Packaging Companies Enter The U.S. Marijuana Industry
Child-resistant, opaque, and affixed with the proper warning label. These are just three from the list of government-issued packaging regulations for legal cannabis products in America. While the rules it operates under may be stringent, the booming marijuana industry offers an important new opportunity for packaging companies as new businesses turn to them for their expertise in making sure their edibles, concentrates and flower products are wrapped up just right.
The Revere Group packaging company in Seattle had been working for many years with some of the largest candy-makers in the United States when cannabis companies started contacting them in 2013 to prepare for the legalization of recreational marijuana in Colorado and Washington states. Now along with making boxes, bows and stand-up bags, they serve 25+ companies in the marijuana industry, producing trays of plastic containers for cannabis oils and thousands of labels.
While the regulations continue to evolve, the industry itself and its need for supplies grows bigger each month. “When marijuana availability was less reliable, we’d get orders for 600 of one label or 700 of another” said John Simpson of The Revere Group, “Now that the marijuana is coming in more regularly, companies are upping their orders to 20,000 labels.”
Marijuana industry clients represent less than 1% of The Revere Group’s total sales right now, but management there is attending local marijuana business meetings like the MJBA (Marijuana Business Association) to learn about the market and meet potential customers. “It’s a major business opportunity,“ said Dave Rheins, founder of the MJBA. Research from ArcView estimates the legal cannabis industry totaled 2.7B$ in revenue in 2014 and is on track to expand significantly as the list of states that legalize marijuana grows.
Smaller packaging businesses like The Revere Group will have some very big competition. “Whether it’s coconut oil or marijuana, if there is a trend on the rise, we want to be there to see if we can package it,” said Lyle Cummings. His company, Victory Packaging headquartered in Houston, employs over 1400 people, and sells more than one billion dollars per year of packaging and labeling products. “We’re exploring opportunities in the marijuana industry,” said Cummings, an account executive.
The company recently contributed $5,000 to be a sponsor at Hemp Fest in Seattle. “It was a great chance to meet some of the people in the industry,” said Cummings.
Small start-ups are exploring the cannabis packaging segment as well. Two recent retirees (a school teacher and a cable executive) identified a local need and started a company called Higher Standard Packaging to sell eco-friendly containers to the marijuana industry. They reported selling 3 million of the containers and child-resistant caps in their first year of sales. “What started out as a part-time research project turned into a more than full time job,” said co-founder Barbara Diner.
Government packaging and labeling regulations vary by state and most founders of marijuana-related business have little experience in retail packaging, said Cummings. He said the industry needs containers, labels, table-toppers, folding cartons, retail displays, printed bags, and more. The new growers and stores will rely on the expertise of the packaging company for design and legal compliance because they have so many other aspects of the business they need to pay attention he said.
So far Victory Packaging is just in the design and sample phase with a handful of marijuana-related businesses but hasn’t billed anyone for anything yet. That will be an important milestone because for all packaging companies, small or large, the issue of payment could be complicated. Because marijuana is still illegal in America at the federal level, banking is hard to secure for cannabis businesses. Most of The Revere Group’s customers pay with credit cards.
The owners of Higher Standard Packaging said their first payment of more than five thousand dollars came in cash – a stack of small bills that smelled like marijuana.
Author of the best-selling “All I Really Need to Know in Business I Learned at Microsoft”. Julie Weed writes for The New York Times, Forbes and has written for Inc. magazine, Entrepreneur, Fast Company and others. Julie will be writing regularly for Cannabusiness.com, covering all aspects of the emerging cannabis industry.