October 31, 2021 | Publication: Mordor Global Industry Reports

Global Cannabis Packaging Market - Market Dynamics

Market Dynamics
Market DriversRising Demand for Medical and Recreational Cannabis Products
Sales in USD million, Colorado, United States, 2015-2021 (H)

Colorado Department of Revenue

The increased demand for cannabis products in medical and recreational products has directly impacted the growth of the studied market. The COVID-19 pandemic has
played a significant role in the increase of consumption of cannabis products. Cannabis products are used in the medical field to increase appetite, reduce anxiety, and
relieve imminent pain. The COVID-19 pandemic took a heavy toll on emotional health, with people being compelled to stay at home and completely cut off from the
external world. This has directly contributed to the increased use of cannabis products driving the ancillary demand for cannabis packaging products.

According to the State of the Cannabis Industry 2020 report by three cannabis industry players from different parts of the value chain, namely, Vangst, Leaflink, and
Flowhub, in mid-March 2020, United States witnessed a two-week spike which was primarily led by the initial panic phase. The cannabis retail sales shot up in the same
period and then stabilized in the following weeks as the demand and supply cycle of the cannabis products became normalized.

Furthermore, the report outlined the sales of recreational cannabis increased in several states across the United States. According to Flowhub, recreationalcannabis sales
increased by 11% in Alaska and 74% in Oregon between April 25, 2020, and June 1, 2020, compared to the same period in 2019. Furthermore, Colorado witnessed a
25% increase between March 16, 2020, and April 24, 2020, year-over-year basis, while California registered an increase of 70% in the same time. Such a significant
increase in recreational cannabis sales is expected to continue in moderated numbers over the forecast period and drive the need for suitable packaging formats.

Moreover, the increase in medical cannabis products has driven the need for peel-and-twist bottles and blister packaging. For instance, according to Ultra Health,
combined patient sales from the 34 licensed producers in New Mexico's Medical Cannabis Program amounted to USD 203 million in 2020, increasing by 57% year-
over-year basis.

Legalization of Cannabis in Various North American Countries

Cannabis has been grown, sold, and distributed through illegal channels for several years. The legalization of the product routed the sales through proper channels urging
systematic governance in the sector. The legalized product distribution across countries has directly impacted the need for sophisticated packaging formats to enhance
the brand image and extend shelf life, amongst other requirements.

Medical cannabis use has been legalized for several years in countries like the United States. But the recent legalization ofcannabis in Canada and multiple states of the
United States is driving the growth of the studied market. Canada has already legalized cannabis for medicinal and recreational purposes in 2018. The United States is
fast catching up with several state governments legalizing the use in tandem with public pressure and as a means to curb the illegal distribution of the product.

For instance, in Arizona, voters approved Proposition 207 in November 2020, which legalized cannabis for adult use. The state provided licenses to operators that
enabled adults to buy cannabis 80 days after voters approved the initiative. The new legalization allows buyers to purchase a maximum amount of one ounce per
transaction from regulated sources. There are 1.37 dispensaries operational in the state of Arizona per 100,000 people. The increased demand for the products is
anticipated to drive retail sales.

Furthermore, according to the New Mexico Department of Health (NMDOH), the state is aligned with the increasing demand for adult-use cannabis at the retail level, as
Albuquerque has 8.37 dispensaries per 100,000 people. Moreover, to add to the latest list of legalized states in the United States, the Governor of Connecticut signed
into law legislation in July 2021 that legalizes and safely regulates the adult use of cannabis in the states.

Continuous introductions of favorable laws that legalize cannabis in the North American region, especially in the United States, are driving the growth of the studied
market. Furthermore, the restrictions in marijuana advertisement have led cannabis product developers to stress innovative packaging solutions. Ascannabis becomes
legalized across more states in the United States, the demand for packaging formats is anticipated to surge significantly over the forecast period.

Market RestraintsStringent Regulation Related to Cannabis Packaging

The stringency of the regulations is anticipated to offer some degree of flexibility over the forecast period so as not to stifle innovation in thecannabis packaging
industry but currently poses an immense challenge. Even with this recent legitimization of cannabis in several countries, several strict norms need to be followed for the
packaging of cannabis products.

For instance, according to regulations in the state of California, which were codified in Proposition 64, the law that legalized adult-use cannabis in the state, the
packaging of cannabis was outlined with different requirements. The guidelines provide a skeleton of different labeling requirements for smokablecannabis, like a flower
or pre-rolled joints, versus what it considers manufactured cannabis products, like edibles, topicals, and concentrates.

In addition to the labeling requirements, the law also provides directions for cannabis packaging sold in a dispensary in California. The requirements are listed below.
Such rigorous practices have created a challenge for packaging solution providers to maintain compliance.

Export Table To Excel

Characteristics Description
Tamper-evident This includes things like a plastic seal, a sticker across the lid that rips when opened, or jars with lids that pop up after opening.
Plastic packaging must be at least 4 millimeters thick and heat-sealed or certified in accordance with the federal Poison Prevention
Child-resistant
Packagin
Resealable Products designed for multiple uses must come in packaging that includes some type of closure, whether that's a lid or an adhesive seal.
Opaque (for edibles
This rules out any glass that isn't amber-colored and creates a preference for plastics.
only)

Furthermore, the cannabis packaging standards differ from country to country and from state to state in some instances. The lack of uniformization of regulations in
countries like the United States, where state governments are actively legalizing marijuana, but the product continues to be illegal on a federal basis, has created
immense confusion amongst cannabis vendors and their packaging suppliers.

On a country level, Health Canada has outlined the requirements under the Cannabis Act and the Cannabis Regulations as a packaging and labeling guide for cannabis
products in Canada. Under the Cannabis Act, it is prohibited for a person that is authorized to sellcannabis (or for a person that sells a cannabis accessory) to sell it in a
package or with a label: That does not meet the requirements of the Regulations [25, CA] If there are reasonable grounds to believe that a package or label could be
appealing to young persons [26(a), 27(a), CA] That sets out a testimonial or endorsement, however, displayed or communicated [26(b), 27(b), CA] That sets out a
depiction of a person, character or animal, whether real or fictional [26(c), 27(c), CA] That associates it or any one of its brand elements with, or evokes a positive or
negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring [26(d), 27(d), CA]

Different government bodies have outlined such stringent regulations for cannabis packaging, which is hindering the unrestrained growth of the studied market.

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