We sat down with our partners Highway Horticulture in Michigan, Contract Canna in Illinois, and Clovr in Missouri to learn about the opportunities and challenges for cannabis beverage in the midwest market. Learn about what makes each state uniquely positioned for cannabis beverage and about what to look for in a good operating partner.
1. The sheer size – Michigan is now on track to be a $3B plus market for just 2023, which is one of the few bright spots across the U.S., especially for a maturing adult use market.
2. Recent developments – we’re seeing a bounce off of the bottom in pricing as the regulators are getting better at sifting out the cheaters and the good actors are being rewarded for patience and perseverance.
3. Beverage – Michigan is one of the largest adult use states with the smallest percentage of beverage as a category. It has been so challenging to get beverages through approvals, but we’re now in a spot where we’ll have 3 of the best brands available in Michigan with Happi, Keef, and Uncle Arnies – each bringing a lot to the game and to the consumers in Michigan.
I mentioned the size of the market and the under representation of beverage: This isn’t because Michiganders don’t like to drink and don’t like their cannabis, they do! We believe (as do our partners) that the market is so ready for ready-to-drink cannabis beverages and has been starved of a full suite of products because of the regulatory process and also the major investment it takes to get a beverage line in the state. Again, we believe our investment and perseverance is about to pay off and it will be a benefit to the cannabis consumers and drinkers of Michigan.
Our people. We have great facilities and capabilities in the state, but that’s not how we win. We’ve won and kept partnerships and relationships based on our people going the extra mile and doing the right thing by our customers.
I could write a book but will keep it brief. It’s very competitive, it’s very large (650+ retailers), and it can be very challenging to navigate the regulatory process on more complex products such as edibles and beverages. We have learned a ton in the last couple of years and gained great traction with our brand partners and our retail distribution partners. While it’s challenging, the consumer is highly educated in cannabis and will reward those brands that best understand what people want in Michigan.
Up until we started operations the market was being supplied by the same few companies for the past 6 years. The Illinois market was begging for new products and we saw a need for a competent infused products contract manufacturer. There was and still is so much white space in the beverage category in Illinois. We continue to launch new SKUs and have launched ~20 SKUs in our first six months of operations. We look forward to partnering with more brands and launching more products when capacity become available.
We are seeing some genuinely great tasting cannabis beverages hit the market. These are products that I believe could go toe to toe with some of the best RTD alcohol and non-alcoholic options. As product quality and consistency continue to improve, we are going to see more consumer adoption. We are excited to bring new product innovation to Illinois and supply consumers with a wide variety of options.
We are uniquely positioned in terms of our physical location in the state as well as production capabilities and service offerings. We've located our facility about 30 minutes south of the city of Chicago, near the intersection of I-80, I-57 and I-294. Around 75% of the dispensaries in Illinois are located within an hour of our facility. This allows us to distribute more efficiently and with fewer vehicles. The products we manufacture are sold in over 90% of IL dispensaries!
Currently we have the capabilities to produce both still and carbonated beverages in can and bottle formats. Utilizing counter pressure filling we can produce carbonated canned beverages up to 4.0 volumes. We also recently installed a high-speed capping line for bottled products to increase our production capacity.
We offer our clients turn-key entry into the Illinois market. We will source and procure ingredients and packaging, conduct the packaging/label review and revisions, manufacture and distribute products. We don’t want our clients to have to deal with the headaches that they have experienced all of their other markets.
Illinois is probably one of the strictest regulatory markets. This hinders beverages from being produced, distributed and sold efficiently. There are things we would love to automate for the sanity of our employees, but it is not yet possible. There will need to be some administrative code changes in the future to help enable the beverage market to grow.
It’s just the beginning! We haven’t even begun to start working with the newly proposed regulations. New regulation also makes us come together as an industry to help each other figure out how to navigate and succeed. Missouri is unlike any other adult-use state in the country with no limits on the amount of THC dosage in a product. Working with multi-state operators and local companies in a very collaborative (and competitive) industry is very refreshing!
With Missouri’s unique THC dosing rules, you can make high-dose products that exceed all other states’ 10mg dosing restrictions. Specifically in beverages, this allows for a wider variety of SKU dosing diversity. It also allows for high dose SKU’s that provide some of the most economical THC value on the market.
Operating efficiencies and a good team. We have taken our stumbles and bruises from the last two years of operating and tried to learn from them. From packaging, labor and technology we continue to learn and invest in areas that make us faster, more reliable and continue to keep a quality product. Part of that efficiency piece is a good, reliable, and knowledgeable team that has stuck together since day one.
There is a ton of competition, and it just keeps coming both organically from new companies in Missouri and from other multi-state operators. Come with your operating efficiencies ready and a product differentiator.
With partners across the country, Vertosa is uniquely positioned to help you successfully expand your brand to new places. Our white glove service makes it easy to navigate the manufacturing process in any legal market. Book a meeting with one of our knowledgable experts to learn more.