Opinion: Marijuana Caviar Is A Concentrate, And That's Not A Bad Thing

cannabis-buds-cupcake-By content diller
Photo: content diller/ shutterstock

It's time to quit kidding ourselves. Marijuana caviar is a way around recreational marijuana concentrate limits, and that's not a bad thing.

The cannabis industry in Washington, Oregon, and Colorado are rapidly and dynamically changing. Most recently, prices of cannabis have been falling substantially. In Oregon, for instance, a pound of cannabis auctions for $100 and most dispensaries offer grams of flower priced less than a craft beer. Products such as wax, shatter, cannabis oil, distillate, edibles, among others have similarly experienced pricing decreases.

With the cost of marijuana in several legal states having lost half or more of its wholesale value, small local dispensary brands with one, maybe two locations have been struggling to compete with highly integrated dispensary chains. As a way to appeal to high-spending consumers in times of falling prices, products such as concentrate and caviar have continued to penetrate the legal cannabis market.

In several cases, the oversupply contributing to the falling price of legally grown marijuana is related to a large number of market entrants – spurring competition – as well as recreational programs aversion to limiting the number of grower licenses which can be issued.

States are introducing legislation to legalize marijuana – whether medical or recreational – with each passing election cycle. There are currently 29 states with some variation of medical marijuana program. Additionally, nine of those states have adult-use laws in place, permitting anyone 21 and up the legal right to use and purchase cannabis. In several of these markets, lawmakers have restricted the sale of cannabis concentrates.

Concentrate limits are based on THC equivalency

Cannabis Concentrate Limits

mountain_weed_leaf_By Asim Patel
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Economic researchers, industry analysts, interested investors, and, of course, the broad consumer demand may differ on reasoning, yet the consensus is growing: cannabis legalization is set to continue. Along with it, the spread of products such as marijuana caviar, also known as moon rocks, will occur.

As legalization of marijuana continues, the trend of creating limits on cannabis concentrates has grown as well. The policies seem to have caught fire in the halls of state legislatures from Washington to Maine, where concentrate sales are limited to seven grams and five grams of concentrate, respectively.

In California and Colorado, concentrates are limited to eight grams. In Nevada, recreational users are allowed 3.5 grams of concentrates. In Massachusetts, up to five grams may be purchased. Oregon allows five grams of concentrates, the same as Vermont.

Given these limits, high tolerance recreational concentrate tokers are caught going to the dispensary with frequency. This can often limit the purchasing power of the consumer via price specials and deals. You know, the ol' 'the more you buy, the cheaper it is per unit' sort of thing.

And that's where marijuana caviar comes in.

Marijuana caviar IS concentrate under the guise of flower. It's a remarkable deception, able to penetrate EVERY legal cannabis market. Marijuana caviar is sold as flower, despite every state with concentrate limits as part of their marijuana laws.

Marijuana caviar is the legal loophole.

What are cannabis concentrates?

According to California marijuana laws, cannabis concentrates are defined as follows:

"Cannabis that has undergone a process to concentrate one or more active cannabinoids, thereby increasing the product's potency. Resin from granular trichomes from a cannabis plant is a concentrate for purposes of this division. A cannabis concentrate is not considered food."

As the definition suggests, cannabis concentrates are of exceptional potency when compared to their flower counterpart. Wax and shatter often exceed 70% THC; distillate can breach 90% or more. Oil cartridges usually range between 70%-80%, whereas flower is typically no more than 30%.

Many strains average around 20% THC in legal marijuana markets.

What is cannabis?

Under the California Medicinal and Adult-Use Cannabis Regulation and Safety Act, cannabis is defined as:

"All parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified, obtained from cannabis."

The law goes on to say the definition does not include the mature stalks, fiber, seed oil, or any other preparation of fully grown, but mostly unusable portions of the plant.

As noted above, most flower within legal markets ranges from 20%-30% THC. This means that for every gram of bud, users can expect to consume roughly 200-300 mg of THC. This is a rough estimation.

