by KRYSTINA SKIBO
Editor’s Note: As Demonstrated by the previous pages’ cannabis feature focusing on the broader Minneapolis market, the legal THC industry is rapidly evolving. So too is the way that beverage alcohol retailers must approach pot products of all kinds — not just drinks. With that in mind, we provide a number of recent cannabis news stories that beverage alcohol retailers would be wise to consider and keep in mind.
As President Donald Trump considers a proposal to federally reclassify cannabis via an administrative process, a GOP congressman has introduced a bill that would achieve the reform legislatively, codifying the policy change under federal statute.
President Trump signaled openness to cannabis rescheduling in early August, with the Drug Enforcement Administration’s (DEA) new leadership also naming it a top priority.
This is also the fourth session in a row that Rep. Greg Steube (R-FL) has filed his “Marijuana 1-to-3 Act,” according to Marijuana Moment, a reference to the fact that the measure would make it so cannabis would be transferred from Schedule I to Schedule III under the Controlled Substances Act (CSA).
“Moving cannabis to Schedule III would mark the most significant shift in federal cannabis policy in over 50 years, and one that is grounded in science, patient needs and economic reality,” says NewLake Capital Partners’ CEO and president Anthony Coniglio. “While it would not legalize cannabis, it would recognize its medical utility and remove the punitive tax burden of Section 280E.”
Reclassifying Cannabis From Schedule I to Schedule III
In October of 2022, former President Joe Biden requested that the U.S. Department of Health and Human Services and the Department of Justice to review cannabis’ Schedule I classification under the Controlled Substances Act (CSA).
In April of 2024, the DEA agreed with Biden, officially starting the process of moving cannabis from Schedule I to Schedule III.
“For decades, federal policy has classified cannabis — and by extension, the compliant state-licensed businesses that produce and sell it — alongside heroin under Schedule I of the Controlled Substances Act,” Coniglio explains. “A Schedule III designation would open the door to much-needed research in the medical applications of cannabis, and mark an important step forward for new institutional investment, better access to capital markets and a stronger foundation for long-term industry growth.”
The Biden administration's proposal was endorsed by Trump on the campaign tria. Trump said more recently at a press briefing that he was considering rescheduling. The president also said a decision on the pending cannabis reform would come soon.
“The next few months will determine whether this process delivers regulatory clarity or becomes mired in politics,” says Coniglio. “Policymakers should follow the data, the Department of Health and Human Services’ recommendation and the principle that science — not stigma — should drive scheduling decisions. Rescheduling is not the final step, but it is an essential one. The science is clear, the process is underway and the benefits are within reach. Now it’s time to finish the job.”
Even though flower continues to reign supreme, edibles have become increasingly popular, evolving from a niche product to a significant segment of the legal cannabis market.
Edibles are particularly popular in the U.S. and in Canada, according to a report from BDSA. In the U.S., sales grew roughly 20% year-over-year from 2019 to 2023, and represented about 12.4% of sales in the legal cannabis market.
New Frontier Data also reported that consumer spending on cannabis edibles in the U.S. reached more than $3.5 billion in 2023. Edibles rank third in total sales and market share in North America after dried cannabis and cannabis extracts.
“The U.S. edibles market has really come into its own in the past few years,” says Jessica Hanson, founder and managing director at Homegrown Group. “It’s now worth around $4.5-5 billion annually, making up about 14-15% of total legal cannabis sales.”
The edibles market includes a wide range of product types, such as cannabis-infused beverages, gummies, brownies, candy or mints. Most states that have legalized adult-use cannabis restrict the amount of THC to five or 10 milligrams per serving, while other states allow for higher amounts of THC for medical users.
According to a report from ResearchAndMarkets.com, the global cannabis edibles market was valued at $5 billion in 2023 and is expected to reach $9 billion by 2028, growing at a CAGR of 12.26%.
The Making of Edibles
How can someone take a plant and turn it into a delectable snack or beverage that’s infused with other mouth-watering flavors? Rebecca Mariolis-Baker, CEO and co-founder of cannabis brand Urmawm, describes the step-by-step infusion process for her brand:
1. Cannabinoid Activation (Decarboxylation). First, Urmawm starts with cannabis extracts that contain THC and CBD in their raw, non-psychoactive forms (THCA and CBDA). Through gentle heat, they activate these compounds via decarboxylation, making them effective when ingested.
2. Infusion Into MCT Oil. Next, they blend the activated cannabinoids into MCT oil derived from coconut. This oil is ideal for edibles because it’s flavor-neutral, shelf-stable and rapidly absorbed by the body, improving cannabinoid bioavailability.
3. Homogenization (Even Distribution). The infused MCT oil is emulsified with Urmawm’s gummy base to ensure even cannabinoid distribution. This step is crucial, since it guarantees that each gummy delivers a consistent dose.
