Where to Operate? Choosing the underground cannabis industry or the regulated one

Where to Operate? Choosing the underground cannabis industry or the regulated one

Countries around the world have regulated cannabis, and some of them even offer medicinal cannabis in a similar way they do with pharmaceutical drugs. Yet, none of these countries have created an ideal industry structure that paves the way for sustainable growth and success.

In some countries, like Russia or Saudi Arabia, cannabis is still completely illegal. At the same time, other countries have varying levels of legality for consumption. Some countries, like Argentina have decriminalized the plant for recreational purposes. Still others, like Canada, have fully legalized cannabis for recreational use but regulate it under the same lens as alcohol.

With so many different markets opening up in different ways, people want to know what is better: operating in an unregulated industry, or in a regulated one?

A challenging environment

Working in the underground cannabis industry brings challenges unlike any other, like navigating around the law and managing a growing customer base with limited resources. The regulated cannabis industry faces its own challenges as well, with increased regulation complicating operations and leaving existing businesses feeling overwhelmed. Strict laws around advertising and lab testing have made it difficult for businesses that are just entering this government-controlled system to succeed. No matter what sector of the cannabis industry you find yourself in, challenges are sure to arise and will require hard work, determination, and clear focus if you want to thrive.

Access to capital

Businesses in the underground cannabis industry face a tight squeeze when it comes to accessing the resources they need. Raising capital to invest in anything of scale or creating any form of credit is incredibly difficult. The situation becomes even more complicated when it comes to moving from the unregulated space into regulated markets. Despite public perception that businesses have access to unlimited capital and credit when working with legal cannabis, firms are often frustrated when trying to access traditional banking or financial institutions. There are, however, an increasing number of non-traditional options available for companies looking for financial backing or loans. With guidance from qualified experts, business owners can be directed towards creative options which may help them weather this challenging economic climate and build successful businesses in a changing market.


Security is a top concern in the underground cannabis industry due to the potential for serious criminal charges. Those in the business prioritize security as a matter of survival. Conversely, the regulated cannabis industry faces fewer legal consequences, but still must comply with federal and provincial laws to maintain a license and avoid regulatory penalties. Adhering to safety laws and standards is just as important as avoiding law enforcement.

Product Regulation and Safety

Shopping in the underground market can seem tempting due to lower prices, but it’s important to be aware of the risks involved. Consumers have no way to know for certain the quality and safety of the products they are buying, which could put them at risk of consuming unsafe goods. When it comes to buying items in a regulated market, consumers have peace of mind that these products have been held to high standards. They are monitored regularly by regulatory bodies, meaning that users can trust that whatever they’re consuming is safe and has been produced according to best practices. Shopping in a regulated market definitely pays off when it comes to keeping your health and safety a top priority.

Product Innovation

Product innovation happens all the time and the underground market serves as an excellent platform for entrepreneurs with unique ideas to test out their latest creations. However, once those products enter the regulated market, they must adhere to a number of strict rules and regulations in order to remain available. These include making sure that dosages, ingredients, methods of preparation, packaging, and even labeling parameters are all congruent with official requirements. In other words, entrepreneurs must conform to a certain framework if they want to keep their creations on the shelves and make them available to customers. Fortunately, innovation is alive and well despite these strict regulations – creativity always finds a way!

A man is seen cooking and experimenting with candy
Fritz’s founder Ari Cohen conducts much of Fritz’s initial R&D in his own home candy workshop.

Connecting with Customers

Underground producers have the amazing advantage of being able to directly connect with their customers, learning firsthand about product development, use cases, and customer perspectives. This is helpful because it enables them to make changes quickly in order to give their customers exactly what they need and want. On the other hand, regulated producers may have limited ability when it comes to engaging with consumers regarding effects, usage, and so on. This is due to restrictions on marketing or even fundamental differences in the way they do business. Because of this lack of access to customer feedback and insight, it can be more difficult for regulated producers to refine and improve their offerings over time based on customer needs. This can result in a less perfect product experience for their customers.