What is Marijuana Caviar?

moonrocks_By Danae Abreu
Photo: Danae Abreu/ shutterstock
Marijuana caviar bends the rules of concentrate limits by maintaining it is flower. True enough, caviar (also known as moon rocks) is available in bud form, yet the additional ingredients increase, if not double, the potency of the underlying cannabis flower.

The process of making marijuana caviar is simple, though you do need to allow enough time to pass for the cannabis oil to dry enough to be readily smoked.

Marijuana caviar is made by utilizing hash oil or distillate to soak a fresh nug lightly. After a 10-20 minute period of allowing the oil to absorb, the nug is carefully rolled in kief. After the nug has been covered with kief, it is left to dry for roughly a day.

The result is a high-potency nug which subverts concentrate limits by being both concentrate and flower. This is where, in a glaring disparity of legal wording, marijuana caviar evades the confines of concentrate purchasing limits.

After all, it is a flower product.

Marijuana caviar can range from 40%-80% THC, placing the product well above the THC range of flower alone. Instead, caviar is within the realm of concentrate potency. For every gram, this would mean users could expect to consume roughly between 400-800 mg THC.

Why We Have Marijuana Concentrate Limits

In 2014, Colorado passed House Bill 14-1361. The Act, among other things, ordered the Department of Revenue to study the equivalency between cannabis products. By January 1st, 2016 the Act required lawmakers in the state to design purchase equivalencies for recreational marijuana products based on their findings.

The study was designed to evaluate the equivalency of cannabis edibles and concentrates to flower.

The evaluation focused on THC and 11-OH-THC – the cannabinoid and its metabolite known to produce the 'high' of marijuana. The study used three measurements: physical equivalence, pharmacokinetic equivalence, and market price equivalence, the study was able to assess how many edibles (10mg servings) and how many grams of concentrates can be produced from an ounce of marijuana flower.

Policy experts crafted limits on edibles and concentrates, implementing them October 2016. The purchasing limits were a response to public health, peace, and community safety concerns, given the difference in both effects experienced by users and the potency of the products themselves.

Cannabis concentrates, after all, often range between 75%-90% THC. That's as much as 900mg THC in each gram!

The Colorado-based equivalency study reasoned the average THC potency by weight of flower to be 17%. Stated differently: each gram contains 170mg THC – over a 500% decrease when compared to concentrate.

The study also evaluated the ability of THC or its metabolite 11-OH-THC (resulting from eating rather than smoking cannabis) to enter the bloodstream and the brain.

The Results?

As mentioned above, researchers evaluated the equivalency of cannabis products to flower using three measurement criteria: physical, pharmacokinetic, and market price. As physical and pharmacokinetic equivalencies are more strongly related to concentrates than market price, the market price equivalency is not included in this piece.

Physical equivalency was measured by determining how many 10mg edible doses or grams of concentrate an ounce of flower PHYSICALLY is equivalent. This allows researchers to have a standard measurement for the production of cannabis products based on their flower or trim inputs, as well as extraction method and solvent used. The study concluded one ounce of flower was equivalent to as many as 434 edible doses and up to 8.5 grams of concentrate.

Pharmacokinetic equivalency was measured to allow researchers a metric to evaluate the relationship between dose, different cannabis products, and varying cannabinoids or metabolites thereof.  The study concluded one ounce of flower at 17% THC was equal to as many as 83 edible servings of 10mg each or 7.72 grams of concentrate at an average of 62% THC each. This means for every gram of flower, roughly three edibles and 0.28 grams of concentrate can be produced.

The Value of Marijuana Caviar

The legal market in Colorado has brought on numerous perceptual changes of how a legal marijuana industry would function within view of the public. Passed in 2012, Amendment 64 offered $40 million of annually collected marijuana excise taxes to the B.E.S.T. Fund – a fund set up to provide construction grants to public schools in Colorado.

The first recreational dispensaries opened their doors in January 2014. The state took a year to collect data before further implementing a tax rate. The tax covered all legal marijuana sold from a grower to a producer or dispensary (not to a consumer) and would be based on the average market rate for cannabis.

