Business and Operations
‘High’ stakes: Baking with cannabis in Canada
The growing interest in culinary cannabis opportunities in Canada
By Bakers Journal
On On March 3, 2021 Restaurants Canada found culinary and cannabis experts to clear the smoke around the edibles scene. Since the prohibition was repealed on October 17, 2018, Bakers Journal celebrates the third anniversary of cannabis’ legalization by bringing experts to the table. Let’s look ahead to discuss what the cannabis and culinary world will look like in the future.
Chad Finkelstein, partner at Dale & Lessmann, LLP, spoke of the legalities that have emerged: “The initial draft of the legislation that we saw didn’t contemplate the legalization of edibles. It was really specific to dried flowers, oils or seeds.” He added that he feels that restaurants present an opportunity to the baker or confectioner. However, restaurants are still unsure as to where they fit in.
Finkelstein added that there were licensed producers (LPs) who wanted to do either production themselves or co-packaging, and may have underestimated the challenges of cannabis’ legal dosage and food packaging. Some may have been turned away by the realization that an entirely different facility would be needed to create edibles; using an existing restaurant to create cannabis-infused confections is not currently legal.
Finkelstein observed that there is a retail landscape with the regulations now in place and the stores are proliferating. His discussion hinged on where bakers or confectioners could find the opportunities and where the challenges might be.
Jen Juby, the Vice President of Operations at Hemisphere, has restaurant experience which presents some advantages to the growing cannabis industry. However, like any entrepreneurial venture, there are always surprises.
Juby said that the restaurant service had prepared her to be agile and fluid, particularly with regulated markets, such as serving alcohol, which prepared her for the cannabis regulations. She adds that the service end regulations are so restrictive at the moment that any “authentic human connections” that they do develop in the stores are found through curbside service, on the phone, or at the counter. She recognizes that many may be first time clients, not just for Hemisphere, but for any cannabis experience at all. “That passion for service and creating an exceptional experience for guests is critical in this space.”
Finkelstein agrees, guest experience is the single most important thing for the edibles market. “That’s what keeps people coming back. Your ability to connect with a cannabis consumer is very different. It is highly regulated, there are very restrictive prohibitions on how you’re allowed to advertise and promote your business and what you can do with the customer to even get them in the door in the first place.”
Currently, Canadian Federal laws state that edibles can’t be marketed in the same manner as non-infused candy or pastry: No bright colours that might entice children, no appetizing photographs on the label or box. Getting a client curious enough to try a pot brownie or a THC-infused candy presents a unique advertising challenge for the Canadian LP.
Whereas traditional bakeries can advertise through posters and photographs to lure customers in, edible bakers are restricted from visual marketing. Juby was asked how she brings in clients: Does she market her goods to people who embrace it without hesitation, or for clients who prefer to enter and exit the shop as discreetly as possible? “It’s a combination, actually,” she admits. “What I think is critical around the branding element is being able to create that inclusive space that really calls out that we’re striving to end stigma, creating a welcoming warm environment where space is open to discuss cannabis openly and the uses for each consumer that comes in.” Many first-timers may be overwhelmed with choices, and look to experienced staff for recommendations. “Having a brand name that creates a welcoming environment, creates a possibility for us to take them on a journey while staying within the regulations.”
Despite the fact that it has been legal for three years now, Finkelstein still fields questions from clients asking if they can just start making their own THC-infused chocolate or gummy. Juby explains that some of the restrictions involves consumer health and safety. “In order to produce any cannabis product, even a topical CBD product– any product that is regulated and legal to sell in a licensed locations — these producers need to be licensed through Health Canada, and that product then is purchased by each province.”
How can a would-be edible LP get in? Provincial regulation means that retail shops cannot directly develop a brand and bring it to a cannabis store. “I would need to work with a licensed producer that is licensed through Health Canada to get that product and sell it in province…there are quite a few steps at this point in regulations,” cautions Juby.
Andy Deonarine, President and Diretor of CannSell, added that he’s optimistic that lounges will be the future of edibles, as it’s currently being tested in Ontario. “Do I think it will happen anytime soon? Probably not. And before they do, I hope they do consult with restaurateurs, people behind the business to allow them to be set up for success.” He adds that the way to help both the customers and the cannabis edible market would be to have legislation for consumption lounges, though he admits that is “very difficult right now.”
Both Deonarine and Juby are more optimistic about the future of edible lounges: “This is where there’s a strong brand out there, where consumers already have a strong emotional connection,” said Juby. “I believe it’s not ‘if,’ it’s ‘when.’”
“I think [consumption lounges] would be great for the cannabis industry and the restaurant industry as a whole, and obviously for the consumer to have a safe space for consumer cannabis. Especially if you’re a tourist or you’re at home and you can’t consume at home. Hopefully it does happen sooner than later.”
Juby ads that when tourism opens up further, there will be more opportunities for food tourists seeking a gourmet edible to be tried safely in an edible lounge. “I think lounges will open up to the opportunity for infusion and infused meals… I think it’s a benefit for the restaurant industry. [Cannabis] is still creating those opportunities and moments for visits for restaurants.
Juby adds, for those who are not looking to provide a psychotropic experience, CBD-infused candy also have a role to play in the food industry. “I think so many restaurants are already considering this option… I think it’s a great way to lean in to that option. Even being able to play off of what has been done since they’ve deregulated and they’ve legalized CBD across the US, we could take some of the best practices and the successes from that experience, but it’s going to be an incredible opportunity for restaurants that will surface.”
What do the experts advise for somebody who might be looking to explore either a cannabis retail business or a cannabis product brand?”
Juby believes at this stage it would be best to be agile and patient, as the regulations are quite restrictive. She admits regulations do change fairly frequently, the changes that she’s seen over the course of the three years in retail have been dramatic.
“My advice would be to have an excellent plan around local store marketing,” she adds. “I think restaurateurs, and local store marketing was so crucial for a reason: because there are so many restrictions around promotions and branding and advertising.” Alcohol prohibition was repealed only a hundred years ago, yet we’re only now easing on some of the marketing restrictions that surround Happy Hour. “We’re less than three years in so we’re going to be on a constant wave; riding that requires a ton of agility.” / BJ