Fritz’s founder Tabitha Fritz stands in front of a market table in 2017.


The cannabis industry is at a crossroads. As the number of countries legalizing cannabis increases, each jurisdiction must determine just how much regulation is right. There are pros and cons to any regulatory scheme.  If your company is thinking about making the transition from operating in an unregulated environment to a regulated one, we can help. We have the experience and knowledge to guide you through this process so that you can make the best decision for your business. Contact us today to learn more about how we can help.

The Truth about dosing in Illicit vs Legal Edibles

The Truth about dosing in Illicit vs Legal Edibles

In 2021, New Brunswick’s provincial research organization found that many samples of illicit cannabis edibles were greatly underdosed and contained contaminants that would not be allowed in the legal cannabis market.

As part of a recent research study, the RPC sent multiple packages of six types of illicit edibles to a lab for potency, microbial, and contaminant testing. At the same time, the agency tested samples of five types of legal edibles from Cannabis NB, the provincial retailer in New Brunswick.

When they reviewed the test results, the researchers found significant differences between the regulated and illicit products they reviewed. First, the legal products were free of contaminants such as microbials and pesticides while the illicit products weren’t. In a regulated production shop like Fritz’s, all of our ingredients and inputs are tested for microbials and heavy metals before we ever add them to a batch.  We also periodically test our finished gummies to ensure we’re not adding any contaminants in during production, something we’re not required to do, but that helps ensure every gummy we sent to market is of the highest quality.

Second, the researchers found that legal products were safer and more consistent. Every gummy we make is traced throughout our entire production process, from the time it is nothing more than raw ingredients until the time it lands at another licensed facility. And when it comes time to package the gummies, we’ve got a strict weight range that we adhere to, making sure that every gummy we ship to market is the right size.

The third area that researchers found major variation in was cannabinoid potency.

The Over/Under on Potency Claims

When it comes to edibles, the regulations allow for different tolerance limits based on what the product is dosed at.  An edible with 2mg to 5mg of THC must be within 80% -120% of the dose; an edible with more than 5mg must be within 85% -115% of the dose. Practically, this means that a 5mg edible could actually be dosed anywhere from 4mg to 6mg. A regulated 10mg edible could actually be dosed from 8.5mg up to 11.5mg.

In the research study, all of the illicit edible products tested would not meet this specification. Dosing accuracy among these packs ranged from 23% of expected cannabinoid potency to 38% at best!

For the illicit products, dosing accuracy ranged from 23% – 38%.

Of the legal products, one (Legal 5) would not meet specifications. Legal 5’s potency tested at 67% of the reported amount, while the other legal products accuracy ranged from 86% to 105%.

For the legal products, accuracy ranged from 67% – 105%.

Researchers also noted that Illicit edible packages were not compliant with cannabis regulations. They were lacking security features, were colorful, had illustrations of well-known cartoon characters and imitated popular brands of candy products. This is an example of how Health Canada’s unnecessarily restrictive regulations on packaging force consumers to the unregulated market to access fun packaging that puts kids at risk.

Fritz’s Co-Founders on Dosing

We’ve spent a lot of time over the past few years thinking about and experimenting with edible dosing. From our very first estimates of the THC in our products, to our recent calls for Health Canada to increase potency limits on edibles, we’ve spent the last few years constantly considering, eating, and sleeping (under the effects of) cannabis edibles. In fact, we’ve got a bird’s-eye-view and a unique perspective to share. Here are some of our thoughts.

Ari:  When we first started producing and selling edibles years before legalization, there were no testing facilities available to us. This, of course, presented a challenge when we were trying to figure out dosages for labelling products. This was back in the pre-distillate days – when almost all edibles were made with old school cannabis oil that came from infusing the flower right into the oil that was then used to make edibles. Quite frankly, no one had a clue what actual dosages were. 

So, we did our research. We went out and tried every legacy edible available (shoutout Hamm’s Hash!) and used those as a benchmark for labelling our dosages accordingly.

