Legal cannabis markets struggle with political hurdles and competition from illegal cannabis sales. Terpenes, however, contribute to a safer, legal cannabis market. Read on for all the details.

Over thirty-five U.S. states currently have some form of legal cannabis. Even holdout states like Kansas and Alabama are slowly moving towards medical. At this point, it’s pretty obvious consumers are interested in the various aspects of cannabis products, but the legal market is still running into several hurdles nationwide. Surprisingly, one of the biggest issues is competition from illegal cannabis sales. 

From an outsider’s perspective, it may seem strange that black market cannabis is still thriving in states like California. However, in a 2019 annual report, the Cannabis Advisory Committee discussed how a combination of factors (high taxes, burdensome regulations, etc.) led to illegal sales making up nearly 80% of the cannabis market in California. 

While progressive political changes will obviously help remedy this, there’s another avenue that can influence consumer buying habits in this regard. Read on and discover how terpenes contribute to a successful, legal cannabis market.

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How Terpenes Contribute to Legal Cannabis Markets

Here’s the short and sweet of what we’re covering today...

• While it’s hardly an isolated incident, California is a good example of how high taxes and restrictive regulations eventually make it more convenient for consumers to purchase illegal cannabis products.
• Canada, however, convinced consumers to buy legal products with strategic product positioning.
• Until the taxes and regulations hindering the U.S. markets are reduced, manufacturers need to focus on factors they can control: finding ways to lower production costs and making products more desirable to consumers.
• Manufacturers that use terpenes can lower production costs because they don’t have to rely on massive amounts of plant matter to get the taste, smell, or effect they’re looking for. 
• Using terpenes that follow NCIA Safe Vaping Recommendations also helps combat health and safety arguments against the cannabis industry. 
• On top of creating consistent aroma and flavor, terpenes help ensure your consumers are getting a consistent experience every time they purchase your products. This helps consumers make more informed buying decisions and creates greater consumer confidence. 
• When consumers choose to purchase illegal cannabis products, they sacrifice product knowledge and safety. These are the factors that manufacturers can and should take advantage of to shift consumers away from illegal products and towards legal products. Using terpenes helps with both.

What’s Fueling Black Market Cannabis Sales in Legal States?

While there are other states with this issue, California’s illegal sales are a prime example of the many factors hindering the success of legal cannabis. The biggest issues right now are taxes, local and state regulations, and licensing issues.

Taxes have long been the bane of the hemp and cannabis industries. For example, the 1937 Marijuana Tax Act enforced strict regulations, extensive fees and taxes, and required a massive amount of documentation. On the surface, that doesn’t sound terrible. However, a short time after it was put into place, these legal industries effectively died. It simply became too expensive and complicated to buy, sell, cultivate, distribute, prescribe, and/or use these products. 

On some level, that’s what’s happening in California right now. Local and state taxes are creating an expensive trickle-down effect that influences all parts of the supply chain. In order to afford that, products have become more expensive. For consumers considering switching from illegal to legal cannabis products, the choice is simple; stick with what’s more affordable. 

Another simple reason consumers often opt for black market cannabis products is just proximity. When cities/counties ban cannabis businesses (or when there are state licensing delays or caps), consumers have to travel farther for legal products. A lot of the time, it’s less expensive and more convenient to purchase illegal products closer to home. 

How Did Canada Convince Consumers to Buy Legal Cannabis?

Product positioning is one of the ways Canada has overcome their illegal cannabis issues. Offering competitive prices helped lure consumers into dispensaries and away from black market sales. Cannabiz Media even says, “During the second quarter of 2020, legal cannabis sales in Canada outpaced illegal sales for the first time.”

It would be easy to attribute that growth to shifting consumer trends from the pandemic. However, a new Statistics Canada report says it’s difficult to measure the pandemic’s effect on cannabis use. Some of the main factors supporting the growth of Canadian cannabis consumption are ease of access from additional stores and more product choices. The report also notes that by the end of 2020, legal cannabis sales rose to 68.4% compared to 23% in the first part of 2018. 

Until taxes and regulations become less restrictive, the U.S. legal cannabis market is still in for one hell of a fight. However, finding ways to lower production costs and make products more desirable to consumers is one step manufacturers can take right now to promote a successful legal cannabis market. 

How Terpenes Contribute to a Successful Legal Cannabis Market

Terpenes, the hydrocarbons that give most plants their unique scent, flavor, and effects, are a surprisingly big part of the cannabis industry. The glandular trichomes you see glistening on the surface of some buds are what produce various cannabinoids, flavonoids, and terpenes. 

