effective. 

In comparison to cultivation, or extraction, edibles manufacturing is by far the most cost-effective product category for operational costs and licensing, too. For instance, the cost of securing a license and setting up shop for most traditional licenses in California is over $1 million. When edible production or white-label edibles in California typically costs less than a ¼ of that cost. 

How to Start an Edibles Business in California

Now that you know the why, let’s get to how to start an edible business in California.  The state of California uniquely offers what’s known as a Type-S license that allows for cannabis kitchens, or commercial kitchen shared spaces. The Type-S licenses are available for in-state, out-of-state, and even out-of-the-country applicants and give manufacturers the ability to operate in ‘shared-use’ facilities and, more specifically - 

• Extract cannabis using butter or cooking oils
• Make cannabis products through infusion
• Package and label cannabis

In shared-use facilities, Type-S manufacturers can usually either reserve their own suites or maintain a membership to use the common areas and equipment on a rotating schedule. This type of license not only cuts initial start-up costs but also saves on ongoing operating costs, wages, and equipment repair budget line-items, too. 

Even more, advanced Type-S facilities can help you with licensing and learning how to sell edibles to a dispensary in California. Some, like My Green Network located in Santa Ana, also offer distribution and transportation, taking care of that part of the equation, too. 

Outside of crafting your own edible product line in a Type-S facility or under a different license type, white-label cannabis edibles are another popular route for current licensees to explore. White labeling gives you the opportunity to quickly put a quality product on the shelves with fewer start-up costs and you own control over branding. 

Starting an Edible Business in California - The Bottom Line

Without any forecast for higher product prices or lower wages or costs - it’s time to get serious about how to scale growth, increase profits, and leverage your brand over competitors. As you’ve learned here, one way to do so for a growing number of cannabis brands is starting an edibles business in California. 

Whether you’re from out of state, out of the country, or already licensed in California, getting licensed to produce or white label cannabis products is simpler and more cost-effective with California’s Type-S license. So, now that you’ve learned how to start an edibles business in California and the reasons why make now the time you begin exploring the options to do so seamlessly. 

Start by contacting My Green Network to schedule a tour of our Type-S shared-use licensed facility and cannabis kitchen for your future edibles brand. Or, browse our pricing page to learn more about how our licensing and membership process works. 

Want a step-by-step guide to learning how to sell edibles to a dispensary in California? Download our complimentary guide for industry statistics, the most cost-effective ways to do so, and actionable tips you can take now to get started.

If you’re a baker or chef (or just someone who’s watched the now trending ‘The Bear’ on Hulu) you know how anxiety-ridden and stressful the job can be. Early mornings, or late nights, are riddled with customer complaints, staffing issues, and oftentimes, unfulfilling when it comes to appropriate pay. 

For these reasons (and more), the culinary community and the cannabis community go hand in hand. In fact, this relationship has already motivated a plethora of chefs like LA locals, Enrique Olvera, and The Yeastie Boys to become edible manufacturers in California, themselves. 

Are you one of these culinary or cannabis enthusiasts seeking to align your two passions for a bigger and more fulfilling payoff? Private label edibles and baking for dispensaries have never been more popular for professionals and personal foodies looking to capitalize on the budding cannabis market. So, where can you start? 

Here, we’ll dive deep into how to easily become an infused product manufacturer with shared cannabis kitchen space and affordable licensing options. 

The ‘Why’ Behind Private Label Edibles

Smoking cannabis naturally produces creative edible ideas from the minds of current cannapreneurs, pastry chefs, sous chefs, and just everyday consumers - who don’t always have the funds or capabilities to make those edible visions come to life. Even with widespread legalization across the US, it’s been hard for mom-and-pop shops to make it big (or even turn a profit) when you consider the cost of becoming a licensed operator, especially in California.

Today, traditional licensing options in California cost a minimum of $1 million, and that doesn’t even include the operating costs it’ll take to keep your business up, running, and profitable. But before we scare you away, it’s important to know that the edibles category's market share is growing exponentially as more consumers become comfortable with their soothing (and satisfying!) effects. 

