The Cannabis 2.0 Market in Canada: Topicals
In our last article in the Cannabis 2.0 Market 2020 series, we take a look at topicals. Cannabis-infused topicals are lotions, balms, creams, and oils that contain cannabinoids, usually CBD and/or THC. These products can serve a wide range of purposes and come in a variety of formats, from wellness creams helping to relieve localized pain to recreational lubricants that help make sex more enjoyable. The cannabinoids in topicals are absorbed by the CB2 receptors in our skin, providing relief and enhancement, usually without producing an intoxicating high.
These products started to become available in most Canadian provinces around the spring of 2020. However, like basically every other cannabis 2.0 product, Quebec has decided to completely ban the sale of cannabis topicals in their province.
Today, we are going to examine the very new but quickly growing cannabis topical market in Canada, try to define the topical consumer, and analyze the marketing strategies of the current brands in the space.
How big is the Topical market?
According to a recent report by Grand View Research Inc, the global CBD skincare market size is expected to reach $1.7 billion USD by 2025. When looking at the market for THC and other cannabinoid topical infusions, that number is even larger. According to Deloitte, the cannabis topical market alone will account for $174 million in sales in Canada in 2020.
Topicals have been sold through unregulated channels for decades. These products are starting to prove their demand in the legal space and provide a lucrative opportunity to bring new consumers into the cannabis market.
Who is the Topical Consumer?
Cannabis and CBD-infused topicals can be used for a wide variety of purposes, which means that they appeal to a wide range of consumers. Most topical consumer need states can be broken down into three benefits: relief of inflammation and related skin issues, relief of pain, and enhancement of sexual pleasure and performance.
When treating inflammation and related skin issues, topicals appeal to beauty, and health-focused individuals. Beauty enthusiasts would use topicals for puffy eyes, inflamed skin, to reduce the swelling of acne and even possibly to help treat more serious conditions such as psoriasis and eczema. There is a potential market for cannabis-infused makeup, lip balms, facial scrubs, and similar products.
When relieving pain and soreness, topicals appeal to those seeking wellness, improved health, and medical treatments. Individuals that are interested in natural alternatives to traditional medicine (i.e. naturopathy, yoga, etc.) will find the potential analgesic qualities of topicals very compelling.
When used for enhancement of sexual pleasure and performance, topicals appeal largely to younger singles and couples without children who are looking to improve their sex lives.
Interest in topical products is fairly evenly spread across many age groups. Younger individuals are more interested in these products for beauty and sexual purposes, while older individuals are seeking relief of pain and skin conditions.
Based on a January 2020 report from Headset, females are slightly more interested in purchasing topical products than their male counterparts. This data, taken from mature American markets between 2017-2018, shows that 2.6% of topical purchases are made by women while 1.2% of purchases in the category are made by men.
What Brands Sell Cannabis-Infused Topicals in Canada?
Products: Transdermal CBD Cream and the Transdermal 1:1 (THC:CBD) Cream.
Product details: The Transdermal CBD Cream contains 250mg of CBD and the 1:1 Cream contains 125mg of THC and 125mg of CBD. Both are scented with botanical (non-cannabis derived) terpenes.
Branding details: LivRelief is a wellness brand that existed prior to cannabis legalization in Canada. The brand is marketed by Delivra, a biotechnology company founded by Dr. Joseph Gabriele, which was acquired by Harvest One Cannabis in July of 2019. The LivRelief transdermal CBD and 1:1 creams were launched in select markets in the spring of 2020.
LivRelief cannabis creams use the same name and same logo design as their other, non-cannabis related products. LivRelief offers a variety of other “pain-relieving” creams that do not contain cannabinoids. Their branding is very wellness/medical focused, offering “pain control and relief without a prescription”. This blatant medical-type marketing is rare in the Canadian recreational market. However, their CBD and cannabis products are not featured on the same website as their other products or brand story.
Products: THC-infused face serum, THC-infused bath oil, THC-infused multi-use balm.
Product details: THC-infused face serum contains 213.95mg of THC and is made with jojoba seed, rosehip, and lavender oils. THC-infused bath oil has 120mg of THC and is made with hemp seed, birch bark, and eucalyptus, among other items. Multi-use balm contains 6.58mg of THC and traces of CBD. Made with natural ingredients including coconut, apricot, and hemp seeds.
Branding details: Compliance Brands is the fruition of a partnership between Volero Brands Inc. and Beleave Kannabis Corp. The brand promises to provide “compliant cannabis-infused products”.
The branding is… confusing. We’re not sure who it appeals to (other than Health Canada and other regulators). Throughout the Compliance Brand’s website, there are quotes such as “We don’t make the rules, but we sure do love them. We are here and ready to do what it takes to get our products to you. If that means we double-down on following the rules, well then, we’re all about it.” Is the whole brand tongue-in-cheek? Is it a dig at companies like CannTrust?
While it is definitely important to follow the rules and respect the regulators, the fact is – most consumers don’t care. It is a strange positioning for a Consumer Packaged Good.
Products: Extra Strength Body Cream
Product details: Contains 25mg of THC and 25mg of CBD (derived from 48North’s outdoor-grown cannabis) in a 2oz bottle. Contains arnica, peppermint, and juniper (and cannabis). The cream feels cool and invigorating on the skin.
Branding details: Apothecanna is a fairly established American topical brand that was founded in 2009 and licensed by Canadian licensed producer 48North in 2019. The brand is committed to making products that are made without the use of artificial ingredients, fillers, parabens, or GMO ingredients. Apothecanna does not have a separate website or social media accounts for their Canadian brand. However, there is a short section on 48North’s website about Apothecanna and topicals. This product was the first topical to launch into the Ontario market. The brand plans to launch more, higher potency topical SKUs in the near future.
Products: THC-infused topical roll-ons for pain.
Product details: The company will soon be launching three different roll-on topicals to help manage pain, with varying levels of THC and/or CBD. Other topical creams and intimacy lubes coming soon as well.
Branding details: Apothecary Labs is a brand with a good amount of consumer recognition that has transitioned from the traditional market to the legal space. Apothecary Lab’s head chemist and COO is Kuldip Gill, who has formulated many popular North American over-the-counter topical products over his long-standing career. All of these products are proudly produced and manufactured at their facility in Port Coquitlam, BC.
The Future of Cannabis-Infused Topicals in Canada
Similar to all other 2.0 categories in Canada, the future of topicals is yet to be seen.
Although dried flower remains the number one category, topicals and other 2.0 products have continued to slowly gain market share in mature American markets such as Colorado and California.
Topicals have the potential to bring in new consumers who are not looking to experience an intoxicating high but are still interested in the potential benefits of cannabis for their bodies and minds. If cannabis/CBD-infused topicals can gain mainstream acceptance among the beauty and wellness communities, the total market size may surpass any analyst’s predictions. This would require that these types of products are made available on the shelf or over-the-counter in pharmacies, health stores, and even department stores. Instead of forcing a potential consumer into a cannabis-specific store when they otherwise would not step foot inside, allow them to purchase these products in an environment that they feel comfortable in.
With so little brands in the Canadian space (only 3 brands launched and 6 SKUs available), there is a big opportunity for companies looking to market these products. The future of topicals is bright – both medically and recreationally.