Inside the booming edibles economy
In 2017, Nathan Cozzolino started Rose, a “farm to edibles” brand based in Los Angeles. Cozzolino and his team cultivated organic hemp and marijuana, produced its own low-dose gummies with natural organic ingredients, and sold the product to licensed dispensaries. This structure required overhead that cost upwards of $80,000 a month. Six years in, the brand wasn’t able to sell enough products to cover its expenses despite being sold in more than 100 retailers.
That changed in July of 2023 when Rose switched the entirety of its production to hemp. “We did it because it was that or go out of business,” Cozzolino says. He let go of his cannabis licenses, downsized his facilities, and within 60 days built a website where he could sell directly to customers. Within the first month of online sales, Rose was able to break even. Now, the company is selling more products than it’s able to make, and Cozzolino and his team can focus on the part of the business they love most: the agricultural and culinary work, and sharing the therapeutic benefits of cannabis.
“Being able to sell online directly to our customer in a responsible way has been what Rose has needed to fully realize our potential as a company and to be able to pursue everything that we dreamed of doing,” Cozzolino says. “And that always brings us back to the farm, investing in the land, and seeing how we can make our product more interesting, starting with the agricultural component of it.”
Rose is part of a bigger shift in the cannabis industry toward hemp-derived edibles, which can give users much of the same effects as cannabis-derived THC at lower dosages. As customers increasingly search out low-dose options, they’re finding that these products, from gummies to chocolate to mints and beverages, can be legally shipped right to their door with a few clicks online, circumventing the need to visit a licensed dispensary.
[Photo: Rose]
The recreational cannabis landscape has been rapidly changing in recent years. While flower and vapes still account for the majority of the market, edibles are becoming a fast-growing category, especially in the United States. The market generated $10.6 billion in 2024—a figure that’s expected to reach $47.1 billion in 2043, according to a recent report from Research and Markets. And within the edibles market, a growing number of brands are using hemp-derived THC, which is biochemically the same as cannabis-derived THC, in their products.
“The explosion of hemp-derived cannabis products has helped quicken the normalization of cannabis,” says John Kagia, the director of cannabis policy in New York and an industry analyst.
There are a few reasons for this: Cannabis companies have found that low-dose edibles are extremely popular with their customers. Meanwhile, the 2018 Farm Bill that removed hemp containing up to 0.3% THC from the federal list of controlled substances has made it easier for cannabis companies to meet the demand. Brands are betting that curious cannabis users will be intrigued enough by gummies and seltzers to eventually become loyal shoppers and daily cannabis users.
[Photo: Gossamer]
The Edible Future of Cannabis
To people in the cannabis space, the mainstreaming of edibles is a natural next step for recreational and medicinal weed. “They’re very universal,” says Verena von Pfetten, a cofounder, with David Weiner, of Gossamer, a cannabis media platform. “You don’t have to learn how to roll a joint, you don’t need to buy a piece.” Plus, clearly labeled doses make it easy to measure just how much THC you’re ingesting. These aren’t the mystery brownies that might knock you out for an entire afternoon. Gummies account for 72% of the edibles market, and “a gummy vitamin is something people are comfortable with,” von Pfetten adds.
When Weiner and von Pfetten, who have media backgrounds, launched Gossamer in 2017, they saw an opportunity to make cannabis more accessible to people who were interested in the effects of THC but were alienated by the stereotypical stoner branding or expert-level discussions about strains. “Everything was ‘verity’ or ‘green’ or ‘canna’ something,” Weiner says. “It was just kind of like, surely there’s a more sophisticated way of tapping into this.”
[Photo: Gossamer]
The marketing around edibles tends to be approachable, with brands playing into the desired effect that someone might want to achieve, like better sleep, more energy, or relaxation. “The customer we want to reach, and that we believe is actually the largest customer base across the board, doesn’t make their lives revolve around cannabis; they incorporate cannabis into their lives,” von Pfetten says. “And so how can we help them do that?”
Gossamer’s online store, which began offering hemp-derived edibles in 2024, sells everything from THC tinctures to gummies to pre-rolls. The bestsellers are, by far, one- and two-milligram products.
[Photo: Rose]
The Business of Edibles
Edibles also make business sense for cannabis producers. The THC in these products can be derived from hemp, a variety of the same plant species as marijuana that contains a lower concentration of THC.
The 2018 Farm Bill legalized the industrial production of hemp containing up to 0.3% THC. It also declassified the plant and cannabinoids derived from it, as a controlled substance. This means that products made with hemp can cross state lines and don’t need to be sold in regulated dispensaries, opening the market to states where recreational marijuana use is prohibited so long as they don’t have regulations against hemp.
Despite more states legalizing recreational cannabis, companies in this space haven’t been growing as quickly or as easily as they anticipated. Just 27% of cannabis businesses are profitable. The regulated adult-use market across the country is fragmented, with each state having slightly different rules about retail. Since hemp- and marijuana-derived THC are biochemically the same, edibles brands have been switching to hemp-derived THC in their products, which has helped their businesses remain viable.
“A significant advantage that the hemp-derived ecosystem has is centralized production,” Kagia says. “It’s much cheaper for these brands to build in one place and ship nationally than to build in every individual market like they would have to do in the adult-use space.” Additionally, Kagia is seeing the strongest growth in demand for hemp-derived edibles in states that have not legalized medical or recreational marijuana.
“What the industry needed was to be able to have a small operation, with little overhead, still working in a regulated way using third party labs for testing,” Cozzolino of Rose says. “But they needed to be able to sell directly to their customers without a storefront and with an online business the way the rest of the world works.”
