Consumers Prefer Higher THC Limits in Edible Packages

So here's the deal...

The regulation of THC limits for edibles is a topic that has been under discussion by government regulators and industry stakeholders alike. Recently, Health Canada requested five licensed cannabis companies to cease the sale of certain ingestible marijuana products that had been accepted by Provincial boards under the category of “ingestible extracts”, rather than edibles. In Canada, edibles are subjected to a limit of no more than 10 milligrams of THC per package, whereas extracts or "concentrates" are allowed to contain significantly more THC per package. As we explore this topic, we will examine the impact of this regulation on the market and the industry.

Our method to the madness

In this report, we examine sales from Headset Insights markets.  Analyses include data from most or all of the following markets AZ, CA, CO, FL, IL, MA, MD, MI, NV, OR, and WA in the US and AB, ON, BC, and SK in Canada.

Edible sales, USA vs. CAN

Edibles are the fourth most popular product category YTD in Canada. The category is substantially less popular in Canada than in the US market, with nearly half the percentage of total sales of their southern neighbour. In the US, regulation on THC per package is much more relaxed with some states allowing up to 800mg of THC per package. Canada’s tight regulation on THC per package likely contributes to the category’s low popularity compared to other legal North American markets.

Oregon sets a precedent in '22

There is some precedent for consumer demand when it comes to limited THC per package for Edibles. The Oregon Liquor and Cannabis Commission adopted new rules increasing the edible THC package limit from 50mg to 100mg as of April 1st, 2022. In the chart above, you can see that there is a clear consumer preference for the larger THC per package amount, a trend that we’ve also seen play out in the Canadian market over the last few years.

Popular "ingestible extracts"

In Canada, some Edible producers have been able to bypass THC limitations by classifying their products as “ingestible extracts.” There are currently only a handful of Brands selling these “ingestible extract” products. In fact, three of the top ten Edible Brands, Aurora Drift, Indiva, and Edison Cannabis Co. have product lines that utilize this alternative product rendering method. In fact, the top three products from each company are labelled as ingestible extracts and contain over 10mg per package.

Packaging impacts affordability

Similar to high-dose beverages, consumers have shown a significant preference for value in the cannabis industry. To measure this value, EQ Price is a metric that measures the price per milligram of THC. When extract-based product lines were first introduced in the fall of 2022, there was a noticeable drop in prices, resulting in an increase in value that has clearly been highly appealing to consumers. This decrease in price has helped drive sales by providing customers with more affordable options.

Higher potency products dominate the market

When we compare the top three “extract” products from Indiva, Aurora Drift, and Edison Cannabis Co. to the rest of the Canadian Edibles landscape, these nine products have collectively accounted for 17.7% of all Edible sales from January through April 2023.  Additionally, for each of these three specific companies, their top three products on average account for 41.9% of their total sales across all categories.

Our takeaways...

Based on the data presented, there is a clear indication of consumer demand for Edibles with higher total package potency in Canada. If high total package potency is restricted from the Canadian Market, it may result in a negative impact on the Edible category overall, leading to reduced consumer spending and financial losses for producers. It remains to be seen how regulators will respond and the consequences it will have on the market.

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