Cannabis producer Aqualitas is doubling down on branding itself as a green company and setting itself apart from competitors with new packaging made from plastics recouped from the oceans.
“You take material from our shorelines, oceans and waterways feeding oceans and these materials can be repurposed into packaging,” says Aqualitas CEO Myrna Gillis.
Through a deal with Colorado-based Sana Packaging, the Liverpool-area cannabis producer has developed and will be using packaging sourced from the oceans for its products.
“As members of a coastal community, it’s no longer enough for us to simply keep packaging out of our oceans and landfills. We want to play an active role in cleaning it up,” says Gillis. “Our first packaging order succeeded in reclaiming two tons of plastic from the ocean.”
The new packaging is expected to remove 10 or more tons of plastics from the oceans annually, as the material is re-used to make Aqualitas packaging.
It is being launched coast to coast through the company’s medical platform in five-gram jars, and then in Nova Scotia in the recreational market this month through the Reef Organic brand.
The Clean Green Certified cannabis producer’s move comes at a time when the marijuana industry is marked by intense competition and falling prices, which are putting a squeeze on profit margins due to over-capacity in the market. Softer-than-hoped-for initial sales due to continued competition from illegal recreational pot producers have also hurt many of the players in the industry.
Although struggling to break even, many cannabis producers in Canada did enjoy increasing revenues last year, with sales growing by a reported 120 per cent to hit $1.2-billion.
In December, recreational cannabis sales climbed a reported 19.6 per cent in Nova Scotia, 10.8 per cent in New Brunswick, 41.8 per cent in Newfoundland and Labrador and 17.6 per cent on Prince Edward Island compared to the same month the previous year.
Aqualitas, too, is seeing revenue growth.
“Year over year, we’re up about 37 per cent and the sales in the industry are up, with people moving over from the illicit market into the legal market…,” says Gillis.
The company sells its products in eight provinces and its medical marijuana products are on the Medical Cannabis by Shoppers platform. It is even making inroads into both the German and Israeli markets.
But Gillis admits the company is so far only covering its operating expenses and is not yet in the black.
“Investors, throughout COVID-19, we haven’t been able to monetize,” says Gillis. “It’s very difficult to do business during COVID because you can’t have site visits.”
Many industry experts are expecting mergers and acquisitions in the industry to pick up steam over the coming couple of years.
“The industry is in for a very rough 24 months,” says Gillis. “You’re going to see some consolidation and mergers.”
During the pandemic, Aqualitas has focused its energies on standing out from the herd by upping its investment in the environment.
Although its corporate offices are in Bedford, Aqualitas is already mostly known for the low energy and low water consumption of its roughly 90,000-square-foot operation in Brooklyn, on the outskirts of Liverpool. The company uses LED lights, an aquaponic system with koi, and biodegradable pouches and labels for its products.
The company is even considering an adopt-a-koi or name-a-koi promotional campaign to draw more attention to its environmentally-friendly aquaponic system. The company’s latest investment in going green, packaging from reclaimed ocean plastics, is a response to complaints about overly-packaged products in the industry.
“One of the big problems in the industry because of childproof packaging is that there is a lot of excessive packaging,” says Gillis.
Millennials, those aged 18-to-34, make up the bulk of cannabis consumers and are more likely than other age groups to buy products they perceive as being good for the environment. They have also complained about excessive packaging by cannabis producers.
By shifting to ocean-reclaimed material, Aqualitas will drive up its packaging costs by an estimated 15 per cent, putting even more pressure on profit margins for a company whose products are already more expensive than those of most of its competitors.
“Our product is among the most highly priced on the market, so we had to have a pretty compelling value proposition,” says Gillis. “So far, we’ve had a great response from our distribution and retail partners and consumers.”
The Pivot is a regular business feature about an Atlantic Canadian company adapting to new market realities with innovative products, services or strategies. To suggest a business for The Pivot, please e-mail: [email protected].
