Rather than legalize all cannabis product categories at once, Canada opted to roll out a select few at a time, starting with dried flower and oral oils in October of 2018. What that means is that the legal market in Canada is not a true representation of cannabis users consumption method and product preferences. When we look to fully legalized and developed markets like those in certain US states, we can see some clear trends:
- While flower sales continue to grow in absolute dollars, they are declining as a category share of overall sales.
- Edibles are gaining ground, picking up some of the decline of flower.
- Concentrates and extracts, partially fueled by the rise of vaping, are becoming more popular, and also picking up some of the flower losses.
- Pre-rolls are gaining in popularity because of their convenience and the hype surrounding high-CBD and balanced strains.
Now that Canada is releasing a second round of categories to legalization on October 17, by mid-December Canadian consumers will have access (although somewhat limited) to edibles, concentrates, and topicals. The Canadian market will then gradually begin to reflect the trends that are being seen across the cannabis markets elsewhere, allowing the growth of product categories other than flower. More and more LPs will begin shifting some or all of their harvests towards these value-added categories that, in many cases, command better margins than dried flower. In fact, many of the major players have already stock-piled significant product for exactly this reason and have processing systems in place to begin manufacturing these products on day 1.
What does this mean for cannabis harvesting technology?
The addition of new product categories to the Canadian cannabis market will have a profound impact on the harvesting technology currently in use and will likely steer advancements in harvesting technology moving forward.
There is a small minority of LPs that have continued to use batch-style dry trimmers. While we argue that this type of trimmer isn’t a good choice for the scale of any LP, the proponents of these machines claim that they are gentler on the product. But as LPs begin producing edibles and extracts, trimming with a batch-style trimmer will not provide any benefit (real or imagined). It will simply slow down the harvesting process and make it more difficult for an LP to scale. Realistically, if an LP wants to expand into edibles or extracts, they will not be able to use batch-style trimmers and compete against LPs that use throughput-style trimmers like the Mobius M108S. It will simply be too time consuming, labor-intensive, and ultimately, expensive.
While different types of extracts use slightly different cultivation, harvesting, and processing methods, one thing remains consistent across all extract products: they are not derived from hand-trimmed flower. It has no impact on the final product whether a flower is perfectly trimmed or not. In fact, in cases where the extract is made from flower only, if it’s trimmed too tightly there may be revenue loss over time. For “nug-run” extracts (extracts created from only flower and not fan leaf), the trimming process is to remove the fan leaves and some sugar leaves. These flowers would have a “shaggy” trim for those that are familiar with trimming terminology. For other extracts, the trimming process is more of a de-leafing to remove fan leaves (which still have value in creating lower-quality extracts or distillates and isolates.) And some extracts bypass trimming altogether, with the flowers and leaves going through a quick bucking process and directly to extraction after that (or drying, then milling, then extraction).
The extracts category growth will drive further trimming automation and a total abandonment of hand-trimming or batch-style trimming by any LP that is going to shift focus to this new product category. Because extract manufacturing in Canada will soon be done on a scale not seen anywhere else in the world (much like the larger Canadian LPs current growing facilities), we believe it will continue to drive advancement and technology that caters to trimming specifically for this category. While Mobius remains committed to serving all of the cannabis industry, it’s entirely possible that at some point we’ll release features, tools, or additional components that are specific to extract processes that have different trimming requirements than LPs producing dried flower.
Additionally, the demand for milling machines, typically the last process before extraction when working with dried plant material, is growing substantially.
As cannabis users turn to convenience, pre-rolls as a category have grown significantly. With the current wave of hype surround CBD, there is even a sub-category of CBD pre-rolls that are already 50-state legal. While hemp farmers that are growing specifically for smokable flower are in the minority, they are having a hard time keeping up with demand and are growing fast as a subcategory of hemp cultivation.
“Hemp farmers cultivating smokable flower for CBD pre-rolls can’t keep up. The market is through the roof, they simply can’t produce it fast enough,” says industry expert Brad Mitzelfelt, “In 2018, hemp farmers growing for CBD had approximately 5% of their crop grown for smokable flower with 95% grown for biomass. In 2019 we’re seeing a shift to approximately 20% being grown for smokable flower and 80% for biomass. We expect to see this trend continue, especially as tobacco consumers continue to search for a healthier alternative and vaping tobacco doesn’t seem to be as safe as people had hoped.”
Pre-rolls are not created from hand-trimmed flower. Flower used in pre-rolls is almost exclusively trimmed with an automated cannabis trimmer, as there is no reason to hand-trim a flower that will never be seen in full-flower state by the consumer. Like extracts. the growth of pre-rolls is again fueling the sales of another type of milling machines, like the Cannmill from CannTech.
“Most of the interest in our milling machines has come from the growth in extraction," says CannTech CEO Ryan Bjergso, "While that remains the largest source of our sales, we’re now seeing a lot of interest in milling machines from LPs that are ramping up production of pre-rolled products.”
Edibles, including the range of sub-categories like beverages and sublinguals, use THC, CBD, and other cannabinoids as an ingredient. Any of the other characteristics of the origin plant, (aroma, taste, terpenes) are removed. (Users do not typically want their cherry soda, chocolates, or gummies to smell or taste like cannabis!) That means that in most cases when cultivating plants specifically for manufacturing edibles, the trimming process is skipped entirely. Often grown outdoors, the whole plants are broken down to biomass before being processed to create cannabinoid isolates, which are then added to edibles as an ingredient just like sugar or eggs might be.
While the development and maturation of the Canadian cannabis market continues, Mobius remains committed to creating the most advanced harvesting equipment and automation available, further increasing our partners' return on investment, reducing their labor costs, and supporting their business goals.