The most popular edibles brands have also quietly shifted to hemp-derived THC for their low-dose edibles, including Wyld (the best seller in most states); Kiva, a portfolio of brands that makes chocolates, gummies, and mints; the chewables brand Sundae School; and Cann, the beverage company.
The move is paying off. Aaron Nosbisch, the founder of Brez, a maker of beverages infused with hemp-derived cannabis and mushrooms, posted on LinkedIn that 83% of its sales were DTC and that the brand is pacing to make over $50 million in revenue this year.
[Screenshot: Edibles.com]
Selling Edibles, Without the Dispensary
With more edibles on the market, the retail landscape is changing, too. Before, these brands were at the mercy of dispensaries, which often paid wholesale prices based on the amount of THC in a product and not the overall quality of experience. (For example, a package of 20 microdose gummies from Rose retails for $40 and has 20 mg of THC total while a tin of pre-rolls with 1,635 mg THC total sells for $45 at MedMen.) Additionally, the brand communication could be uneven depending on how familiar dispensary staff was with a product. It wasn’t the best environment for low-dose options.
“Most brands from the get-go have said, we think people want a lower dose edible,” von Pfetten says. “And then the struggle has been getting dispensaries and the general industry on board with selling them at that price point. The hemp-derived market allowed brands to sell the products that they always wanted to make direct-to-consumer.”
And despite big investments in retail design, dispensaries remain alienating for some shoppers—or just inconvenient. “The experience that retailers are providing is not speaking to individuals,” Cozzolino says. Meanwhile, gas stations and corner stores have also begun to sell these products, leading to confusion about what is actually being sold and how safe it is.
“This is still such a young market that we don’t yet have a good sense of how consumers are processing the difference between these two products,” Kagia says, referring to hemp-derived THC and marijuana-derived THC.
Von Pfetten compares the public level of knowledge about the cannabis industry and all the products available to skincare in the 1960s. “If you talked to women about AHAs, retinol, salicylic acid, and hyaluronic acid, I think most women would be like, ‘What the fuck are you talking about? I use cold cream,’” she explains. “We are just barely getting to that point in cannabis. People are like, oh, weed gets you high, but then you start talking about CBD, CBG, and terpenes and PHC. So there’s all this education that needs to happen in order for customers to really understand the benefits of the products, and a lot of that education is happening online.”
[Screenshot: Edibles.com]
In addition to direct-to-consumer sales, online shops specializing in edibles, like Gossamer, are now entering the marketplace to balance a trustworthy, reliable retail experience with convenience. “You still need some guardrails,” von Pfetten says, noting that a fully DTC market isn’t sustainable since brands need multiple points of discovery. “How do I know that this is vetted and curated?”
Edible Arrangements, the fruit basket company, launched Edibles.com, a marketplace for hemp-based THC products in March. It now sells to customers in Texas, which has not legalized recreational cannabis, and is using its existing franchise locations as delivery hubs. It essentially layered another product onto its logistics infrastructure. It plans to expand to Florida, the Carolinas, and Georgia next. Soon, Edibles.com will also build a physical retail location in Atlanta.
“An interesting strategic thing for us to solve is how do we alleviate some of the barriers to entry and how do we give trust and education to our consumers that will then translate into permission to say, ‘You know what, maybe I will try these products,’” says Thomas Winstanley, the chief marketing officer for Edibles.com. “Because if it’s coming from Edible Brands, then maybe I can take it a little bit more seriously than what I see at a gas station.”
[Photo: Rose]
The Complicated Future of Hemp-Derived Edibles
While hemp-based edibles continue to gain popularity, some states are beginning to regulate the product, citing public health concerns. Meanwhile, cannabis interest groups are lobbying the government to regulate hemp-based products and “close the loophole” in the Farm Bill, as U.S. Cannabis Council (USCC) Executive Director Edward Conklin wrote in a letter to Congress last year. The alcohol industry is also lobbying for more restrictions on hemp-based edibles.
As states roll out more regulations around hemp-derived THC, the online shops and brands have stopped shipping to them. In 2023, Washington State created a new law that said any product containing THC is considered cannabis and must be sold in licensed dispensaries. In September of 2024, California enacted temporary emergency regulations to ban hemp products with detectable levels of THC and recently extended the policy to June 2025. In New York, where edibles constitute 15% of licensed cannabis sales, there are now potency limits on the sale of hemp-derived edibles. Anything over one milligram per dose, or 10 milligrams per package, must be sold in a dispensary. According to Kagia, New York set the limits based on potential intoxication risk.
Kagia hopes that there is more clarity on the federal level about the production and distribution of hemp-derived THC products as a matter of public health and safety and for business efficiency reasons, too.
“It would be unfortunate if we ended up with another patchwork national model for hemp-derived products just as we have for the adult use ecosystem,” he says. “I don’t think it serves the cannabis economy writ large to have these bifurcated models where functionally the same products can be sold in one context but not in another. And so we are looking forward to robust discussion with our national lawmakers on the governance of hemp-derived cannabinoids moving forward.”
Cannabis companies are cautiously watching the space. Von Pfetten believes that dispensary customers will and should continue to shop in licensed facilities for high-dose edibles but “as long as the right guardrails in place are in place in terms of shipping, age gating, and vetting, someone should be able to buy a one-milligram or a two-milligram edible online or receive it direct in a store.”
To Cozzolino, the regulatory discussion about low-dose edibles is missing the fact that these products are about a culture of cannabis, not intoxication. “If the people regulating [cannabis] try to force us back into a three-tiered system, then they’re inhibiting that and ultimately they are decreasing the value of what people in the world can experience with cannabis,” he says.
So while low-dose edibles might be the future of cannabis, anxiety about the category looms. Luckily, there’s a gummy for that.
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