But we were way off, and so was everyone one else. We were so very wrong. 

We assumed the gummies we were making were 75mg of THC each, based on the effects as compared to other edibles with the same dosage listed. Our cereal bars we estimated to be at 125mg of THC.

We originally estimated our cereal bars to be dosed at 125 mg of THC. Not even close.

And as soon as testing became available for edibles, we sent our stuff out to a lab in Vancouver and were SHOCKED by the results. The cereal bars we had been listing and labelling at 125mg each were actually….24mg. This created an issue, both in terms of marketing and selling our products and getting the information out there. We realized that if WE didn’t know what proper dosing was, the average consumer of our products wouldn’t know either. 

Surely people wouldn’t buy our edibles if we started labelling them at 20mg. Not with many other products out there claiming to be 5-25x that strength. But we also believe in transparency and education and honesty, so we knew we had to do SOMETHING.

Transparency is the Solution

Tabitha:  First, we reformulated our products with proper dosing. This meant understanding the dosing that was coming from the infused coconut oil we used, as well as beginning to use distillate, which we could get tested, and use to precisely dose our products. Second, we changed our packaging to provide more transparency into our dosing. 

We changed our packaging to give the customer more information, and highlighted the actual THC present.

Finally, we launched a social media campaign to tell our customers the truth about what we had found out, and what we were going to do about it. We told them that we had been as misinformed as they were, but now that we knew the truth, we were going to work to provide them with exact dosing and transparent information, even if that meant our products looked like they were lower dosed than other producers’ products. But we believed that with time, consumers would discover the truth about the quality of our products and the accuracy of our dosing by trying them and comparing them to other edibles. In our experience, the market usually regulates itself that way.

Regardless of knowing we were doing the right thing we weren’t sure how it would be received. In fact, we probably did lose some sales to other producers who claimed to have higher dosed products than us at comparable prices, but ultimately, the customers who continued to purchase from us were very grateful to know what they were getting, to have more information, and to be better able to choose the right products for them. 

Many of our customers told us they were grateful to learn more about accurate dosing in edibles.

Ari: To our surprise, we started selling even more cereal bars and gummies. People appreciated and responded to honesty in dosing and labelling. And sure, we still got plenty of people who came by our Green Market booth, picked up a product, and scoffed as they put it back down. “Bro – how come you charging $10 for a 40mg edible when this other table is selling 300mg edibles for the same price?”  

Cereal bar samples at a Toronto Green Market table.

This problem still exists and runs rampant in the legacy market. Pick up any pack of 3000mg candy from an illicit dispensary and compare the effects with a pack of our 10mg Hash Rosin gummies, and you’ll quickly see that inaccurate dosing in the legacy market is one of the biggest issues for many consumers. Many are using prefabricated packs of “Stoner Patch Kids” or “Weedeoes” with familiar logos for their products but are using unknown amounts of questionable inputs to infuse their edibles. It’s a crap shoot for consumers every time they buy unregulated edibles. They don’t know what they’re going to get. 

Tabitha: In Canada, licensed producers have to follow Health Canada’s Good Production Practices for cannabis. This means that every single input we use and every single batch of edibles we make gets tested to make sure they’re safe, free from contaminants, and accurately dosed.  We believe our customers should get what they pay for, and we’re just as committed as always to transparency and education.

At the end of the day, we’re cannabis consumers ourselves, and so everything we do is with the consumer in mind. We’ve always been committed to offering our customers accurately dosed, delicious, and consistent products, a legacy that has followed us to the regulated space.

Fritz’s favourite flavours

Fritz’s favourite flavours

One of our favourite parts of running Fritz’s over the years has been experimenting with different flavours and combinations.  We’ve tried so many different flavours, with varying levels of success, and have found some classics that seem to please everyone, as well as some wild and wacky flavours that have gathered their own cult following.

