A Look at How the Legalization of Cannabis Stands to Significantly Impact Canada’s Foodservice Industry

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CHALLENGE

In the wake of cannabis legalization last October, the foodservice industry is eager to capitalize on the much-talked-about opportunities this budding market could present. But there’s still some waiting to be done, as a federal policy on edibles is finalized and further changes are considered. In the meantime, uncertainty and lack of clarity abound, while the desire to be ahead of the curve has led several entrepreneurs to conduct initial testing and development in backrooms and home kitchens.

“In the product-development life cycle, you need to start planning if, for example, [cannabis edibles] come to be a legitimate product in October 2019, because you’ve got food safety, supply testing and all those things that product developers have to do…[It] takes time to get a product to market,” says Tricia Ryan, who is part of the team that spearheaded the Infused Innovations Initiative — a Toronto-based public-private partnership committed to educating and supporting cannabis entrepreneurs in the food-and-beverage sector. “What I’ve been trying to do, in my particular role, is refer people to where they can go so they can keep it clean and above board in the interim as a policy is being set.”

She also warns those who have been working behind closed doors may not be granted licenses when they look to officially join the fray.

“The biggest challenge is staying within regulations and guidelines and making sure everyone is working together cohesively,” adds Travis Petersen, president/private chef with Vancouver-based The Nomad Cook. “There’s a lot of grey areas.”

Should the currently proposed policy stand, edible products will be required to feature plain, child-proof packaging, labelling requirements and the standardized cannabis symbol and health warning. They will also be prohibited from including added caffeine or making health-benefit or nutrition claims on the label and be restricted to 10 mg of THC (tetrahydrocannabinol or the psychoactive compound in cannabis) per package. Additionally, there will be strict manufacturing controls to reduce the risk of foodborne illness and production of these products will have to be conducted in a separate facility from other food products.

“Because it’s not clear how the government wants production to happen and where right now…if you’re a food processer or cannabis processor, the challenge would be if they change their mind — much the way they have been changing their minds around retail distribution,” notes Ryan “You don’t want to build something like that and pay for the license and then find out you can’t use it, [or they] all of a sudden change their mind and now you can do it in a regular facility.”

However, the industry has been banding together, with several professional organizations hosting information sessions, including the Canadian Association of Professional Sommeliers (CAPS) – Ontario, which has been hosting monthly “Hospitality Sessions.”

OPPORTUNITY

According to a report by ArcView Market Research, U.S. sales of cannabis edibles exceeded $1 billion in 2017. And, with 2018 estimates placing the value of the Canadian cannabis market at $4.2 to $8.7 billion, it’s not hard to see the appeal of entering this new market. In fact, a 2018 survey by Dalhousie University found nearly half of those surveyed (45.8 per cent) indicated a willingness to try cannabis-infused food products once legalized.

There are many companies currently doing R&D on cannabis-infused products, as well as several products that have been announced within the last year. Infused beverages are a particular focus, with Canadian companies eager to jump into the arena, including Cool Beer Brewery, Flow Alkaline Spring Water, Hill Street Beverage Company and Molson Coors Canada.

Despite the number of companies developing beverage products, according to the Dalhousie survey, only 17.2 per cent of respondents indicated an interest in buying cannabis-infused drinks. Several other infused-product categories garnered greater interest, with 46.1 per cent of respondents indicating a willingness to try infused bakery products, followed by ready-to-eat products (including candy) (26.6 per cent), oils (24.2 per cent) and spices (18 per cent).

Looking ahead, there appears to be a significant potential market for infused dining at foodservice establishments. The Dalhousie survey found 38.5 per cent of respondents would consider ordering cannabis edibles at restaurants. Additionally, 26.6 per cent indicated they would consider replacing alcoholic beverages with cannabis when dining out.

“Cannabis has different tastes and smells, so the food industry has a big opportunity in terms of integrating it into menu planning and sensory delivery,” says Ryan. “This then leads to the foodservice industry needing to educate those in culinary schools and in the marketplace around how to infuse a dinner.”

“Cannabis is the new frontier of undiscovered cooking…There’s going to be a lot of opportunity. It all just depends on what regulations come through,” agrees Petersen. “It’s going to be a while before restaurants are going to be able to serve cannabis, though.”

This is because the proposed policy for edibles only allows for shelf-stable, packaged retail products, ruling out offering infused dishes at restaurants. And, Petersen points to liability concerns as a key reason he expects this opportunity to be held up.

However, chefs across the country have been testing the Canadian public’s appetite for cannabis-dining experiences through underground events. For example, Petersen hosted events in nine cities, serving 1,200 guests in 2018. “The response is really what’s sold us on continuing to push forward with it,” says Petersen. “People really enjoy something new, something different than they were expecting and are surprised with the quality of food we’re putting out…[We’re] expanding people’s perceptions of what they thought edibles [are and] what infused dining could be.”

The Nomad Cook is also exploring other avenues related to culinary cannabis. “Our goal is to be a chef-approved line that the home cook can rely on to educate them on how to use cannabis,” Petersen explains. His plans include a line of products for home cooking, including terpenes (aromatic compounds found in the oils of plants, of which the cannabis plant produces approximately 100) and a cookbook.

And, with research indicating less than one-fifth of Canadians (19.5 per cent) feel knowledgeable enough to cook with cannabis at home, it’s reasonable to believe there will be growing demand for trusted resources.

Petersen is not the only chef to identify the opportunity in establishing yourself as a culinary-cannabis expert. For example, The Wellness Soldier, Cody Lindsay, has partnered with Cannvas MedTech Inc. to feature his expertise on the learning platform Cannvas.me.

Some foodservice companies are seeking to capitalize on the real-estate opportunities created by cannabis legalization. Both The Second Cup and Coffee Time have partnered with cannabis retail brands (National Access Cannabis Corp. and Huge Shops, respectively) to convert select café locations to cannabis stores.

There’s also a wealth of speculation on other ways cannabis legalization could benefit the foodservice industry in Canada. Cannabis tourism is one such example, which many anticipate will draw international travellers and create potential for increased restaurant visits.

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