Food industry veteran Stephanie Gorecki, VP of Product Development at Cresco Labs, and Cory Rothschild, SVP of Brand Marketing talk about why edibles are the future of the cannabis business with @CrainsChicago
Why edibles are the future of the marijuana business
Chicago, with its deep roots in the food biz, is well positioned to capitalize on the growing popularity of THC-infused snacks.
By: JOHN PLETZ
Food industry veteran Stephanie Gorecki, head of innovation at Cresco Labs on the West Side, says, “For us, it’s a food-formulation process. It’s identical to any mainstream (consumer packaged goods) company.”
At a small food laboratory on the West Side, Chicago's rich history in candymaking is mingling with its new role as a hub of the burgeoning cannabis industry.
That's where food industry veteran Stephanie Gorecki and her colleagues are cooking up candies for their new employer, marijuana company Cresco Labs.
On a recent afternoon, a machine squirted dark-red liquid into flexible molds, turning out nearly 150 gummies to be dusted with powdered sugar. Nearby is a rainbow-colored assortment of gummies that will hit the shelves in time for next month's Pride celebrations.
Cresco and its rivals are developing more edible pot products as existing customers and newbies look for ways to get high other than smoking. Edibles made up about 21 percent of total weed sales last year, trailing smokable "flower" at 51 percent, according to Chicago-based Brightfield Group. But edibles are growing faster. Brightfield expects them to grow 20 percent annually through 2025, compared with 15 percent for flower.
Edibles, which range from chocolates and gummies to hard candies and mints, are critical to projections that the U.S. marijuana industry will more than double to $41 billion in sales by 2026.
"Who doesn't like gummies and chocolates," asks Tom Adams, CEO of Global Go Analytics, a cannabis data and consulting firm in Carmel Valley, Calif. "The world's not making any more smokers. There's a significant portion of users who are not going to inhale."
It's another step in the evolution of cannabis from an illicit backwater to a mainstream consumer-products business. Weed companies are racing to develop new products and brand names while food, alcohol and other consumer-products giants are on the sidelines. For now, established packaged foods companies like Chicago-based Mondelez International, maker of Oreo cookies, Cadbury chocolates and other treats, are still leery of a business that's been legalized by many states but not the federal government.
That buys pot companies time to figure out how to make edibles tasty enough to compete with the candies consumers are used to. To get the flavors right, they're tapping Chicago's deep pool of expertise in candy, food and consumer products. The city has long been a center of candymaking, with names such as Mars, Wrigley and Brach's. Chicago factories produce such sweets as Tootsie Roll, Lemonheads and Snickers.
Gorecki, who leads Cresco's 10-person R&D staff, came from Chicago food ingredient maker Newly Weds Foods. Megan Coffey, a former pastry chef who runs the Cresco's R&D lab, came from Victus Ars, a boutique candy developer in Chicago. Food scientist Adriana Yepez previously worked at energy-bar maker RxBar and Edlong Flavors, a dairy-flavor specialist in Elk Grove Village.
Their lab is at the Hatchery, which rents space to food companies big and small, in Chicago's East Garfield Park neighborhood. The smell of fruit from a batch of gummies hangs in the air of the small test kitchen.
"For us, it's a food-formulation process," Gorecki says. "It's identical to any mainstream (consumer packaged goods) company."
It's as if Willy Wonka won a cannabis license—except there's no weed. State regulations require that THC, the chemical that gives weed its high, stays at Cresco's licensed processing facility in Joliet. So the lab uses a synthetic flavoring that mimics the pungent taste and smell of marijuana.
Hiding or offsetting that distinct flavor takes considerable effort. Turmeric and ginger, lemon balm, chocolate, vanilla and a host of other ingredients help food scientists get the desired colors and tastes. "The fat in cocoa butter is wonderful for masking flavors," Gorecki says. Cresco was an early player in edibles, signing on Chicago pastry chef Mindy Segal for a high-profile line of gummies, chocolates and other treats. Now the company is broadening its product lineup to appeal to different types of users, doubling the number of brands in the past year to eight. The strategy is straight out of the consumer packaged-goods playbook.
"People are using (the products) to relax, to sleep, for wellness and focus," says Cory Rothschild, Cresco's head of marketing, who joined the company from Gatorade, another Chicago consumer brand. "You need more than one brand to address all these needs."
One Cresco offering, Wonder, is aimed at attracting new users, who are going to be key to the long-term growth of the industry as recreational-use markets mature.
"New consumers do prefer edibles significantly more than other categories of cannabis products," says Matt Zehner, an analyst at Brightfield.
To win new customers, companies will have to reassure users whose only experience with edible marijuana was of the DIY variety.
Getting the proper dosage of THC is crucial. In the early days of medical and adult-use marijuana sales, companies focused on giving customers the most bang for their buck. Most products had 10 milligrams of THC. Now they're focusing on entry-level amounts of 1, 2 or 3 milligrams, adopting the mantra of "start low and slow."
The holy grail for weed companies is to make the product more like alcohol, which is why companies such as Cresco and others also are looking at cannabis-infused drinks. Chicago-based Green Thumb Industries making and selling drinks in Illinois from Cann, a California-based company. Curaleaf, which recently acquired Chicago-based Grassroots, launched Select Squeeze, a line of flavored THC concentrates that can be added to water.
"It's about expanding the universe," says Matt Darin, regional president for Wakefield, Mass.-based Curaleaf. "There are millions of residents who don't want to smoke products, and maybe vapes and edibles haven't resonated. A beverage, which everyone is accustomed to, (is) a natural fit."
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