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The cannabis industry has most definitely evolved in recent years. Outside of recreational use, people are using it to treat inflammation, chronic pain, anxiety, and even neurological disorders.
And there has been a shift away from smoking it to consuming it in alternative ways, which has, in turn, alleviated some of its stigmas.
To say that the substance has become mainstream seems like an understatement at this point. And while you can find cannabis in various forms on store shelves, there are still rules and regulations around how one can purchase these products.
Learn more about cannabis law from our panel of experts and explore insurance for cannabis companies.
What Is Cannabis 3.0?
Cannabis 3.0 is how we refer to the introduction of derivative cannabis products into recreational markets across Canada and the U.S.
We’re talking about edibles, beverages, tinctures, and topicals that are legally for sale as long as it adheres to state law and regulations.
But before we dive into the products that were included under Cannabis 3.0, let’s run through the meaning of some key terms.
First, let’s clearly define the difference between “cannabis” and “marijuana,” as the two are different things even though they are often used interchangeably.
According to the NIH, the word “cannabis” refers to all products derived from the plant Cannabis sativa. The cannabis plant contains about 540 chemical substances.
The word “marijuana” refers to parts of or products from the plant Cannabis sativa that contain substantial amounts of tetrahydrocannabinol (THC).
Some cannabis plants contain very little THC. Under U.S. law, these plants are considered “industrial hemp” rather than marijuana.
THC is the component that most commonly impacts a person’s mental state.
Get coverage designed with your risk profile in mind, from seed to sale. Partner with in-house experts who bring years of experience supporting cannabis.
What Products Are Included in Cannabis 3.0?
As with many emerging markets, when there is a demand there is a way. And the cannabis demand is proving to be quite strong–and lucrative for those in the cannabis business.
In 2019 Deloitte estimated that the annual Canadian market for edibles and alternative cannabis products was worth C$2.7 billion.
The vast majority of this burgeoning Cannabis 3.0 market will be cannabis extract-based products, including edibles, which were estimated at C$1.6 billion alone.
And according to The North American Cannabis Report, legal sales of cannabis are estimated to reach US$39.1 billion by 2025, with adult-use cannabis sales reflecting a growth rate of 144% between 2020 and 2025.
These staggering projections are connected to the product innovation in the Cannabis 3.0 segment and the increase of cannabis consumption across these regions. Take a look:
When you see “cannabis products” on a label, it means that the cannabis has undergone a process to turn the plant material into a concentrate.
You may see this labeling on products such as concentrated cannabis, or on an edible or topical product that contains cannabis or concentrated cannabis along with other ingredients.
“Hemp-infused products” can describe a number of things including personal care products, cosmetics, food for people and/or animals, cloth and fibers used for things like bedsheets, towels, and clothing, as well as other items like hemp-infused paint and paper.
You may also see hemp-infused certified seed that is used for cultivation. Further, any product containing one or more hemp-derived cannabinoids, such as cannabidiol will be described as a hemp-infused product.
When you see a product described as hemp-infused, it means that these products are made from hemp with the federally defined THC level for hemp that has been derived from, or made by, processing hemp plants or plant parts.
If a product is made from any part of the plant Cannabis family Cannabaceae or the seeds of the plant Cannabis family Cannabaceae, it will be described as a marijuana product.
Products like edibles, ointments, and tinctures that contain marijuana or marijuana extracts that are intended for human use will be labeled as “marijuana-infused.”
These products can contain concentrated marijuana along with other ingredients.
Topical-infused cannabis product
“Topical infused cannabis” is used to alleviate localized pain and includes items that are meant to be applied to the skin like balms, oils, lotions, salves, gels, and creams.
According to Deloitte’s 2019 Cannabis 2.0 report, 34% of likely cannabis consumers say they expect to use cannabis lotions at least every two weeks.
These kinds of products will include other ingredients like coconut oil or beeswax.
Tinctures and sublingual products
“Tinctures” are highly concentrated herbal extracts that are swallowed or absorbed under the tongue.
You can find both CBD and THC tinctures. “Sublingual products” like cannabis capsules can be tailored for strains (indica, sativa) or specific cannabinoids (CBD, CBN, CBG).
These kinds of cannabis products are believed to reduce anxiety, treat epilepsy, relieve pain, improve sleep, reduce muscle spasms and treat chemo-induced nausea.
Edible cannabis product
An “edible cannabis product” is intended to be used, in whole or in part, for human consumption, but is not considered food, as mandated by the FDA.
According to Deloitte, while interests in edibles may differ, current and likely cannabis consumers largely agree on preferred edible formats in ranking order: gummies, cookies, brownies, and chocolates.
Depending on the state’s cannabis laws, there are a few options to choose from when looking at “cannabis-infused beverages”.
Consumers can purchase sparkling waters, flavored seltzers, juice-based drinks, tonics, kombuchas, and more.
Many of these products include a mix of CBD isolate and THC to give off more of a relaxed feeling in place of a high.
“Terpenes” are compounds that give cannabis its smell as well as other unique scents such as pineapple, strawberry, and coffee.
Terpenes impact cannabis product taste and smell. Unlike other botanical species, each strain of cannabis has a unique terpene profile.
According to The Natural Farmer, “Terpenes and cannabinoids work together to develop a strain’s particular flavor and resulting high, a phenomenon known as the entourage effect.”
You may see “egg product” in addition to another label found under the Cannabis 3.0 umbrella on an item meant for human consumption.
An egg product found on items like dried, frozen, or liquid eggs means the product contains all, or a portion of, the contents found inside eggs separated from the shell and pasteurized, with or without added ingredients.
Dairy and milk products
If you see a “dairy product” on a Cannabis 3.0 product, it means that the product contains butter, cheese, ice cream, yogurt, or products that include milk or skimmed milk powder.
A “milk product” can describe any product made by the addition or subtraction of milkfat or addition of safe and suitable optional ingredients for protein, vitamin, or mineral fortification.
“Tobacco products” include items made to be suitable for chewing or smoking, or smoking in a pipe.
Tobacco products encompass things like–but are not limited to– cigars, cigarettes, ready rubbed, and other smoking tobacco, snuff, snuff flour, twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings, and sweepings of tobacco.
A “tobacco product” may be used in combination or in tandem with a cannabis product. A “tobacco product” describes any substance containing tobacco leaf like cigarettes, cigars, pipe tobacco, hookah tobacco, and more.
Aerosol coating product
An “aerosol coating product” will have a pressurized coating that contains pigments or resins and dispenses product ingredients by means of a propellant. It may be packaged in a disposable can for hand-held application.
This kind of product describes a pressurized spray system that dispenses product ingredients by means of a propellant contained in a product or a product’s container, or by means of a mechanically induced force.
A “complex product” is composed of multiple components which can be replaced, permitting disassembly and reassembly of the product.
The U.S. and Canadian markets were introduced to many less traditional cannabis products through Cannabis 3.0, but there is surely more to come.
Cannabis will continue to see rapid growth in the long term. Perhaps Cannabis 4.0 or 5.0 will leave us to find cannabis in even more common, everyday products and with more purchasing opportunities.
If all this sounds tempting and you are thinking of starting your own cannabis business, you should know that’s still a bit of unknown territory.
Cannabis companies face unique risks, and it is an industry that’s still unfamiliar to many professionals, including insurers. Check out our article on cannabis industry statistics for data on just how fast it is changing.
Insuring a cannabis company that carries cannabis 3.0 products is a challenge not many brokers and carriers are willing to take on. If you would like to learn more about this particular field, feel free to reach out to one of our experienced brokers.
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