California’s Biggest Cannabis Gummy Player Makes Strategic Distribution Move, Expects Expanded Retail Access for Best-Selling Products

Marijuana is legal in 33 states in some form and more than a dozen countries, but the one market everyone wants a piece of is California. With 2019 legal cannabis sales around $3.1 billion, it’s the biggest market in the world with plenty of upside to sell to the state’s 40 million citizens and hundreds of millions of visitors every year.

When it comes to THC and CBD gummies, the king of the California market is San Mateo-based Plus Products (CSE: PLUS) (OTCQX: PLPRF). Measured by dollar of retail sales, the hemp and cannabis food company holds the position as the largest brand in California for gummy sales over the last twelve months.

Plus achieved this sales lead while being available in 360 licensed dispensaries in the Golden State, a recent shift in distribution partners put the company in position to quickly grow that number moving forward.

On to Bigger Distributors

In a bid to get its best-selling products “on every shelf at an affordable price,” Plus has replaced its previous distribution partner, Calyx Brands, with the supply chain expert HERBL Distribution Solutions. HERBL distributes cannabis goods to more than 600 licensed retailers in California, giving  PLUS access to open over 240 accounts they were not previously distributing to.

Click here to see the company investor presentation

“[HERBL’s] substantial market reach and world class management team give us confidence that they will help PLUS further solidify our position as the largest cannabis-infused gummies brand in California,” said Plus CEO Jake Heimark in a statement on the new distribution agreement.

Plus’ sales team is working with Calyx and HERBL to ensure a smooth transition of existing customers and inventory into the new arrangement – and potentially some new cost-saving synergies – while moving forward to land new accounts.

Gummies Are Hot

There is no shortage of options for consumers of cannabis ingestibles, but people overwhelmingly turn to gummies. According to the market researchers at BDS Analytics, 17 of the top 20 selling edible products in California, Colorado and Oregon were gummies during the first four months of 2019. During that one-third of the year, gummies sales in those three states totaled $115 million, representing nearly 40 percent of all ingestible dollar sales.

Equally impressive, ingestible sales as a group were up 37 percent during the same period at the start of the year compared to the same span in 2018.

To that point, consumer trends have changed in recent years. Less than five years ago, cannabis-infused chocolate bars were outselling gummies, but now gummies outsell other products, like chocolates, tinctures and beverages, by at least two-fold.

The popularity is owed to several factors, including precise dosing of gummies, wide flavor selection and the discrete nature in which they can be transported and consumed.

Click here to see the company investor presentation

Against this backdrop, it is impressive what Plus is doing. “Plus uplift,” which contains 5mg THC and <0.1mg CBD in each gummy, has held the top spot for gummy sales in California for five straight quarters. It outsells the next best-selling non-PLUS gummy 2:1.

The product lines come in an array of flavors including, sour watermelon, sour blueberry, blackberry/lemon, tangerine, concord grape and cucumber lime, as well as orange, black cherry and classic mints.

Bigger Footprint in Cali and More

While Plus and HERBL collaborate to expand distribution in California, Plus is placing products in other states too. Through a partnership with TapRoot Holdings, a vertically integrated Nevada-licensed producer, Plus products were launched into 30 dispensaries in the Nevada market in October. Some of the first gummies introduced were the uplift and unwind brands.

Click here to see the company investor presentation

Hemp, a non-intoxicating cousin of cannabis, became federally legal at the start of 2019 via the passage of the 2018 U.S. Farm Bill. That opened up opportunities for interstate commerce of products containing hemp-derived CBD where local jurisdictions also allow hemp goods. Plus has jumped on this emerging market, launching a new line of 100% hemp CBD-infused gummies that are now available in 43 states through the company’s ecommerce website.

The hemp-based CBD products launched with the support of  entertainment superstar John Legend and global mattress company Casper Sleep.

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About Ash Stringer