Gummies and Soft Candies

One thing we’ve discovered is that a few “buckets” of flavours seem to work for different types of products.  When it comes to gummies and soft candies, fruity and berry flavours are always popular. Flavours that really POP, like blue raspberry and grapefruit work well because they almost “dance” across your tongue while you’re chewing the candy.  At Fritz’s, we make our gummies with a low-temperature German confectionary method that results in a chewy texture.  We think gummies ought to taste like gummies! Because of the chewy texture, the gummy frolics inside your mouth as you chew it, and we focus on making sure every flavour we choose is delicious. highlighting the flavour of the cannabis inputs we use, and disguising any aftertaste that might linger.

We’ve also made gummies with classic candy flavours like red vines and sour lemonheads.  The nostalgic flavours of childhood candies bring consumers right back to the sweet memories they have of childhood, but this time with a more adult offering.  There’s something especially delightful about eating an infused version of a flavour you remember from being a kid, and our customers always responded positively to confectionary flavours.

We’ve also done some REALLY funky flavours with gummies, including horehound, cherry blaster, and one ill-fated batch of “Buckley’s Gummies”, a double-strength batch that we forgot to add any flavouring at all to…they tasted awful, but they worked.

Lollipops and Hard Candies

Many of the same flavours we used for gummies translated perfectly to lollipops and hard candy, and the medium of boiled sugar gave us more room to work with different flavour combinations than the ones we used in gummies. The high-temperature cooking method meant that terpenes wouldn’t be retained, so we used only distillate and isolate in our hard candies and not hash rosin, or other full-spectrum inputs.

We started branching out with unique flavours and creating novel combinations that were sometimes better in theory than in practice.  (Bergamot Yuzu might SOUND like a good idea, but trust us, it’s not.) Fruity flavours work just as well for hard candy as they do for soft candy, and we made lollipops in flavours like lychee melon and guava.  Spicy flavours were another bucket that lent themselves well to hard candies, and some of our more popular lollipop flavours were pineapple jalapeno and cucumber serrano, both very spicy choices that a distinct subset of our customers loved!

Naturally, timeless candy flavours translate perfectly to lollipops, and bubble gum and cinnamon hearts (another spicy flavour) were very popular offerings for both lollipops and hard candy.

We also loved creating seasonal flavours and products, including Pumpkin Spice Lollipops (our own version of the PSL) when fall rolled around each year, Champagne-flavoured lollipops at New Years, and Christmas blends like Cranberry-Lemon, Pomegranate-Orange, and Cranberry-Plum during the winter holidays.

Choosing flavours in the Legacy Market vs. the Regulated Market

Our most popular flavours were the ones we brought to the regulated market when we made the transition.  We brought over Raspberry Lemonade, Peach, Mango, and Strawberry Kiwi because they were some of our most popular flavours in the Legacy market.

One thing we miss about back then was being able to experiment with new flavours, take them to market, and get quick feedback on them directly from our customer.  When we sold our products at the Green Markets or at the Kensington Flea, we were able to connect face-to-face with our shoppers who told us exactly what they thought of each (uninfused) flavour we had out for samples, and every infused flavour we sold from our table.

Not just that, but we could look at the weekend’s sales data and decide on a new flavour on Sunday night, get the flavouring ingredients on Monday, cook the batch on Tuesday, demold it on Wednesday and leave it to cure through Thursday, package it on Friday, and sell it on Saturday.  Now, any new flavour we want to offer must first go through a minimum 60-day Health Canada review process before we can bring it to market.  Every submission (and therefore every flavour) we submit includes a significant amount of preparation and administrative work along with it.

We really do miss the days when we could just whip up some new flavour combinations to see what the market would support!

How we learned to choose the right inputs

How we learned to choose the right inputs

When it comes to edibles, the purity of the cannabis inputs you use is very important! Inputs that haven’t been well-refined can contain fats, waxes, lipids, and other bad tasting plant material. And because edibles highlight the flavour profile of the extract used, a cleaner input means a better taste.

One of the nicest differences we’ve discovered between the Legacy market and the regulated market is our newly found access to clean and pre-tested inputs. There are some things we miss about operating underground, but we DON’T miss having to meet someone in a Tim Hortons parking lot for distillate, or finding out we were lied to about input potency, or having a “friend” replace the kg of CBD we bought from him with rock salt before completely disappearing. (All true stories!)