Source: Colorado Department of Revenue 2018
The average market rate initially was reviewed every six months; however, given how dynamic prices are in the Colorado cannabis industry, it is now adjusted in every quarter. Average market rate tracks the average cost per pound of marijuana.

The table above illustrates the price per pound of cannabis bud, trim, and whole plant prices. Additionally, the cost of bud and trim for extract production as well as cost per plant are included.

The Story Told By Tax Data

cannabis-money-scale-By Imagewell
Photo: Imagewell/ shutterstock
Since January 2015, the price of cannabis bud in Colorado has lost 50% of its wholesale cost. Interestingly, the cost of trim during the same time has seen an increase in the wholesale price of 92%, increasing to $700 per pound from $364.

In some ways, rising trim costs could be a measure to ensure the increasing cost of trim in-part replaces the lost tax revenues on the cost of bud. Given the program has budgetary commitments to the state, such as generating $40 million in excise tax for schools and numerous public health programs across Colorado, using the cost of trim to somewhat stabilize tax revenue amid falling bud prices could be a reasonable measure.

Of course, the average market rate is more an economic indicator than a governmental tax lever.

Overall, however, the change in the cost of buds and trim still amounts to a total mixed change of value collected by $659 per pound – equal to roughly $99 per pound in tax revenue. In addition, the cost of bud for extraction is 33% the price of bud, whereas the cost of trim for extraction is 43% the cost of purchasing trim.

Why set so low?

A High Potency Answer to Falling Prices

I am not claiming marijuana caviar is not a delight. In fact, quite the opposite. Instead, I am offering the opinion caviar IS a product of high-quality at a low cost to produce. And because the product has such high-potency, marijuana dispensaries can ask a higher price for the product while selling under the limits of cannabis flower.

With a name like caviar, the product is steeped in luxury by implied reference. It has value associations built into the title.

In Oregon, cannabis growers and dispensaries have been hit by oversupply tremendously. Wholesale cannabis has plummeted to $100 per pound at auction, leaving little room for small companies to grow revenue while having to cut prices and pay staff.

As reported by Willamette Weekly, Between June 2017 and October, Oregon experienced the average market rate for a pound of cannabis decrease to $700 from $1,500.

This has affected growers, product manufacturers, and dispensary locations significantly, with some going as far as laying off qualified staff or worse: shuttering the business for good. Companies have experienced losses, and so too have their owners and staff.

Supply and Demand Curve

Marijuana Caviar can bring the glut of cannabis flower and rapidly falling market prices more in line with the clout of high-potency concentrates. The cultural association to luxury or class derived from a title like "caviar" seeks to sway the purchasing power of those with disposable income.

A result of this could include higher total sales per customer transaction; however, it could alternatively diminish customer loyalty as casual cannabis users, by purchasing marijuana caviar by the ounce and eliminating concentrate purchasing limits, are likely to visit the dispensary with less frequency.

Whereas cannabis flower in Oregon costs between $60- $130 on average for recreational users, an ounce of caviar or moon rocks can retail for between $450-$500.

While there are several costs associated with producing marijuana caviar, such as extracting or purchasing the oil and employing staff to manufacture the product, the individual sales revenues from a single ounce are at minimum 350% higher than traditional flower sales.

The position many legal cannabis states have taken is to dedicate tax revenues collected on the sale of cannabis to public programs after administration costs.

With prices falling across legal markets, aside from federal legalization or permitting interstate legal marijuana distribution, products demanding a higher price are set to be the industry life-raft. Without federal action, each state with a marijuana program will have to determine how to limit the market supply.

In lack of a clear path, supply and demand will fall out of equilibrium. Competitive ambiguity among a volatile market is not unique to cannabis, yet the funds and expected tax revenues are dependent on both consumer demand and market price. At the retail level, tax revenue is based on a percentage of marijuana sales. At the cultivator, extraction, or edible manufacturer level – such as in Colorado – taxes are collected by weight sold.

Both of these revenue driving models benefit from continuing to allow marijuana caviar be sold as a flower product instead of being accountable to concentrate limits. So do dispensaries, employees, and consumers.