The emerging retail cannabis sector is entering a new phase of development, shifting from single-state business models and market share, to national expansion
BOULDER, CO — October 29, 2019 — The increasing legalization of cannabis retail products is entering a new phase of development, shifting from establishing sustainable single-state business models and market share, to national, multi-state expansion according to From Dispensaries to Superstores: Opportunities in Cannabis Retail, a new report from Arcview Market Research and BDS Analytics. Currently, however, only four states (Oklahoma, California, Colorado and Oregon) make up 80 percent of the total active retail licenses nationally — a clear indication of the legal cannabis industry’s relative immaturity as a consumer retail channel.
With this imminent shift, the report found that single-state operators are in a prime position to leverage early-market share into broader national expansion while still maintaining margins and fending off new competitors. Concurrently, the percentage of respondents identifying as consumers in adult-use states rose from 31 percent in Q1 2018 to 38 percent in Q1 2019, while consumer rates in medical states rose from 18 percent to 25 percent over that same period.
“New competitors with deep pockets, often using the public equity markets to fund business plans, are aiming for scalable, national chain-building from the outset,” said Troy Dayton, CEO of the Arcview Group. “These players can take advantage of distinct state-based licensing frameworks unlike other mainstream consumer retail sectors and leverage their early market share into broader national expansion.”
The report also found that while federal legalization likely will not have an impact on further statewide legalization, such mainstream adoption will be a primary factor to boost interstate operations and shift consumer attitudes even further.
“The legal cannabis market is poised to grow into a $30 billion industry in five years, with three-quarters of that revenue generated within just 12 markets, which is a huge opportunity for cannabis retailers,” said Tom Adams, Arcview Market Research editor in chief and BDS Analytics managing director. “For now, that upside is theirs to lose as federal prohibition keeps mass merchants and e-commerce giants at bay.”
Other key findings in From Dispensaries to Superstores: Opportunities in Cannabis Retail include:
- Currently, licensed retail operations have ample prospects for sustained growth beyond 2024, driven by populous soon-to-be legal medical-use states like Texas, and coming adult-use states like Florida.
- Consumers in adult-use markets are still much more likely to buy cannabis from storefront dispensaries or delivery services. 54 percent of consumers in adult-use states reported buying cannabis from a recreational dispensary in the past six months, while 26 percent reported purchasing from a medical dispensary and 10 percent reported buying from a delivery service.
- 71 percent of consumers in adult-use states and 37 percent in medical states describe cannabis consumption as recreational or social, while 56 percent in adult-use states and 53 percent in medical states cite health or medical reasons.
- Enormous product opportunities lie outside traditional inhalables. The “topicals and other cannabis products” category makes up very little of current spending, however, the price points commanded by those products is significantly higher with the topical average selling price at $28.80 in the second half of 2019.
The 35-page report is available for $297 or as part of the Cannabis Intelligence Briefing Series subscription service from Arcview Market Research and BDS Analytics for $1,975.
About Arcview Market Research:
Since 2011, Arcview Market Research has published over 20 reports analyzing and forecasting the rapidly evolving cannabis space. Arcview’s flagship annual report, The State of Legal Marijuana Markets has become the industry standard for market analysis and data in the sector. In 2017, Arcview Market Research partnered with BDS Analytics to add more robust point-of-sale data and consumer insights to its offerings. Arcview Market Research is a project of The Arcview Group. Founded in 2010, The Arcview Group is responsible for a number of groundbreaking ventures in the cannabis industry. The Arcview Investor Network has helped more than 1500 accredited investors place more than $270 million behind more than 200 companies. In 2015 Arcview became a partner in CanopyBoulder, the first seed-stage mentor-driven business accelerator. Arcview is also co-founder of Cannasure Insurance Services, the leading provider of business insurance to the cannabis industry. Forbes Magazine recently named Arcview among the top five financial firms in the cannabis sector.
About BDS Analytics:
Headquartered in Boulder, Colo., BDS Analytics provides businesses with comprehensive, actionable, and accurate cannabis market intelligence and consumer research. The company provides a holistic understanding of the cannabis market by producing insights from dispensary point-of-sale systems through its market-leading GreenEdgeTM platform, driving consumer research with its Cannabis Insights Group, and generating market-wide cannabis industry financial projections through its Industry Intelligence Group. To learn more about how you can utilize BDS Analytics’ superior market research, please visit www.bdsanalytics.com.
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