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Marijuana merchants have something to learn from Tide Pods

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As marijuana grows up, the clear plastic baggie just won't do anymore. Pot retailers need better containers to hold their merchandise as commercial weed goes mainstream.

[HOUSTON] As marijuana grows up, the clear plastic baggie just won't do anymore.

Pot retailers need better containers to hold their merchandise as commercial weed goes mainstream. And there lies both a lucrative new market and a minefield of potential legal and public relations disasters for packaging companies looking to spur growth.

The legal cannabis industry is demanding products like the FunkSac bag, which keeps odors in and children out, one of 1,500 products offered by KushCo Holding Co. Now bigger, mainstream packagers like Reynolds Group Holdings are eyeing a US$110 million market that could grow six-fold by 2030 as legalization spreads. But they're treading cautiously, with some worried about being associated with a federally banned drug.

"There's a high degree of interest, but it's very polarized," said Jim Chrzan, a vice president at industry association PMMI Media Group. "Some companies do not want to be dealing with cannabis."

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Designing the best container for any product requires meeting a mix of technical, marketing and legal demands. Those challenges are magnified exponentially in the nascent legal marijuana market, where container-makers must navigate a web of laws among the 33 states that allow pot sales.

Most require opaque containers, food-grade plastics and child resistant packaging, but how those standards are met can vary. Colorado, for instance, allows edibles to be bundled in resealable containers, while Washington allows only single-serving packages.

Cannabis is still just a sliver of the US$205 billion US packaging market, but it's a bright spot in a mature industry growing at just 2.1 per cent a year, according to PMMI.

Eye-popping growth prospects are what's drawing interest from mainstream packagers like Berry Global Group Inc, which has US$7.9 billion of worldwide sales. The company estimates a market equal to about 1 per cent of legal marijuana sales, which research firm Cowen & Co expects to reach US$75 billion by 2030.

"It's a rare occasion in the packaging space that a new market forms and gets to that type of growth so quickly," said Brian Hunt, vice president of sales and marketing. "It's hard to ignore."

Some larger companies still worry about alienating their traditional customer base, which might view the packager as supplying "the drug trade" amid the federal prohibition, Mr Chrzan said.

A case in point: Illinois Tool Works Inc touted its Safety-Lok child-resistant slider bag as "ideal" for medical marijuana on the website of its Zip-Pak unit. But hours after Bloomberg News inquired about the pitch, the company deleted the reference to marijuana. Zip-Pak hasn't "marketed or developed products specifically for the cannabis market," spokeswoman Trisha Knych said in an email. She didn't respond to a query about changes to its website.

Reynolds is promoting a similar product, the Presto Child-Guard zipper, as a way to keep youngsters out of cannabis edibles. Procter & Gamble Co uses the technology on bags of its Tide Pods dishwasher detergent to keep kids from eating the colorful swirls of detergent.

Reynolds, which makes Hefty bags and aluminum foil, didn't respond to inquiries about supplying the legal marijuana industry. But it devotes a lengthy blog post on its Presto Products website to touting the cannabis market. Reynolds has received "a continuous stream" of queries from marijuana companies, the company wrote. "Support is at an all-time high (no pun intended)."

Berry's vials, jars and bottles were already being used by cannabis sellers when the company decided to develop products specifically for the market. Research revealed a need for packages to keep buds from drying out, to control odors, to fend off pets and children, and to satisfy a consumer preference for discretion and portability, Hunt said.

Berry unveiled prototypes at an October trade show to gauge demand before investing in molds, the biggest expense in creating a line of injection-molded plastics. The first of its new "Embark" brand products include a hermetically sealed tray designed to keep edibles and buds fresh, a palm-sized package for holding joints, and a hinged case. The black containers leave space for customers to add their own labels and lab results on potency.

"The general stigma has lessened," Berry's Hunt said. "Our practice is to supply for the legal market and to have safety at the forefront. If we are meeting those objectives, then it's reasonable for us to participate in this space."

Larger companies bring marketing heft, manufacturing capacity and ample cash coffers. But they have more difficulty maneuvering in an industry with many smaller players, fragmented by the federal pot ban that creates barriers to multi-state operations and restricts access to traditional banking.

KushCo Chief Executive Officer Nick Kovacevich, 32, founded his company in 2010 in Santa Ana, California, aiming to capitalize on a legalized cannabis market. He took the company public in 2015 and quickly grew it into the market leader, with pot packaging sales jumping 29 per cent to US$15.1 million in the 12 months through August.

"They're going to find some revenue from this space - how could you not?" Mr Kovacevich said. "But we will make it very difficult to take our customers away."

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