Perceptions and Plans of Canadian Food and Beverage Businesses Regarding Cannabis as a Food Ingredient

Abstract

Cannabis-infused consumables may become a fact of life in Canada by the end of 2019 and, according to this study, food companies are already seriously considering their options for entering the cannabis-infused consumables market. Food and beverage businesses continuously search for growth; new products using cannabis as an ingredient are seen by many as a fresh market that is going to open significant opportunities for growth and earnings.This study does not look at the functional effects of cannabis, but rather food processors’ perceptions and plans regarding cannabis as a food ingredient once it is legalized. It explores several dimensions, including perceived risks associated with this embryonic sector, what those risks specifically might be, and any sense of competitive urgency that they may feel. Combined with a similar examination of Canadian consumer attitudes to cannabis consumables, published in January 2018 (Charlebois, Simogyi, & Sterling, 2018), the two reports provide a unique view of the potential opportunities, hazards, and impediments in this new market sector.A total of 294 food and beverage firms were surveyed in August 2018. Just under 40% of these organizations say they support legalization of cannabis-infused products, while a substantial minority (41%) are ambivalent. Over 65% of responding companies are concerned about the risks edibles represent to children and young adults. That said, 16.4% of surveyed companies confirmed that they are either planning to launch a product as soon as edibles are legal, or are already serving a market with such a product. The most commonly stated reason for not entering the cannabis consumables market is that cannabis is not compatible with their current product line. A general lack of understanding of cannabinoids was the second most popular reason given.The results highlight how just risk-adverse Canadian food industry leaders currently are regarding cannabis. Liability risks (47.1%) and reputational risks (20.1%) are cited as significant deterrents to entering the cannabis-infused consumables market. Other hazards include the lack of regulatory clarity, training of front-line staff, the residual social stigma of cannabis itself, questions about supply chain reliability, and the need for different, tamper-proof packaging.Plainly, regulatory questions remain top-of-mind for most company officials. Food and beverage firms say they are awaiting regulatory guidance as a condition of their plans. Respondents also state that governments are likely the key resource that they would employ during product and strategy development. More than 30% of respondents say governments are their primary choice, followed by their own internal resources. And 45.5% see government bearing the chief responsibility for addressing cannabis-infused edibles issues.At the time of this writing, Health Canada has said it expects to begin industry consultations concerning cannabis consumables early in 2019. Until then, based on this survey’s results, we perhaps should expect enthusiastic, yet limited, interest related to these products.