Used as a means to expand SKU lines as well as revenue, white labeling in the cannabis industry offers companies unparalleled upside and potential for impressive profitability.
The evolution of the cannabis industry in recent years continues to outperform market projections. While many attribute this unprecedented growth and positive trending to a focus on business-to-consumer models, some cannabis companies are finding significant successes leveraging white labeling partnerships to tap into a rapidly emerging marketplace that thrives on innovative business models and unique products for a growing consumer base
As the popularity of white labeling services amongst cannabis companies grows, especially in the production of fast-growing categories of value-added products like extracts, oils, edibles, and vapes, companies that are becoming an expert in co-manufacturing and have the ability to provide these services are establishing themselves as the leaders in the industry. Used as a means to expand SKU lines as well as revenue, white labeling in the cannabis industry offers companies unparalleled upside and potential for impressive profitability.
How do white labeling services work?
White labeling is a business practice that involves one company manufacturing a product, which is later sold and advertised under another company’s brand. These solutions are typically done in exchange for a flat fee or percentage of product sales depending on the terms of the agreement.
This business-to-business solution offers a partnering company to attach their unique brand onto a “white label” product for marketing and sale to the final consumer and allows the manufacturing “white labeler” to potentially partner with different companies. Without the need to invest in infrastructure or technology. Cannabis companies can focus on building their brand and selling a wider range of products to a wide net of prospective customers.
Additionally, many also associate these white labeling solutions with toll processing, a practice in which one company provides the raw or partially processed product for another company to manufacture into a value-added product.
Access to extraction and packaging services through white label providers
White labeling services provide an ideal solution for companies who may not have the start-up capital to build a manufacturing facility, secure product licensing or have a difficult time getting a cannabis business off the ground. In these circumstances, partnering with a licensed processor that has established production and focused effort on creating a diversified range of high-quality cannabis products presents outstanding economic opportunities.
One leading example is Ayurcann Holdings (CSE:AYUR), a B2B post-harvest solution provider focused on providing scalable custom processes and pharma-grade products to the recreational and medical cannabis industry in Canada. The company delivers a profitable business model of services and products. It operates three production divisions specializing in expert cannabis-based extraction and refinement, high-quality bulk oil sales and white label manufacturing.
White labeling options for cannabis companies
In an industry that is shifting its focus away from cultivation, more fully integrated companies delivering multiple verticals in cannabis processing and production offer an unparalleled investment opportunity that stands out from the rest. Major players in the cannabis white-labeling space offer unique exposure and retail footing that allow many companies to compete with established brands and quickly make an impact on consumers.
Ayuracann’s production offers full end-to-end outsourcing services, including proprietary product research & development, cannabis extraction & refinement and final production formulation and fulfillment. As a leading white labeling service provider, the company is focused on becoming the partner of choice for leading Canadian cannabis brands by delivering best-in-class, proprietary services, including ethanol extraction, formulation, product development and custom manufacturing.
Benefits of white labeling for cannabis companies
Data collected by Grand View Research projects the global legal cannabis market to be worth US$66.3 billion by 2025. While much of the cannabis product sold today is still the raw product, value-added consumer packaged goods are rapidly gaining significant traction throughout the cannabis industry.
White labeling services allow cannabis companies to capitalize on the latest and greatest cannabis consumer trends by expanding their portfolios to include high-demand products such as oil cartridges, extracts, topicals, CBD bath products and lotions, edibles and more. Without having to invest in the infrastructure, processing labs and manufacturing facilities required to make these products, companies can focus on releasing more products to an eager customer base. With an ever-evolving cannabis market, white label partnerships can give cannabis companies an edge over the competition.
While vertical integration can be a highly efficient strategy for large cannabis companies with the up-front capital to build the necessary infrastructure, companies without the resources to establish it take a huge risk by investing in operational and up-front costs. This includes time, building and equipment costs, license processing and finding specialized staff to grow and sustain the business.
Alternatively, outsourcing manufacturing allows a cannabis company to expand its product offerings, utilize quality formulations and establish its brand while reducing the financial risk associated with vertically integrating. Finding a compatible white labeling partnership means more time to build a brand and reach retailers and final consumers substantially faster. For cannabis companies who want to hit the ground running, white labeling offers the tools, expertise, and systems in place to make it happen.
Cannabis companies are using white labeling services to expand and diversify their product lines and tap into a market that is increasingly favoring value-added consumer packaged goods. For cannabis companies without fully vertically integrated operations, white-label partnerships with major players like Ayurcann Holdings offer exceptional economic efficiency and investing upside with minimized risks and infrastructural costs.