Headset and MJBizDaily recently reported that the sales of marijuana-infused edibles grew more than ‘sales of all MJ products in CA, CO, MI, OR, and WA’ in 2021. As you may suspect, cannabis gummies made up the majority of 2021 edible sales (at 70% of the category’s total market share in 6 recreational states) and accounted for nearly $1 billion in retail sales alone.  The thriving market indicates there is an opportunity to be successful in the cannabis industry by manufacturing edibles.

With the "why" behind private label edibles now under your belt, let’s get to the "what" of private label edibles and the definition of the terminology. Private label edibles are similar to any white label product in the fact that one entity produces the product, and another can brand it however they so choose. That means, even if you don’t have culinary or cannabis-infused kitchen experience - you can brand your own products with your own private label or white label and very easily become a player in the edibles game. 

But, how? We’ll get to that next. 

3 Steps to Becoming an Edible Manufacturer in California

Use the following three steps as your guide to becoming the next up-and-coming edible manufacturer in California. 

#1 - Crafting a business plan 

A business plan is an initial starting point for every business, no matter the industry. In cannabis, it’s even more important to do your research and due diligence while crafting one. That’s because your ability to become licensed is dependent on a sound business plan that’s reviewed by the state’s Department of Cannabis Control.

To be sure you’re setting yourself up for success, you should ask yourself the following questions while compiling your edible business plan - 

• What type(s) of edibles will you produce?
• How will they stand out from their current competitors? 
• Where will you produce the edibles? (A facility is required to apply for licensing!) 
• Where will you get the flower or oil to make edibles and how much will it cost? 
• Will you cook them yourself, or will you need to find talent?
• What kind of license will you need to produce your edibles? 
• How will you distribute or sell your edibles? 

#2 - Funding and licensing 

On to funding - every business needs some type of capital to get off the ground. It’s just a question of how much and from where. However, unlike other industries, since cannabis isn’t federally legalized, new business owners have fewer traditional business loan options. Hence, why it’s been so difficult for small businesses and fresh cannapreneurs to break into the biz. 

Luckily, for those interested in private label edibles or baking for dispensaries - there’s a lesser-known S-type license in California that helps potential licensees get their start for less. A Type-S License is classified as “shared-use” and allows licensees to work in facilities that have a master manufacturing license that is designated as a ‘Primary S-Type License’. 

To add to its appeal, the Type-S license can cost under $50,000 and is typically issued in 60 days vs 1+ years for others.  Not to mention, the lower capital requirements for Type-S licenses also increase the likelihood of a company turning a profit and avoiding the fate of the 37% that are not profitable. 

Because the Type-S Licensee is using the primary Type-S License’s facility, equipment, and space to produce their own brand or product - it helps save on initial operational costs and much more.  Think of it like a WeWork with kitchens, or Cloud Kitchens used as commercial kitchen shared space. 

#3 - Securing a facility 

Starting an edible business in California will require you to secure a facility or cannabis kitchen, regardless of your plan, funding source, or licensing type. That means you’ll also need to consider the cost of cannabis kitchen equipment and cannabis kitchen supplies, too. 

In the initial planning stages of your edibles business, you should also consider the quality of the equipment you can afford and how it might affect the quality of your end product. Especially considering the quality of your product will affect how you price it, too. 

To make all three of these steps that much easier to conquer, California is now home to a select few full-service type S licensed facilities. These cannabis kitchens act like any other commercial kitchen shared space (like Cloud Kitchens) but are equipped with specialized cannabis kitchen equipment, cannabis kitchen supplies, and often offer private label edibles opportunities, too.

From Chef to Infused Product Manufacturer

Now that you know the profitable benefits of becoming an infused product manufacturer or private label edible producer and the simple and cost-effective steps to do so, what’s next? 

Finding the right cannabis kitchen or private label edibles partner. 

At My Green Network, we exist to enhance the edible community by increasing accessibility for culinary or cannabis connoisseurs. Our s-type licensed facility helps you turn your dream or passion project into reality. At a fraction of standard licensing costs and with everything you need in a state-of-the-art, cannabis-friendly commercial kitchen shared space.  

Learn more about our community of ‘chef’s turned edible manufacturers in California’ now by visiting our website or connecting with us socially on LinkedIn. Ready to become one yourself? Schedule a tour of our Santa Ana facility now.

Want a step-by-step guide to learning how to sell edibles to a dispensary in California? Download our complimentary guide for industry statistics, the most cost-effective ways to do so, and actionable tips you can take now to get started.