By Kary Radestock, executive director, Strategy & Sales, Treeform Packaging

The cannabis industry in the US continues to experience significant growth and transformation. Its size is expected to triple over the next 10 years, according to American News Hour – from USD 101.48 billion in 2023 to USD 297.51 billion in 2033.

Legalization efforts at both state and federal levels have expanded, with over half the states allowing recreational and/or medical use. This has led to increased investment, job creation and tax revenue. However, challenges remain, including regulatory inconsistencies, banking issues and ongoing stigma. The industry also is navigating market saturation in some states, leading to price fluctuations. Overall, while the cannabis market shows great potential for further expansion, it faces hurdles that could impact its trajectory.

Reclassifying marijuana to a Schedule III narcotic would have broadly positive implications for US operators, despite falling well short of federal legalization (deschedulization). This move would end the effects of IRS Code Section 280E, which has weighed on heavily plant-touching companies by disallowing deductions for traditional business expenses, inflating their federal tax burden. Though this Schedule III narcotic still would be illegal at the federal level, normalizing its use could bolster legislative support for increasing industry access to interstate commerce, traditional banking services, equity markets and R&D incentives, per Bloomberg Intelligence.

The cannabis industry is witnessing several key packaging trends that reflect both regulatory requirements and consumer preferences.

1. Sustainability: Eco-friendly packaging is gaining traction, with brands increasingly opting for biodegradable, recyclable, PCW and/or reusable materials to appeal to environmentally conscious consumers.
2. Child-Resistant Features: Compliance with safety regulations has led to a rise in child-resistant packaging, ensuring that products are safely and effectively stored away from children.
3. Innovative Designs: Brands are investing in unique and eye-catching designs to differentiate themselves in a crowded market, often incorporating vibrant colors, decorating treatments and creative shapes.
4. Smart Packaging: Many brands are exploring technology-enhanced packaging with features like Augmented Reality (where compliant) and QR codes that provide additional information and enhance the consumer experience.

Overall, the cannabis industry is focusing on packaging that meets regulatory standards while also enhancing brand identity, shelf presence and consumer engagement.

The industry utilizes many different types of packaging containers for their varied and ambitious product lines. The current make-up of materials used in the marketplace today is as follows:

• plastic (including flexible pouches) – 50%;
• glass – 36%;
• tin – 8%; and
• paper – 6 %

Plastic is the fastest growing category due to its superior barrier properties, attractive decorating techniques and low price-point.

“More and more brands are switching from paper boxes to flexible pouches due to price compression,” remarked Ryan Goldman, partner, Treeform Packaging.

Dave Goldman, owner of Treeform Packaging, added, “Cannabis brands are reevaluating packaging often as the market evolves and adjusts rapidly – far faster than the food and beverage space. We see shifts from glass to pouches, from rigid boxes to paper boxes, and from pouches with many SKUs to generically branded pouches with labels differentiating the SKU.”

While metallic decorating processes (hot foil stamping, cold foil transfer and digital foil) and embossing still are trends in cannabis packaging as brands seek to create more visually appealing and premium products, they tend to be reserved for the luxury brands. These decorating techniques offer several benefits:

1. Luxury Appeal: Metallic finishes can enhance the perceived value of the product, attracting consumers looking for high-end items.
2. Brand Differentiation: Unique textures and finishes, such as soft touch in addition to gloss/raised UV coatings, help brands stand out on crowded shelves. Embossing creates a tactile experience, making the packaging more memorable.
3. Enhanced Visuals: These techniques allow for intricate designs that can convey a brand’s identity and story more effectively, using colors and textures that resonate with target audiences.
4. Sustainability Considerations: As brands increasingly focus on eco-friendly practices, many are exploring ways to incorporate these decorative techniques without compromising sustainability, using recyclable or biodegradable materials.
5. Consumer Engagement: Eye-catching designs can enhance the overall consumer experience, encouraging purchases and fostering brand loyalty.

Overall, these decorating techniques continue to be popular as brands aim to elevate their packaging and more deeply connect with consumers.

“The key ingredient in brand packaging is assisting clients with various options,” Goldman said. “Our job as packaging experts is to listen to their needs and views of their brand and then assist them in finding the best-priced products for the best value that allows them to make money.”

While the industry continues to suffer from over-regulation and regulatory inconsistencies, optimism persists. An interesting trend is that many leading cannabis brands now are entering the hemp industry, which was bolstered by 2018 Farm Bill. In December of 2018, the 2018 Farm Bill was signed into law. It removed hemp, defined as cannabis and derivatives of cannabis with extremely low concentrations of the psychoactive compound delta-9-tetrahydrocannabinol (THC) (no more than 0.3 percent THC on a dry weight basis), from the definition of marijuana in the Controlled Substances Act (CSA).

The passage of the 2018 Farm Bill has led to the misperception that all products made from or containing hemp, including those made with CBD, now are legal to sell in interstate commerce. The result has been that storefronts and online retailers have flooded the market with these products, many with unsubstantiated therapeutic claims. Hemp-derived cannabinoids appear in a wide variety of products, including foods, dietary supplements, veterinary products, cosmetics and more. Some of these products contain high doses of Delta-8 and Delta-9 cannabinoids, which can cause significant psychoactive and sometimes intoxicating effects, drawing concern from parents and regulatory bodies such as the FDA.

In summary:

1. The cannabis industry is the fastest growing industry in the US despite the hurdles it faces.
2. Operators are forced to streamline their operations and their packaging to survive the heavy burden of the current regulatory framework and tax structure.
3. Luxury brands will continue to utilize premium packaging materials and decorating techniques to elevate their brands and encourage consumer engagement.
4. Sustainable packaging utilizing compostable, recyclable and post-consumer recycled (PCR) materials continues to show strong growth due to regulatory requirements in many states.
5. Traditional cannabis companies are entering the emerging hemp market to bolster sales and capitalize on this underregulated industry.

There are enormous changes that will occur within the cannabis marketplace in the near and long-term future. Packaging will be an important part of these changes, and print and embellishments certainly will be a part of what will take place in the future. 

Kary Radestock brings over 30 years of award-winning print and packaging expertise and has worked with some of the top brands in the world. In 2016, she founded Hippo Premium Packaging to fill a need for professional and compliant packaging to the rapidly evolving cannabis industry. In her current role as executive director, Strategy & Sales at Treeform Packaging, she continues to work closely with the cannabis and hemp industries developing compliant packaging that helps her clients increase market share and navigate to a more successful future. For more information on Treeform Packaging, visit www.treeformpackaging.com.