Maryland may not be one of the largest cannabis markets by overall sales, but as more mature markets have seen significant declines from price compression and illicit competition, Maryland’s medical cannabis market is poised for growth, especially after the recent passage of adult-use legalization in the 2022 Midterm elections. As the year draws to the close, we’d like to take a minute to highlight the performance of the exciting cannabis market in the Bay State, including pricing dynamics, consumer trends, and brands to watch.
Checking in: Maryland Cannabis Market Performance
Maryland’s medical cannabis program has seen strong growth since the start of legal sales in late 2017. Legal medical cannabis sales totaled ~$550 million in 2021, a ~20% increase over 2020 sales. Voters in Maryland got the chance to make their voice heard on cannabis this year as Maryland Question 4 made its way to the ballot. The ballot question, which allows possession of up to 1.5 ounces of cannabis, paves the way for an adult-use industry and allows Maryland residents to grow two plants at home, passed with 65% of voters supporting the measure.
Like most developed cannabis markets, Maryland has seen retail cannabis prices fall significantly since Q3 2021. Between September 2021 and September 2022, equivalent average retail cannabis prices fell ~35% in the Maryland cannabis market, higher than the price compression seen even in some more mature markets. While dollar sales have stagnated largely driven by price declines, equivalent unit sales have continued to grow, reaching an all-time high in September 2022.
When we look at cannabis markets that have recently enacted adult use cannabis sales, there are cannabis markets that are more mature (such as Arizona) and with much larger populations (like New Jersey), but Maryland is still a cannabis market to watch leading up to the launch of adult-use sales. The market has been under comprehensive regulation for the whole life of the medical program, and with over 100 storefronts spread across the state, Maryland has much better retail cannabis availability than New Jersey did when it launched sales earlier this year. While New Jersey had less than one retailer per capita at the launch of adult-use cannabis sales, Maryland had roughly four times this per capita at the time of the 2022 midterms.
Maryland Cannabis Consumer Insights and Shopping Trends
As the stigma around cannabis consumption wanes and legal access continues to improve, the cannabis consumer pool in Maryland is constantly evolving. Per BDSA Consumer data, past six-month cannabis consumption in Maryland has more than doubled since the Spring of 2018, with 40% of the population claiming past six-months consumption of cannabis by Spring 2022.
- Consumer participation has already seen huge growth, and the state has room for more growth:
- 40% of adults 21+ claiming past six-month cannabis consumption is nothing to sneeze at, but aggregate data from other markets suggest that the Maryland cannabis market will likely see a significant expansion of cannabis consumption after adult-use sales launch.
- Across all adult-use states, BDSA data show that ~50% of adults 21+ report consuming cannabis in Spring 2022, up from ~30% in Spring 2018.
- BDSA data also show that new adult-use cannabis markets are seeing cannabis consumer rates grow faster than ever. Arizona, which launched adult-use sales in January 2021, saw its consumer participation rate grow from ~40% in Spring 2021, to ~55% in Spring 2022.
- Maryland cannabis consumers aren’t afraid to spend, especially for quality:
- BDSA Consumer Insights data from Spring 2022 show that Maryland cannabis consumers purchase more cannabis per trip ($113 vs. $95), and more cannabis per month ($154 vs. $124) than the average of consumers across all other adult-use states.
- Even though the market is seeing price compression, BDSA Consumer Insights data show that Taste/Flavor and High THC Content are the biggest influencers of consumer product choice. BDSA data show that ~4% more cannabis consumers in Maryland are willing to pay more for quality than in the aggregate of adult-use markets.
- As access has improved, more consumers are buying from dispensaries:
- Between Fall 2018 and Spring 2022 the share of cannabis consumers who report having bought from a medical dispensary has exploded, from 14% to 43%.
- This growth in dispensary shopping has been paralleled by significant declines in the share of consumers who report buying cannabis from friends and family. The share who report purchasing from friends and family fell from 72% in Fall 2018 to just 44% in Spring 2022.
Cannabis Brand Landscape and Best-Selling Cannabis Brands in Maryland
Maryland has become a well-established cannabis market, but the state still has plenty of opportunity for growth. One area in which this becomes clear is looking at the state’s brand landscape. As of September 2022, BDSA Retail Sales Tracking data show that the state was home to only 108 brands, with the number of active brands seeing little movement since late 2021. While this may suggest that the Maryland cannabis brand landscape is saturated, the move to adult-use opens opportunities for more brands to launch or expand into the market. As a point of comparison, the mature Arizona cannabis market had ~180 total brands in September 2020, about 4 months prior to the launch of adult-use. By September 2022, the total number of cannabis brands in Arizona had grown to over 250, suggesting that there will be plenty of space for newcomers once adult-use gets up and running in Maryland.
Several of the largest MSOs in the country have gotten in early in the Maryland cannabis market, but a look at the top cannabis brands in the market shows that six of the top ten brands by dollar sales in Maryland in September 2022 were non-MSO brands. While the market will likely see more consolidation as time goes on, this shows that there is clearly space for independent, homegrown brands to hold a strong position in the market, especially considering that the top two brands by dollar sales in September 2022 were homegrown Maryland cannabis brands.
Looking at the top selling cannabis brands across different categories gives us a view into the uniqueness of the Maryland brand landscape. The best-selling cannabis concentrate brand in September 2022 was AiroPro, a subsidiary of New York Based Airo Brands which has used their dominance in the Maryland vape sector to be the dominant concentrate brand overall, bringing in ~12% of concentrate dollar sales for the month. When looking at the edible and flower categories, vertically integrated Curio Wellness claims the spot for best-selling edible and flower brand for September 2022.
Where is The Maryland Cannabis Market Heading?
BDSA forecasts adult-use sales to begin in Maryland in 2024, reaching $215m that year. Adults will be allowed to grow and possess cannabis beginning July 1, 2023, but lawmakers will need some time to cement adult-use retail regulations—likely beginning that discussion in January 2023. The Maryland market is expected to grow to bring in ~$1.2 billion in annual legal sales in 2026, barring any unexpected delays with launch or regulations.
While Maryland is not expected to become the biggest market in the region, the state is expected to make huge gains with the addition of adult-use and become a key cannabis market of the East Coast region that is expected to see some of the strongest growth out to 2026. Though it may be dwarfed in population by nearby New Jersey and New York, Maryland has the advantage of moving into the adult-use era with a well-regulated, robust medical market, ready to service a growing and enthusiastic cannabis consumer base.