Balancing the company's finances.

Dave Dugdale

Manufacturers of Cannabis Edibles Seeing Minimal Profit Margins

While edibles comprise nearly 50 percent of cannabis sales in Washington and Colorado — 42 percent and 57 percent respectively, according to BDS analytics — significant profit margins are so far unrealized, according to a Bakery and Snacks review of a discussion by canna-business professionals at the International Baking Industry Exposition.

The session, “The Future of Wholesale Baking with Marijuana,” presented by two Colorado-based wholesale bakers from Sweet Grass Kitchen and Love’s Oven, gave attendees at the IBIE an inside look at the growing sector.

Eric Knight, COO of Sweet Grass Kitchen, explained that a “significant chunk” of their product costs are packaging and labeling — which have constantly changed. Another chunk is spent on product testing, which runs roughly $16,000 per month.

“The regulations also affect our equipment, material handling, process control and inventory management,” Knight said in the report. “The reason why we do these things is to achieve pharmaceutical level portion control and repeatability.”

Jesse Burns, the company’s director of marketing, pointed out that the new stamping requirements in Colorado forced the company to spend “a lot of capital” on new machines in order to meet the requirements of the new law. He indicated that Sweet Grass Kitchen opted for a class-4 laser to engrave their products, while Love’s Oven uses edible ink.

The stamp is designed to help prevent accidental ingestion of marijuana products.

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