4. Cooking the Gummy Base. Urmawm’s vegan-friendly formula uses pectin instead of gelatin. They mix organic sugar, tapioca syrup, mango juice concentrate and natural flavors to create a fruit-forward, soft texture. The infused oil is then incorporated into the warm blend.
5. Molding, Setting and Packaging. The mixture is poured into molds, cooled and quality-checked for consistency, potency and texture. Final packaging includes accurate dosing and federally compliant labeling.
Peter Barsoom, founder and CEO of 1906, says his brand utilizes a slightly different technique to infuse the brand’s gummies. Instead, he uses a lipid microencapsulation process that significantly enhances the pharmacokinetics of THC, which does three things:
1. It accelerates bioavailability, so users feel the effect in under 20 minutes.
2. It bypasses the liver, avoiding the conversion of THC into 11-hydroxy, which is a metabolite associated with the heavy, sedative experience common in traditional edibles. Instead, 1906’s formulation delivers a fast, clear-headed Delta-9 experience similar to inhalation.
3. It reduces duration, from six hours to roughly 2-3 hours.
“This formulation gives consumers greater control over onset, intensity and duration — key factors in reducing risk and improving user experience,” Barsoom says.
“Cannabis edibles are produced through different methodologies and use different mediums of cannabis extract to infuse the cannabinoids into the product,” adds Brandon Dorsky, CEO and owner of Fruit Slabs. “The production of edibles within the regulated market is differentiated primarily by the use of solvent-less vs. solvent-extracted products to infuse the product. Solvent extracted products are typically made using distillate that is extracted through various methodologies, including ethanol based extractions as well as CO2 extraction.”
Solvent extracted products are highly predictable to work with and reproduceable at scale, according to Dorsky. Solventless extraction is more of an artisan methodology, and solventless edibles tend to be made using fresh rosin. The use of rosin within edibles tends to be seen mostly in craft edibles.
“The edibles market in the U.S. is currently very strong, with gummies leading the category,” says Sarah McLaughlin MS, RD, co-founder and vice president of Melt-to-Make. “Interestingly, women now represent the majority of edible consumers, reflecting the category’s appeal across wellness and lifestyle segments.”
Edibles Present Diverse Appeal
One particularly positive aspect that edibles bring to the cannabis market is their diverse appeal. They’re travel friendly and great for consumers who prefer not to smoke.
Edibles are particularly popular with certain demographics. Older age groups and female customers, as McLaughlin mentioned earlier, tend to have a greater affinity for edibles compared to other cannabis categories.
“Edibles are one of the fastest-growing cannabis categories, especially among newer and wellness-oriented consumers. Their appeal lies in ease of use, discretion and consistency,” says Barsoom. “In many markets, edibles have already outpaced flower as the preferred format for first-time or returning users. As stigma declines and product design improves, we expect continued migration from inhalables to ingestibles.”
Headset Cannabis Data released a Cannabis Demographics report in 2023 which found that older age groups and female consumers show a stronger preference towards edibles compared to other categories. In Canada, women account for 46% of category sales while U.S. consumers over 41 contribute to over half of edible sales
Even though older age groups have a particularly noteworthy edibles preference, younger generations are also major consumers to this market. Specifically, gummies and infused beverages. These users are often more open to alternative consumption methods and are more likely to view cannabis as a substitute for alcohol.
“Many people are drawn to edibles for their convenience, discretion and ease of use,” notes Urmawm’s Mariolis-Baker. “There’s also the perception that they’re a healthier, more socially acceptable alternative to smoking or vaping. Plus, edibles allow for more personalized dosing, which appeals to both first timers and experienced users looking for a balanced, controlled experience.”
Choosing the Right Edibles for Your Goals
As with any cannabis product, it’s important to choose the right dosage and type for the desired effect. Hanson suggests that consumers start thinking about what kind of experience they’re looking for before making a purchase.
“If you want a strong psychoactive effect, look for a THC-only product,” she advises. “If you’d prefer something more balanced, try an edible with a 1:1 THC to CBD ratio, or a blend designed for sleep that includes CBN or melatonin.”
Potency is very important in deciding which edible is right for you. Hanson suggests that beginners start slow, “even just 2.5-5mg THC, and see how that feels before trying more.”
“Be mindful of how long you want the effects to last and how quickly you want them to kick in,” she continues. “Gummies and brownies tend to take longer to start working and also last much longer.”
Also be sure to pay attention to dietary needs and ingredients, since there are plenty of great vegan, gluten-free and low-sugar edible options out there.
Agreeing with Hanson is McLaughlin, reiterating the importance of selecting the right edible by identifying your desired effect.
“Consider factors like onset time, dosage and the cannabinoid profile, such as THC, CBD or CBN,” she says. “Functional ingredients such as L-theanine, valerian root, chamomile or passionflower can further enhance the experience.”
