For the packaging sector, the legal marijuana market presents an intriguing growth prospect. According to a new Smithers report dedicated to this developing area, the worldwide legal marijuana market will more than double in value from $21 billion in 2021 to $55 billion in 2024.
According to Smithers’ exclusive industry research, The Future of Marijuana Packaging through 2024, the value of packaging for legal marijuana products will climb from $493 million to over $1.63 billion in 2024 as the market matures. This equates to a year-on-year growth rate of roughly 24%, much exceeding that of other well-known consumer goods.
However, due to the nature of the product and the new sector that is only now establishing itself for licensed supply, marijuana packaging provides some unique obstacles. Premium package forms, which will reward the development of value-adding packaging concepts, present tremendous potential for packaging converters and suppliers who can adapt their goods to this industry.
Recreational and medical marijuana
Marijuana and its derivatives, particularly CBD oil, have been legalized in some form in several nations, including 46 of the 50 states in the United States. These, like other therapeutic medications, can be packaged in regular pharmaceutical packaging and dispensed through clinics and pharmacies.
Exploiting markets where legal recreational usage is also authorized to have the greatest long-term potential. Over 90% of marijuana packaging sales in the United States now come from the ten states that have legalized recreational usage.
Marijuana’s extensive illegal use already attests to its future popularity. Branded packaging with safety and stay-fresh features will help turn marijuana into a recognized fast-moving consumer goods (FMCG) market, creating new potential for marijuana brands. As a result, packaging firms and technology play a critical role in ensuring product consistency and building brand loyalty among users.
Although marijuana has historically been illegally traded, its potential geographic growth as a packaging segment is mostly determined by when and where it is legalized. While many countries and jurisdictions in the United States have chosen lax enforcement practices, this does not imply that regulated branded packaging has a market.
Because state legislatures in the United States have decided to legalize marijuana, the United States will continue to dominate the global marijuana packaging industry in 2021 and beyond, accounting for 63 percent of the global market in 2021.
The Trudeau administration’s move to legalize marijuana in Canada, making it the first G8 country to do so, is opening up a new consumer market. This, paired with the possibility of recreational marijuana legalization in Mexico, will only strengthen the North American region’s dominance, allowing for synergies and specialized business units centered in the United States. North America will account for more than 80% of the global marijuana packaging industry in terms of value by 2024.
Outside of North America, recreational usage is restricted to a few countries, including the Netherlands (Europe), Paraguay (South America), Australia, and, to a lesser extent, Israel. These can be attractive niche markets, but they don’t have much volume potential for package suppliers.
Markets for Materials
In the underground market, marijuana has always been packaged in plastic bags and films.
New constraints are being placed on marijuana goods as it enters the legally regulated market, such as the installation of child-resistant fittings and sophisticated labelling standards. This is encouraging more people to use stiff plastic “pop-top” containers, which are commonly comprised of injection-molded and colored polypropylene copolymers. These are inexpensive, but they need a lot of manual labor to fill, weigh, and attach the requisite labels.
Due to its environmentally favorable nature, printability, and recyclability, paperboard packaging is proving popular among marijuana users. However, because it’s difficult to make a child-resistant primary package out of paperboard, it’s only useful for overpackaging.
Modern flexible plastic formats are also gaining traction in this market, and several child-resistant fittings could be adapted to marijuana packaging.
Metal and glass also have a large market share, owing to their barrier features, which allow marijuana to be preserved over long periods.
Legal marijuana is a fledgling business with no established packaging supply networks. Many states in the United States begin with a vertically integrated supply structure soon after legalization. Supply chains that specialize in one level of the supply chain will emerge as the market grows. It is critical for package providers to identify and collaborate with enterprises at this stage, or to establish their service lines that can cover this gap.
The necessity to automate packaging is a significant cost and a constraint to the marijuana market’s progress in 2021. The majority of packaging is currently done by hand, although many larger businesses are investing in weighing, filling, and sealing equipment. Small enterprises can use contract packaging and equipment leasing to scale up operations, automate, and save money while improving quality.
Identity of a Company
As a market where brand substitution is relatively easy, recreational marijuana is now seeing the development of its first brand name sellers—there is a strong onus to build a clear identity. Packaging, like other FMCGs, may play an important role in communicating brand values.
The major goal for medicinal brands is to make the product appear to be a real pharmaceutical. For recreational use, numerous firms have aimed for rapid name recognition by partnering with well-known marijuana smokers, such as Bob Marley’s Marley Natural and Willie’s Reserve (Willie Nelson).
Intelligent packaging solutions are also becoming increasingly popular. This is commonly referred to as a “seed-to-sale” concept in this industry, which enables track-and-trace across the distribution chain to ensure supplier quality and avoid counterfeiting. Illegal vendors have already adapted to the new market conditions, creating counterfeit packaging to pass off their wares as those of legal marijuana companies that have begun to gain notoriety.
Market in the United States
The states that have allowed recreational use of marijuana have the largest market for marijuana packaging.
Because of the lead role that US states have played in legalizing marijuana, the US accounted for two-thirds of the global market in 2021, with a value of $388 million. This geological concentration will grow as Canada and possibly Mexico follows the United States’ lead; North America’s market worth will more than triple in three years.
Different types of marijuana packaging are used for flower products (resins or pre-rolled joints for smoking), concentrates (products made by refining marijuana flowers, like hash, dry sieving, and hash oils), and edibles (cookies, brownies, chocolates, and so on).
Rigid plastics and paperboard forms are the most often utilized packing materials in North America. In 2021, each has a market share of roughly $75 million. Rigid plastics are very common for marijuana flower products, whereas concentrates and edible marijuana products use paperboard in smaller quantities. Flexible plastics are employed in some marijuana flower products and are the preferred material for edibles, which have strong similarities to existing foods and snacks. Flexibles account for roughly 43% of the market for the latter use in 2021.
End-users’ consumption habits will change as the legal marijuana industry develops. This will be a big trend in this market for the packaging business. These healthier, more user-friendly gadgets will become more acceptable for marijuana delivery, much as modern customers are increasingly preferring vaping goods for nicotine products.
By 2024, marijuana concentrates in vape cartridges will be the most popular legal marijuana delivery method. The sale of flower items for smoking will drop, reducing rigid plastics’ overall market share. This will put further pressure on the FDA to regulate vape cartridges, especially after the popcorn lung health issue linked to marijuana vapes in H2 2021.