Coconut oil infusions put flavour at the forefront

When we first started making edibles, we used our slow cooker to infuse coconut oil with shake that we purchased from a local cannabis clinic. Ari would decarb the weed in our oven and then mix it with coconut oil in giant coffee cups. We placed the cups in a water bath in our slow cooker on high, and after a few hours, the greenish-brown, thick, and smelly oil was ready to use.

Ari hugs bags of shake that would be infused into coconut oil in the kitchen of our home.

The coconut oil flavour helped to dictate the first products we made, and we focused on making things that would cover up any bad tastes in the crude oil, and highlight the oil’s cannabis flavour at the same time. Dairy-free brownies were our first product. People loved them and we still make the (infused AND uninfused) recipe at home.

We also used infused coconut oil to make other snack products, including Chex Mix (using Tabitha’s family recipe) and granola. We also made canna caps with the oil, which gave our customers the benefits of cannabis oil without having to taste its earthy flavours.

Granola was one of our first products because it’s sweet and savory flavour worked well with infused coconut oil.

THC distillate makes dosing easier

When distillate first became available (at $40/gram!) dosing became much quicker, easier, and more efficient. A pure input like distillate is more refined than an infused oil, giving it a higher cannabinoid percentage. This means that producers can use less of the input to get their target cannabinoid ratio, ultimately leading to a cleaner taste. We still use distillate today in some of our products.

THC caps made with distillate (left) are much lighter in color than caps made with unrefined infused coconut oil (right); the unrefined oil still contains plant matter, affecting the color, consistency, and taste.

Because we no longer had to work with high volumes of coconut oil just to get our desired dosage, we were free to experiment with other products like gummies, lollipops, and caramel corn. Distillate is made using a supercritical CO2 process that extracts waxes and chlorophyll, along with cannabinoids, so it must be followed up by an ethanol extraction process called “winterization” that removes most, but not always all of those unwanted compounds. We quickly learned that while it was much easier to work with distillate, the quality of the distillate we used greatly affected the taste of the edibles we made. Some of the bitter taste could be offset by using the right flavour profiles, but we learned that ultimately, producers who cut corners and use cheap distillate pay for it in the taste and quality of their edibles. Quality in means quality out.

Using CBD isolate

Some of our customers told us that they preferred products with no THC, so once we were able to get CBD isolate, we began adding CBD products to our line. Our most popular CBD edibles had a sour flavour profile that helped offset the bitter taste of the pure cannabinoid isolate, or were caps that hid the flavour entirely.

CBD caps are a popular option for consumers looking to avoid THC.

Hash rosin edibles

Another type of edibles input is hash rosin. Hash rosin comes from pressed bubble hash, and can be considered a “full-spectrum” input. This is because unlike inputs such as distillate or isolate, it contains the all the cannabinoids from the plant and many of the terpenes too. Bubble hash is made using ice water and agitation, and its low temperature process preserves many of the terpenes present in the plant at the time it was harvested. Because no solvents (other than water) are used, the result is a clean and tasty product that’s free from butane, ethanol, or other things that can affect the taste and effects.

Bubble hash contains the loose trichomes from the cannabis plant.

Once the bubble hash is made, it’s pressed into rosin at a temperature that’s kept as low as possible, and decarboxylated over a long period of time to keep the temperature low. Ari makes our Fritz’s gummies using traditional German confectionary methods that use low heat to ensure we get maximum terpene levels in our hash rosin gummies.

The result is a gummy that tastes a bit like weed, and whose effects are much different than other kinds of edibles. In fact, some people tell us that our hash rosin gummies feel twice as strong as our distillate gummies. Let us know what YOU think about our hash rosin gummies!

Fritz’s It Take Two to Mango HashCo Hash Rosin gummies are made using low temperatures and full-spectrum HashCo hash rosin.
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