Profit problems? The top reasons starting an edible business in California can help

how to sell edibles to a dispensary in california

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know the struggle of navigating uncharted territory and keeping up with regulatory fees, state taxes, and, of course, outdated codes like the infamous IRS code 280-e. 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. 

cannabis kitchen

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. 

cannabis kitchen supplies

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.

Become an Edible Manufacturer in California – The Top 3 Ways to Succeed!

edible manufacturers in California

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. 

baking for dispensaries

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.

cannabis kitchen

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 LinkedInReady 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.