McLaughlin advises consumers who are seeking sleep support to look for products specifically formulated with THC, CBD and CBN, paired with calming botanicals. For social or recreational use, a fast-acting, low-dose edible may be ideal.
“If you’re new to cannabis, it’s wise to do your research or consult with a trusted dispensary professional before making a purchase,” she says.
It’s also important to avoid overconsumption with edibles. According to Barsoom, this comes down to three factors: starting with the right dose, choosing fast-onset products and trusting the formulation.
“Most adverse experiences with edibles are tied to delayed onset and inconsistent potency, leading users to re-dose prematurely,” he says. “We believe that education also plays a critical role in overconsumption. For example, starting at 2.5-5 mg and waiting is still the best advice for newer consumers.”
“Avoid mixing with alcohol or other intoxicants,” Hanson adds. “Being in a comfortable, safe setting and planning not to drive for several hours are also good practices. Make sure to stay hydrated; some people think that only smoking can give you dry mouth and it’s not the case. Soft drinks are your best friend, but personally I stick to water.”
Changing Consumer Preferences as Legalization Expands
Legalization has expanded the cannabis consumer base, which now includes people with different goals beyond traditional flower use. Not everyone wants to smoke, and many are looking for familiar, approachable formats. This is why edibles are gaining momentum — and fast.
“That’s why beverages are currently the fastest-growing segment,” says Urmawm’s Mariolis-Baker. “Cannabis drinks are reshaping how people socialize, whether it’s at a backyard BBQ, bar or wellness retreat. They allow consumers to enjoy cannabis in a format that feels comfortable, like holding a drink at a party. It’s a gateway to reintroduce or introduce cannabis in a way that feels intuitive and socially accepted.”
As legalization continues to expand, Hanson is seeing more demand for low dose, microdosed products, and edibles that use natural ingredients or cater to specific diets.
“Consumers are also looking for more fast-acting and effect-based products designed for specific outcomes like sleep, focus or relaxation,” she says. “People expect more from edibles. Now, they want them to be consistent, tailored to their needs and easy to fit into their lifestyle, much like a wellness supplement.”
“Consumer preferences have evolved as new products have emerged and consumer preferences evolve in response to the arrival of new products and product categories,” adds Fruit Slabs’ Dorsky. “The arrival of beverages impacted product distribution within the edibles market, and the arrival of concentrates substantially changed the sales distribution amongst SKUs within the smoking category. This has opened up a portal to new consumers, and beverages have slowly inched their way into being a more significant portion of overall edibles market sales across the last several years.”
The legal cannabis market in California is in distress, and has been for quite some time.
After legalizing recreational cannabis in 2016, the state has struggled to deflate the illicit market, and legal businesses are met with the difficulties of competing with their low prices. This situation has led to financial instability, with many businesses struggling or failing to pay their taxes.
Cannabis business owners told LAist they struggle to pay high taxes and fees while they watch illegal operations go unchecked. They say when they’ve tried to talk to city officials, they’ve been stonewalled and shut out.
“The cannabis market in California has been distressed for a while and it’s not getting any better,” says Oren Bitan, litigation partner at Buchalter. “It’s a confluence of a few different things: a proliferation of the illicit market where unlicensed players are in business and not getting shut down, the licensed businesses have to compete and are losing business share, and the prices in California have also plummeted over the last few years.”
A Thriving Illicit Cannabis Market
When prices of any product skyrocket, consumers look to where they can get it the cheapest. In the cannabis market, that means seeking out illegal stores.
Even though the consumers end up getting a discount, this process undercuts legal businesses and erodes their customer base, making it difficult for them to generate the revenue needed to cover their costs, including taxes.
“There’s really no penalties for illegal businesses now,” Bitan explains. “They weren’t necessarily that severe prior, but the penalties have been almost eliminated since there’s not enough resources to enforce the law. So, even if regulators find an illegal store, they may get cited and even shut down, but there’s nothing stopping the owner from opening another store across the street.”
Due to the lack of resources at the state level, these illegal storefronts are falling into the hands of local municipalities, who also don’t have the resources necessary to handle the situation.
All in all, it’s a recipe for disaster, and the legal cannabis businesses are the ones suffering. These businesses are being squeezed by high taxes and an inability to compete with the illicit market, leading to widespread tax debt and business failures.
What Needs to Be Done?
According to Bitan, in order to start weeding out the bad actors in the cannabis market, additional resources and enforcement are needed.
“If there is more enforcement to the point where the unlicensed market goes away, that will help the licensed market, because then they will be getting a larger share of consumer sales,” he says. “An unlicensed store can pop up and go away, but a piece of property can’t move. So, I think the tactic of citing a property owner for an unlicensed business would be an effective strategy.”
Until then, Bitan advises legal cannabis businesses to persevere through these difficult times.
“There is some level of optimism at the bottom, but things can only get better from here. Hopefully that becomes a reality,” he says. •