Shortly after the legalization of cannabis leaf products in Canada came what the industry generally classifies as Cannabis 2.0. Here, cannabis derivatives such as edibles, tinctures, oils, topicals, infused beverages etc. can be sold by a licensed distributor within Canada. This opened the sector to a new segment of users. These individuals are typically uncomfortable with traditional use but were more open-minded to product alternatives that can allow them to explore and appreciate the properties of cannabis. It is predicted that Cannabis 2.0 will be worth at least $2.7 billion annually with over 50% of the value from edibles ($1.6 billion).
Current Gaps in Producing Alternative Cannabis Products
While Cannabis 2.0 presents great opportunities for Canada as a global leader, there are still a lot of challenges in product development including separation, taste, and shelf-life. Cannabinoids are lipophilic molecules which makes it immiscible in products without a fat or oil component. As a result, alternatives such as infused beverages often have issues with separation and that can impact reproducibility of product experiences for stakeholders which decreases brand image. Finding different surfactants or methods to increase solubility has been of particular interest to the industry. On the other hand, certain terpene profiles from certain cannabis strains and their extraction methods are often more compatible with a specific flavour profile. Optimizing procedures to maximize taste of and extraction procedures for distillates can help decrease costs for developers. Lastly, understanding how long active ingredients in processed cannabis goods last and how to lengthen that shelf life can reduce help businesses decrease waste and subsequently save on money.
Raising Capital for Necessary Research
Innovation in alternative cannabis products will be key for the Canadian market to grow their profit margins and help them stay at the forefront of the global cannabis market as legalization expands. Bringing to market high-quality cannabis products can help Canada realize the upper limit of the recreational cannabis market projected to grow to $4.34 billion in the next few years. To keep this competitive edge, developers need to continually stay engaged in research efforts to optimize procedures and create better products. However, these can ultimately become very costly ventures for businesses to carry out especially if they have limited working capital for experimentation.
In Canada, businesses of all sizes can claim the research tax credit, SR&ED, for similar procedures outlined above. The main focus of SR&ED eligible projects should be to help resolve uncertainty in the field. If you are wondering if any ongoing research projects in your business qualifies for this tax credit, reach out to our team here at Felix SR&ED, This email address is being protected from spambots. You need JavaScript enabled to view it., to book a free consultation today!
