According to research published this spring, the global market for legal marijuana products is predicted to reach $66 billion by the end of 2025. Wow. That is wild. Savvy entrepreneurs and inventors have taken notice.
As a person who loves new products and has a background in the packaging industry, I've been watching the development of the cannabis industry with great interest. Recently, students of my coaching program InventRight who are pursuing licensing agreements for their cannabis-related products have told me they're being embraced with open arms. In terms of obtaining patent protection, the industry is so new that there isn't much prior art to overcome, which is exciting. Because there are so many avenues for these companies to pursue and only so much time, your product must offer a persuasive benefit.
To find out more about the popularity of open innovation among marijuana businesses, I interviewed Arkady Grigoryan, an InventRight student who recently signed a licensing agreement for his pre-roll packaging solution. Because it concerns pre-rolled joints, he expects it to roll out to the two other major markets for pre-rolls, which are cigars and cigarettes. The big benefits of his invention, the RoachPack, are that it is child resistant and allows the smoker to store what's left of their joint in the same package.
"I was inspired by a problem I came across," Grigoryan explained. "You could say I'm a clean freak. When I quit cigarettes and started smoking marijuana, I realized that you don't really finish an entire marijuana joint, but there was really no good way of storing it for later use."
So Grigoryan began developing a solution. The first prototype he made and patented turned out not to be manufacturable, prompting him to hire a firm to help with reengineering. At the firm, he befriended an employee named Jonas Matossian. Like me, Matossian started his career in the toy, game, collectibles, and novelty gift industries doing product development. During his career -- which includes spending 11 years in China overseeing prototyping and manufacturing from ground zero -- he estimated he has worked with hundreds of inventors.
"We always cast nets out. Our philosophy was, we want your invention ideas, so bring them to us first," Matossian told me in a phone interview.
When Matossian switched gears and began working in the cannabis industry a year ago, he brought the same philosophy with him. This fall, he became the director of strategic development for the new cannabis sector of GPA, the global packaging company known for doing design, engineering, and manufacturing in-house. Since it was founded in 2007, GPA has worked with major brands including Case-Mate, Ring, Skullcandy, and Costco.
After observing that the cannabis industry was exploding, Matossian was inspired to start developing his own designs for child-resistant packaging for cannabis products. He knew that beginning in 2020, for example, all cannabis packaging in California would be required to be child resistant. After Matossian met and pitched his concepts to the CEO and president of GPA, he was offered the opportunity to take on a new role.
"GPA wants new innovative ideas and charged me with bringing new child-resistant products to the table," he explained. "The first person I thought of was Grigoryan, having developed his prototype [for a new type of child-resistant pre-roll packaging] in a previous role. I also genuinely believed in his product as a solution."
The RoachPack solves the problem of what to do with the remains of a half-consumed pre-roll using an internal compartment that is airtight and keeps ash debris separate from what's left of the joint. This way, it stays "as fresh as it can be," Matossian told me. When the smoker has finished the joint, the RoachPack also functions as a trash receptacle.
When Matossian brought the RoachPack to GPA, negotiations moved quickly -- largely in part because Grigoryan had already had his design certified as child resistant. Next week, GPA will launch the RoachPack at the Marijuana Business Conference and Cannabis Expo in Las Vegas. It can be made using a range of different materials, including sustainable packaging, and is rolling out in dispensaries over the next few months.
In an interview, Matossian reflected on the benefits of open innovation, the opportunity for creatives in the cannabis industry, and what he wants to see from inventors.
You've worked with independent designers in the past, and now your new position at GPA is to work with inventors, to look for the most innovative ideas.
Matossian: Absolutely. That's the most fun part of the job for me. When you're trying to develop something new every day, sometimes you lose focus on what else is out there. I've always thought that working with inventors would bring some fresh perspective, and, so far, it has. GPA prides itself on working closely with its clients to help make their products better. To get that secondary perspective on what the market needs as well? In my opinion, that's invaluable.
I believe in creating relationships with new people so we can bring new products to market that add to our offerings. I don't see this as a bad thing whatsoever. I would actually like for us to be the first stop for inventors who have a new packaging solution for the cannabis industry. The worst we can say is no and maybe point them in the right direction. And the best-case scenario is that we license the product from them, and hopefully we're both successful with it.
