Legal cannabis is the fastest growing industry in North America, with significant implications for the food and beverage industry. The recently released State of Legal Marijuana Markets report from Arcview Market Research and BDS Analytics projects retail sales of legal cannabis will climb from 2017’s $9.2B to $24.2B in 2021—an impressive 27% CAGR.

From medical applications to health, wellness, relaxation, and recreation, no other ingredient has offered food and beverage companies such wide-ranging potential in the form of consumer benefits and methods of consumption. Consumers in states where the substance is legal now have a rapidly expanding variety of choices of cannabis and products containing cannabis.

The edibles category is especially ripe for innovation. According to the BDS Analytics trend study Public Attitudes and Actions Toward Cannabis in North America, 54% of US adults age 21 and older have tried cannabis, as have 51% of Canadians age 18 years and older.

The study defines adults age 21 years and older (residing in states where the drug is legal) who have consumed cannabis or products containing cannabis in the past six months as “Consumers.” Last spring, these Consumers made up 23% of the US population. Another 38% are “Acceptors.” These are adults who would consider consuming cannabis or cannabis products in the future. Rejecters—those who would not consider future consumption—comprise 39% of adults.

The majority of persons in the Consumer group don’t fit the “stoner” stereotype. They are men and women with an average age of 40 years. Compared to Acceptors and Rejecters, they are more likely to be working full-time; many are raising families. They describe themselves as “physically active” (38%), “very social” (30%), “creative” (50%), and are more likely to say they are “satisfied with life” (40%) versus the Acceptors and Rejecters.

The majority of these cannabis Consumers are most experienced with inhalables and prefer that product form. However, 20% already prefer cannabis-infused edibles. Among consumers of edibles, baked goods are the most common and preferred edible cannabis product. Gummy candy is a distant second, followed by chocolate and hard candy.

Infused edibles are not just about the psychoactive component of cannabis, THC (tetrahydrocannabinol). Cannabis-derived terpenes are used in beer brewing to impart or enhance flavor, and cannabis contains more than 100 cannabinoid compounds. Of these, cannabidiol is by far the most prevalent. Cannabinoids offer a new toolbox for food and beverage R&D, from flavorants to functional health benefits for managing pain, sleep, and inflammation.

Legalization of these compounds has created a need for food industry best practices, standardization, safety, and other competencies. The need for communication and education is also growing. Many adults in the US are either uninformed or misinformed about CBD and THC: 42% don’t know if there are differences in the effects of CBD or THC, and 35% incorrectly believe that there are no differences. Many (46%) believe incorrectly that any hemp product will make them “high.”

In the states where cannabis is legal, brands are now emerging across new categories of edibles for moms, medically motivated seniors, outdoor enthusiasts, and even Fido. At the same time, consumers are evolving in their attitudes and practices, creating significant innovation opportunities for cannabis-infused foods and beverages.

Originally appeared in the December, 2018 issue of Prepared Foods as The Eye on High.