Marijuana Business Magazine February 2019

Marijuana Business Magazine | February 2019 92 The company brought in $2.3 million through sales of 545,000 units during the past 12 months, McAulay said. About 60% of those sales came from edibles, approximately 15% of which were derived from the hard candies. Infused edibles comprise approx- imately 9% of the marijuana sold in Washington, according to the state’s Liquor and Cannabis Board. In addition to losing money from sales, Green Labs would also have lost out on the roughly $10,000 the company invested in the molds used to make the candies as well as the time spent promoting its brand and a few more thousand dollars on bulk packaging. The new, less-stringent rules limiting colors, shapes and vibrant, colorful packaging stand to cost Green Labs much less. McAulay foresees spending 2019 overhauling its packaging in-house and making some slight color tweaks to its hard candies, mints and other products to meet the new rules. The changes could cost up to $15,000 for Green Labs and upward of $50,000 for companies that outsource their redesign work, he said. Playing It Safe Like many states where marijuana is legal, Washington had rules on the books to keep cannabis away from children. One of those rules prohibited the sale of gummy candies. But the LCB by its own admission approved some products that met the definition of “especially appealing to children” during product reviews. Green Labs’ McAulay said produc- ers started by making something similar to Starburst and continued to introduce softer and chewier products until eventually they were selling traditional gummies like those found in the bulk-food section of a typical grocery store. To avoid skirting the rules and opening itself to risk, Green Labs did not try to make a gummy product. But the new rules give the company renewed confidence to introduce a chewy candy. “As we continue to get a clearer definition on the rules, essentially our understanding now is gummies are available,” McAulay said. “Rather than us thinking they were going to take away products from us, they’re giving us the go. That allows us to create new product lines with the confidence they’ll be able to stay around, giving us the ability to tap into new markets and to start getting attention of the typical gummy consumer.” Ending Production Green Labs did not immediately halt production of Swifts Sour Drops after receiving the notice from the LCB that the state would be stricter on gummies and hard candies. The board introduced new labeling rules in May 2018 calling for all previously approved marijuana-infused products that are ingested to be resubmitted for review. When companies made submissions for product and label review, they would be notified in writ- ing by the state if their product was no longer allowed. Washington state regulators plan a crackdown on the sale of mari- juana-infused products considered “especially appealing to children.” One of the producers in the state, Green Labs, expects to shell out tens of thousands of dollars meeting new packaging requirements but sees some opportunity with the new rules. Here’s what you need to know: • In fall 2018, the Washington State Liquor and Cannabis Board announced licensees could sell through their stock of gummies and hard candies until their inventory was depleted or April 3, which- ever came first. Facing backlash, regulators changed the rules in December, so that infused-candy makers could continue selling their products with limited colors, shapes and packaging designs. • Green Labs, producer of Swifts Edibles, had only three products that fell under the original ban: Swifts Sour Drops in lemon-raspberry, orange-mango and key lime- strawberry flavors. The company now must overhaul the packaging and labels of most of its SKUs to meet the new requirements. • Green Labs experienced a temporary bump in sales after the ban announcement, but it did not ramp up production to ensure retailers would be able to sell through the product before the state’s new deadline, Jan. 1, 2020. • Gummy candies were approved in Washington in the months before the crackdown announcement. Green Labs avoided making a gummy product to not take on unnecessary risk. The new reg- ulations give the company more confidence to introduce its own gummy product in the future. Green Labs will have to update the labels for its Swifts Sour Drops to meet Washington state's new regulations. Courtesy Photo