April 16, 2018

Plus Products, a Palo Alto, California-based manufacturer of cannabis-infused edible items, announced it has closed a $6 million Series B led by Serruya Private Equity Partners and Navy Capital Green Fund LP.

Plus Products has secured the eighth temporary manufacturing license in the state of California, and is one of the first companies to commercialize fully-compliant edible products on the legal market. All of its products are produced in its 12,000 square-foot, scalable food-grade cannabis production facility located in Adelanto, California, which was funded through a Series A raised last year by the company from The Green Organic Fund and Verde Mountain Fund.

“We are extremely proud of the products PLUS (TM) has brought to market,” said Jake Heimark, CEO and cofounder of Plus Products. “We’ve quickly grown into one of the leading edible brands in California. With the proceeds of this round, we will continue to further our mission: to make cannabis safe and approachable for all types of consumers.”

Infused with Potential

Plus Products is well positioned in a category that is verging on explosive growth. As recreational marijuana usage is now legalized in nine U.S. states and the District of Columbia, the business is rapidly gaining traction with consumers who are more comfortable eating cannabis than smoking it due to long-held stigmas associated with smoking in general.

California alone saw a marijuana-infused edibles market valued at $180 million last year, and edibles accounted for 18 percent of the state’s total legal sales in February of this year, according to BDS Analytics. Other states where cannabis has been legalized also are showing exceptional growth in their edibles categories, with Washington State seeing its sales of edibles jump by 121 percent last year, and Colorado seeing its edible sales triple from $17 million to $53 million between the first quarter of 2014 and the third quarter of 2016.

Compounding the potential for growth for the category is how easily cannabis can be infused into a variety of food. Initially focused on candy-type products, the edibles space is on the cusp of expanding into more mainstream foods and beverages, including gluten-free and vegan options.

“The main active ingredient in cannabis is THC. It’s a molecule. It’s extremely small. It’s extremely potent. And it’s generally pretty lipophilic, which means it likes fats and it can dissolve in alcohols. You’re going to see this molecule be put in all manner of products now that you can manufacture these things legally,” David Downs, editor of GreenState, said on a recent episode of the Bite podcast reports Mother Jones.

All told, these positive factors have led the Specialty Food Association to name marijuana-infused edibles as one of their top 10 trends to watch in 2018.

This market movement is being duly noted by some of the most iconic traditional industry giants who are vying for a piece of the pie. Indeed, a Gallup poll released in October of last year found that 64 percent of the U.S. population is in favor of lifting the ban on marijuana, according to the Chicago Tribune. And as state-by-state legalization marches on, at this point, 20 percent of the U.S. population may legally partake or use legal marijuana. It is evident trends such as these and the fact that the legal cannabis market is expected to reach a value of $50 billion by 2026, according to Cowen & Co., that have mainstream companies who are struggling with slowing sales turn their eye, and their capital investments toward the space.

In October of last year, Constellation Brands, the $42 billion name behind such consumer favorites as Corona and Modelo beers and Svedka vodka, agreed to acquire a 10 percent stake in Canada’s Canopy Growth Corporation – a leading provider of medical marijuana, for $191 million.

This subjectively huge deal marks the first time an alcohol company has decided to enter the legal marijuana space. As beer sales slow, and legalization of medical and recreational marijuana continues to gain steam, Constellation states that this deal, which will see the two companies partner on producing non-alcoholic, cannabis-infused beverages, is part of the group’s “long term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics…”

-Lynda Kiernan