Cannabis ointment with labels created by Lightning Labels in Denver%2c Colorado

Some call it the ‘Green Rush.’ Others liken it to the Wild West. Experts say it’s growing faster than the dot-com era in the early 2000s. Call it what you will, the legal cannabis market is growing by an unprecedented rate and is presenting a tremendous opportunity for the label and packaging industry.

In the US, eight states (Alaska, California, Colorado, Oregon, Massachusetts, Maine, Nevada and Washington) and Washington, DC have fully legalized cannabis to be sold and taxed in dispensaries for recreational use. Another 22 states and Washington, DC have active legal markets in the form of legalization for medical or scientific purposes. 

Elsewhere in North America, the Canadian government is expected to legalize recreational marijuana for the entire country by July 2018, and Mexican President Enrique Peña Nieto recently signed a decree opening the door for medical cannabis legalization. 

All this points to an industry that is accelerating faster than any other in recent memory, and the payoff could be huge for label and packaging suppliers. 

Arcview Market Research has studied the legal marijuana market and its growth opportunities. According to its reports, the legal cannabis market reached $6.7bn USD in US, Canada, and Mexico as these countries have expanded their legal marijuana market. 

At a 34 percent growth rate, this industry is growing larger and faster than the dot-com era (see boxout), and the market will reach $22.6bn USD by 2021, according to the Arcview’s most recent ‘State of the Legal Marijuana Markets’ report. 

‘Very few consumer industry categories reach $5 billion USD in annual spending and then post anything like 25 percent compound annual growth across the following five years,’ Arcview’s report states.

A wide market 
The products for this market are plentiful. There’s the flower – or the traditional marijuana ‘bud’ – but also cannabis-infused edibles and beverages, cannabis lotions, oils, topicals, capsules, tinctures, vape pens and pre-rolled cigarettes. Additionally, dispensaries sell all the accouterments to indulge – pipes, pre-rolled cigarettes, cigarette paper and more. Not to mention the products for medicinal marijuana. The list of legal cannabis and auxiliary products and services is practically endless: all products that require a label and need packaging guidance. Converters prepared to enter this developing market could be at the forefront of this so-called ‘Green Rush’. 

Packaging could play a key role in guiding an industry that looks to shed its stoner image as it moves toward wider adoption. As these companies evolve, they’re looking for their labels and packaging to represent a grown-up image. High-end dynamic packaging is in demand. 

‘Now [marijuana companies] have a prime product that will reside on shelves,’ says Gary Paulin, Lightning Labels director of sales and client services. ‘Consumers are going to walk into a dispensary and expect the products to look high-end. Recreational legalization has been a real game changer, it puts the prime label front and center.’ 

Lightning Labels, a label converter based in Denver, Colorado, has been at the front lines of this evolving market. Paulin continues: ‘You have an industry that’s grown out of the shadows. But it’s grown up, and now it deserves to be taken seriously. These companies are putting more thought into branding and realizing that the brand is so much more than a logo. A brand is who you are.’ 

The industry, while profitable, has a unique set of challenges. 

In the US, branding is met with roadblocks. Even though there are active legal markets in 30 states, marijuana still remains a federally illegal substance. The office responsible for registering trademarks – US Patent and Trademark Office – is a federal office, and therefore will not trademark marijuana retailers or marijuana products. This means brands are effectively left open to counterfeiters and trademark infringement. 

And while the future of US cannabis legalization under the Trump administration is unclear, repeal of federal prohibition would ‘fuel explosive growth,’ Arcview notes in its report. 

Regulations 
Digital flexible packaging converter ePac, based in Middleton, Wisconsin, has seen greater interest in this arena since opening a second location in Boulder, Colorado. Carl Joachim, ePac’s chief marketer, has lovingly compared the emerging legal market to ‘the Wild Wild West’. 

‘I’m referring to the level of maturity of the industry,’ says Joachim. ‘From the standpoint of the income opportunity the industry promises to deliver: there are many companies vying for market position, and a few larger entities beginning to emerge. While new entities are formed and licenses are obtained, in many states lawmakers are still defining the regulations that are needed to govern the industry, while enabling an infrastructure to support growth.’ 

As states iron out the rules guiding this new industry, oft-changing regulations can lead to headaches for label and packaging converters, according to both Joachim and Paulin, as they require changes to the packaging. However, digital technology lends itself well to this industry, as there are many smaller, boutique brands, with short runs and frequent artwork changes. 

‘Often there are new state regulations that deal with how the product needs to be marked,’ Joachim explained. ‘These are simple changes we can easily make, without the need for additional plate fees. Our customers often drive other changes once they understand how we can help them create great packaging with eye-popping graphics.’ 

Shifting attitudes
Although today acceptance for legal cannabis is hugely popular (polls show that 80 percent of Americans approve legal access to medical cannabis, Arcview says), for years it’s been an industry that’s operated in the black market, so it’s reasonable that some businesses would be apprehensive about jumping in. 

At Lightning Labels there were few misgivings. ‘To choose not to participate in it because you may not agree with it, that’s now seen as somewhat foolish,’ he continues. ‘Our attitude is: legal is legal. It’s a huge vertical that we don’t even know the potential of long term. We’re going to be active in it, and we’re going to be transparent. We’re not doing this is the shadows. It’s an exciting business to be a part of.’

ABOUT THE AUTHOR

Chelsea McDougall is North America editor for Labels & Labeling.

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