The Bengal Bite 
Lessons from the California Edibles Market - Brands in Cannabis, Part III
September 3, 2021

As we discussed in our last Bengal Blog post, California retail sales data suggests that consumers are not particularly brand loyal when it comes to cannabis flower and concentrates, instead preferring to try out many different products across different brands. The edibles market in California seemingly is behaving unlike these other categories.

Kiva has consistently been the top edibles seller in California. Why? For one, many consumers (rightly or wrongly) feel that they can judge the quality of cannabis flower, extracts, and concentrates by just looking at them. Flower that looks dry is likely dry. Flower that looks like it has low crystal and terpene content likely does as well. Bag appeal is actually an indicator for flower, and for concentrates as well. 

Not so with edibles, many of which you can’t see before you buy, and which often look the same from one manufacturer to another. To the eye of many consumers, there is not much visual difference between brownies, gummies, or other hard candies. So, buyers have less information to go on when they are making the purchase. But, information is much more critical in this case - a misdosed or ineffective edible will ruin an entire night’s experience, so the cost of a consumer’s lousy decision increases. In this kind of situation, it makes sense to start to see the kind of loyalty Kiva gets to develop.

And, let’s not forget infrastructure - Kiva has some of the furthest reach in California as it distributes to over 650 retailers. That shelf space, reach, and ability to manufacture consistent products all undergird the loyalty that Kiva has developed. As you can see below, other edible brands have also developed what seems to be some stability in sales - indicating at least some loyalty as well. 

We look forward to learning more as companies continue to innovate as customers come in from illicit markets.

• Do you trust your doctor about cannabis? (The Cannigma) | Barely a quarter of cannabis users trust their doctor to provide them with reliable information about medical cannabis and how to use it to treat their medical or health conditions, according to a recent survey. At the same time, 80% of those surveyed said that they would be willing to use medical cannabis to treat a medical condition if it was recommended by their physician.

• Ascend Wellness Borrows $210 Million at 9.5% for Four Years (Press Release) | AWH intends to use the proceeds to (i) repay substantially all of the Company’s debt excluding approximately US$12 million of outstanding acquisition payments with near-zero interest rates, (ii) finance the Company’s pending investment in MedMen NY, Inc. and (iii) support the Company’s future growth and acquisition initiatives. It is a mark of how the cannabis debt markets have improved that there was no warrant coverage necessary as a prerequisite to the deal.
   
• TerrAscend to buy Michigan cannabis operator Gage in $545 million deal (Marijuana Business Daily) | North American cannabis company TerrAscend plans to enter Michigan’s marijuana market after reaching a deal to buy local operator Gage Growth in an all-stock transaction worth $545 million. Under terms of the deal, Gage shareholders will receive 0.3001 common shares of TerrAscend in exchange for each Gage share, representing an 18% premium for Gage shares based on the companies’ closing share prices Tuesday.
   
• Planet 13 to Enter Florida Medical Cannabis Market with $55 Million Acquisition of Harvest License (New Cannabis Ventures) | The destination dispensary chain continues to expand following the opening of their 2nd store in Orange County, California. With the upcoming merger between Harvest and Trulieve, this deal marks a meaningful step in consolidating the license regimes between those two organizations, and the first step towards Planet 13 bringing their dispensary experience to the East Coast.
   
• High priority: Kathy Hochul vows to launch NY’s legal marijuana industry Cuomo stalled on (NY Post) | Gov. Kathy Hochul vowed that getting New York’s budding marijuana sales program off the ground will be a high priority. Hochul on Wednesday promised to clear the logjam. “Nominating and confirming individuals with diverse experiences and subject matter expertise, who are representative of communities from across the state, to the Cannabis Control Board is a priority for Gov. Hochul,” the new governor’s spokesman, Jordan Bennett, told The Post.