Legalization changes everything. And in 2018, legalization of cannabis, both for medical and adult-use is playing a huge role in influencing where the industry is headed – with production, with consumption and everything in-between. It transforms cannabis from something reminiscent of dried oregano in a plastic bag into a smorgasbord of products, complete with elaborate store displays, state-regulated testing and high-tech facilities and laboratories focused on the plant’s manifold intricacies.
Once states pivot to legal marijuana sales, trends quickly root. With more than four years of harvesting and analyzing cannabis consumer sales data — including 800,000,000+ retail transactions — as well as conducting wide-ranging consumer research, BDS Analytics offers the most in-depth analysis of this complex marketplace. Here are our Top 10 Budding and Burning Cannabis Market Trends for 2018.
- Consumers Drive Evolution
Cannabis enthusiasts cover more ground than consumers in most industries. Among other things, the industry includes customers who buy cannabis for both medical and recreational pursuits. These consumers are driving research and development, as well as product and brand proliferation.
- Affordability Arrives
In Colorado and Washington, the states with the most mature legal recreational marketplaces, prices for flower and concentrates have declined dramatically, and in Oregon and California flower prices are headed down, while concentrate prices remain steady. As competition rises, prices tend to dip.
- Brand Surge
Consider: In Colorado in 2014, brands captured 19 percent of the market. By November of 2017, however, the brand share of the cannabis market had doubled, to 38 percent. Meanwhile, in Colorado, Washington, Oregon and California the top 5 edibles brands in each state own more than 40 percent of the market, and in Colorado and Washington the top five concentrates brands capture more than 70 percent of the market. And individual brands have the potential to achieve explosive growth — sales for one brand in Oregon rose 19,179 percent between 2016 and 2017.
- Consumers Demand Variety
The market share for the top-selling product in Colorado, Washington, Oregon and California does not rise above 4 percent. Brands must remain highly attuned to their customers and offer a wide range of products to achieve and maintain marketplace triumph. Depending on one winning product is not enough to carry a brand.
- Novel Newbies
Legalization always creates consumers who are new to cannabis, and their profiles and habits stand apart. The newbie skews towards women between the ages of 25 and 44, and half say they are in the market to explore medical applications. Among edibles consumers, newbies are more likely than cannabis veterans to seek low-dose products.
- Beyond the Bong
Consumers inhale, swallow and slather cannabis products, but as markets mature new delivery methods emerge. Sublinguals get applied beneath the tongue, and quickly lead to a buzz. Transdermals usually arrive as patches — consumers place the patch on a body part, and the THC and other cannabinoids slowly enter the bloodstream, for long-term relief. Expect to see increasingly more alternative delivery systems as industry scientists explore the plant in greater detail.
- Form Follows Function
Terpenes? CBD? Cannabinoids? Potent compounds pack the cannabis plant, and brands increasingly leverage them for specific applications, such as sleep, taste and energy. Product development is exploding to the benefit of the consumer.
- All Praise the Nibblers
Some of the top products in different states arrive with 5 milligrams or less of THC per serving. That’s considered low-dose, and the movement towards weed with less wallop is expanding. In Colorado, growth for these products hit 83 percent by the end of 2017. Meanwhile, consumer research reveals that 33 percent of cannabis consumers seek low-dose options.
- Marketing for Mood
As the universe of products grows and consumers become more educated, brands pursue consumers interested in specific effects, rather than just celebrating cannabis in general. The average number of reasons consumers provide for consuming cannabis is eight — including everything from “have fun” to “manage anxiety.” This offers brands a wealth of marketing opportunities. For example, the No. 1 brands in select categories in California and Colorado market for specific effects, like sleep and energy.
- Legal Leads to Luxe
The range of broad retail identities — budget, mainstream, premium and luxury — finds sound footing in legal cannabis markets. And the rise of the upscale cannabis consumer is fully flowering. They enjoy high incomes and advanced educations; live in the suburbs; enjoy the outdoors and fine arts; are physically active; personal care is extremely important for them; shop for organic and gourmet foods; pair cannabis with other products; are fluent in the language of strains and products; value dispensary relationships; and are comfortable with all of the avenues for consumption — inhalables, edibles and topicals. These are dream consumers for many kinds of brands.
Our 2018 trends were influenced and inspired by the collective brain trust of BDS Analytics.