Excerpted from 11/21/19 issue of Label & Narrow Web Magazine.
It seems the cannabis labeling market is not going up in smoke anytime soon. It’s here to stay, and with it comes opportunity.
As of October 2019, 10 states in the US have passed laws to regulate cannabis like alcohol. They are: Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon and Washington. All but Illinois were by ballot initiative. Currently, there are 27 other US states with bills to legalize pot, and Gallup polls show that two out of every three Americans now support legalizing marijuana. Furthermore, marijuana is now legal throughout the entire nation of Canada.
Times have changed indeed. And what’s emerged from this new open-mindedness is a brand new labels and packaging market. Throughout most legal locations, there are dispensaries – literally stores that sell all kinds of cannabis products. Not only is the plant matter itself for sale, there are myriad other products, many of them food, such as assorted candies, gummies, cookies, honey, chocolates and even beverages. There are also vapes, pills, tinctures and other kinds of concentrates for smoking, vaporizing or ingesting. There are even topical cannabis products.
What do these products have in common aside from containing cannabis? They all require labels and packaging!
This is not a small market, either. According to The Freedonia Group, demand for cannabis product packaging is anticipated to reach $278 million in 2019, increasing 31% per year to $1.1 billion in 2024. Primary and secondary containers, the firm says, will continue to account for the largest share of packaging demand at 62% of sales in 2024. These containers account for the bulk of unit packaging costs, as they must meet government regulations while also offering aesthetic and performance advantages.
Demand for containers used to package cannabis products is expected to increase 34% annually from $156 million in 2019 to $670 million in 2024. All container types are anticipated to see extremely fast growth along with expansion in the marijuana and hemp industries: Jars and bottles – which together will account for 62% of sales gains – are versatile and see widespread use across nearly all cannabis delivery formats (e.g., flower, edibles, topicals), The Freedonia Group reports. Meanwhile, folding cartons, bags and pouches are expected to post very strong increases due to rapid gains in the popularity of edibles.
Packaging suppliers will remain competitive, the Freedonia Group says, by offering containers that can support product differentiation – such as high-quality graphics and a premium image. Such containers include glass bottles, vials, metal tins and other containers.
And these containers need labels. There are literally hundreds – perhaps thousands – of different strains of cannabis. Combine that with all of the different forms of products and their varying containers. Now add a host of legal requirements and more and more entrants into the space. What results is serious demand for not only lots of labels, but labels with variable information that’s often changing.
With so many different strains and types of products, SKU proliferation is a huge consideration for cannabis labels and packaging.
According to Steve Smith, President of all-digital custom product label provider Wizard Labels, “Digital printing is an ideal fit for the cannabis market – for up-and-coming brands as well as established brands. Digital printing’s cost-effective shorter runs and viable lower minimum order quantities enable our cannabis brand customers to order the quantities they need for each batch and SKU. Meanwhile, new entrants to the space can align the label quantities they need with the pace of growth of their business.”