What do you prefer to see when someone is submitting an idea? A prototype, a sell sheet, a video?
I always love to see a prototype or a works-like, looks-like type of model to truly convey the image of the product. But there have been instances in the past where I've worked with inventors when their ideas were just a sketch on a napkin. We would develop the product on the basis of the concept, invest in it to bring it to market, and do all the marketing behind it.
To answer your question, I prefer to see a physical, works-like, looks-like model or prototype, but a video, a deck, anything will suffice as long as it conveys the image and maintains alignment with where we're going as a company as far as packaging. We're happy to work with whatever, see whatever.
When a product comes in, how long does it take for you to get back to that inventor with a yes or no?
Well, for the RoachPack, the licensing agreement was signed within five weeks. So, not too terrible.
Yeah. Tell that to the inventors, though. They think it's really slow.
How important is cost when evaluating an idea?
Cost is always crucial. But the good thing about the cannabis industry and packaging is that the value of the product offsets a lot of the packaging costs, in my experience. For example, when a package of pre-rolled marijuana cigarettes sells for $40, you're not going to balk at a $1 or a $2 price tag on a package that functions the way you want it to and is child-resistant certified.
We've noticed in cannabis that there's less resistance to cost, but as the market's becoming more saturated, people are getting more price-oriented. At GPA, we have solutions for every price point. We can make a package as fancy as the client wants, or we can make it as low-key and simple as they want. Our primary concern is the child-resistant function. How do we make that better and keep expanding on it and taking it to the next level? I think inventors will play a key role in that.
How important is intellectual property?
Very. It's highly important to me. I've come up with products that I shopped around to contract manufacturers and then saw on a store shelf. It's highly frustrating. What can you really do about it, if you're not protected? Some of these inventors, they can't invest tens of thousands of dollars to get patents and do child-resistant testing. The good thing about GPA is that if we believe in the product and it's a great item, we do have the backing to do that. Meaning, we can protect the inventor and the company.
A big part of how Grigoryan got a licensing agreement signed for the RoachPack (keeping in mind that this is kind of a new way of doing business for the company) is because he did make those investments with his own money. He did get his patent protection. He did get his name trademarked. He did invest in initial child-resistant testing. That speaks volumes, especially to a C suite who are kind of distant from what's happening on the ground and would like to see that they're protected. That's less money for them to invest. That's less risk for them to take on.
So, from a corporate perspective, I think that if you're in a position where you can invest more in your product, do it. If you're not, it's not an automatic no, it's not a closed door. It just results in the company's having to invest more, and it may take more time to get the item to market. Because we can't put a child-resistant package on the shelf before it's actually been tested.
It's still such a new industry. A lot of things are still getting worked out. At this point, how I see it is "Adapt, improvise, and overcome."
How important is the relationship-building aspect of a licensing agreement?
I don't think of them as a licensee, us as a licenser. I look at the inventor as a partner. Their success is our success and vice versa. If we're going to invest in patents and marketing material and everything else -- put all that backing behind it -- we absolutely want to see the product succeed. And when an inventor gets his royalty check, seeing that smile on their face is always a great thing. You know what I mean? Who doesn't want more passive income?
Put another way, if an inventor comes to me with just a sketch of a product, and I have to develop that product, that inventor is not going to get a higher royalty rate because the expense is higher. He will still get paid fairly, of course.
I always tell inventors, "Look, the more you do, the more you walk in the door with, the more you get. The more risk you take away, the higher royalties are going to be."
What are inventors doing wrong?
Getting too attached to an idea, taking feedback the wrong way, is something I see. For example, if someone turns you down, that doesn't mean your idea is bad. It just means that maybe it's not a fit. Don't be turned off by being turned away. That just opens 100 more doors for you. You have got to keep grinding and not take any rejection personally. That's the best advice I have.
This is one exciting industry! I will be attending the Marijuana Business Conference and Cannabis Expo in Las Vegas next week as well to report on the opportunities and challenges of open innovation in the marijuana industry.