Essentially, terpenes give manufacturers more freedom and control. Because we can isolate specific terpenes, manufacturers don’t have to rely on massive amounts of plant matter for flavor and aroma. In addition, adding specific terpenes to products gives manufacturers more control over the consumer experience. 

In the end, terpenes make it much easier to create products with consistent flavors, scents, and effects. But what does that have to do with the legal cannabis market?

Terpenes Help Reduce Production Costs

In the past, if someone wanted to make a product that smelled like lavender they would need large amounts of the actual lavender plant. That meant sourcing, transporting, and processing a large amount of plant material to access those natural terpenes. Even with strict protocols in place, however, there could still be inconsistencies because terpenes are volatile. 

Two of the exact same plants may have different terpene expressions because things like weather, soil quality, and even farming techniques can alter the terpene content of a plant. Terpenes can also easily be lost during transportation, not to mention how the actual manufacturing procedures (handling, heating, etc.) can damage or completely destroy terpenes. That can lead to lots of time and money for products that may not be consistent in flavor, aroma, or effects. 

By extracting terpenes from botanical or cannabis sources, we’ve taken out all the guesswork. Manufacturers can add terpenes and know the aroma, flavor, and effects will be consistent across all of their products. That means spending less money elsewhere in the production process, which is a big win for you and your customers. 

Terpenes Promote Safe, High-Quality Cannabis Products

One of the biggest arguments against a legal cannabis industry is health and safety. Since many cannabis products can be inhaled, they often get caught in the crossfire when it comes to attempts at banning/reducing tobacco or tobacco-related products. For example, the FDA has recently announced plans to prohibit all flavored cigars and menthol-flavored cigarettes. 

The purpose of such a ban, according to the FDA, is to reduce tobacco use overall and reduce the number of children who may start smoking. However, a ban like this will obviously affect cannabis consumers who use flavored tobacco or cigar leaves (Black and Mild, Backwoods, Swisher Sweets, etc.). 

Those not well-versed in the differences between cannabis and tobacco products, don’t always understand how bans like these inadvertently hurt the cannabis industry. Luckily, terpenes help promote safe, high-quality cannabis products that don’t have the same health risks some tobacco products possess. 

Organizations like the NCIA (National Cannabis Industry Association) aim “To promote the growth of a responsible and legitimate cannabis industry and work for a favorable social, economic, and legal environment for that industry in the United States.” That’s why we adhere to NCIA Safe Vaping Recommendations. By doing so, manufacturers that use our terpenes know they’re getting high-quality ingredients that…

• Are U.S. Pharmacopeia FCC grade and produced in cGMP compliant facilities
• Are available as botanically derived or cannabis-derived.
• Mimic the terpene concentrations naturally present in cannabis flower.
• Provide C.O.A. documentation for every batch.

Terpenes Provide Consistency For Positive Consumer Experiences

We’ve already mentioned how terpenes create consistent flavor and aroma, but terpenes do a lot more than that. To explain, let’s return to the lavender example from earlier. 

Someone might want a product to smell like lavender because it’s just a pleasant aroma. However, terpenes interact with us in many ways. Have you ever wondered why there are tons of “calming” and “relaxing” products that include lavender? Well, a big part of those soothing properties comes from the terpene linalool. Linalool has powerful sedative and anxiolytic properties, which make it a great addition to calming bath oils, relaxing pillow sprays, etc. 

That’s also why some cannabis strains make people feel energized and chatty, while others make people want to chill on the couch and fall asleep. While strains have different cannabinoid levels, it’s their unique terpene profiles that dictate the specific experience a consumer might have. 

Terpenes influence our mood by interacting with receptors in our brains and nervous systems. That’s why certain terpenes have mood-elevating, analgesic, or even sedative properties. When manufacturers can provide consistent experiences, consumers can make more informed decisions. Consumers will be able to purchase products for specific purposes and experiences. In the end, terpenes help manufacturers create products that consumers can trust. 

Terpenes Promote Consumer Trust

While consumers sometimes opt for illegal cannabis products, there are certain factors they’re sacrificing by doing so; mainly safety and product knowledge. And until taxes and restrictive regulations are reduced, these are the variables manufacturers can and should use to their advantage. Reducing production costs gives manufacturers more flexibility, and producing safe products that have consistent experiences creates consumer trust. And terpenes help in all of those areas.