NEW REPORT: Cultivation Demand for Cannabis to Triple by 2022, Driven by Booming Demand for Concentrates and Edibles
BOULDER, Colo. — November 13, 2018 — Total worldwide cultivation demand for dried cannabis flower is forecast to more than triple from 2.1 million pounds in 2017 to 6.9 million pounds in 2022, according to the “Flower: The Foundation of the Cannabis Industry” report released today by Arcview Market Research in partnership with BDS Analytics.
That growth in cultivation demand will largely be driven by consumer demand for edibles, concentrates and other cannabis-containing products. Consumer spending on raw flower as a commodity is expected to continue shrinking as a share of total United States dispensary sales during that time period. Even so, retail flower sales are forecast to grow at a compound annual growth rate of 14.8 percent to reach $8.5 billion in 2022.
“While the market share for flower is dropping, the rapidly expanding cannabis market means consumer spending growth rates for flower will continue to be robust,” said Troy Dayton, CEO of the Arcview Group. “After all, the packaging and branding revolution that has transformed and supercharged the growth of concentrates and edibles is only now spreading to the flower category and is likely to drive its continued growth.”
The report analyzes the phenomenon of exploding demand for cannabis at the same time that wholesale pound prices are down across all legal cannabis markets. Most dramatically, Oregon’s Spot Index fell 52.3 percent, from $1,771 per pound in the opening week of 2018 to $844 per pound in the week ending July 27, 2018, according to Cannabis Benchmarks data cited in the report.
“Declining wholesale prices will put pressure on growers to adopt the efficient practices developed in the broad agricultural economy over recent decades,” said Tom Adams, Editor-in-Chief at Arcview and Managing Director of BDS Analytics’ Industry Intelligence Division. “This is a key opportunity for those cultivators who can adapt; meanwhile falling raw material prices will support profitability in every other sector of the business.”
The report includes market-specific cultivation-demand data and projections to 2022, analysis of state and federal legislation’s effects on the industry, and insights into the rise of branded strains based on BDS Analytics’ GreenEdge point-of-sale tracking. Additional key findings include:
- In California sales of branded flower saw a significant jump in share when new packaging rules came into play in July 2018. That month 41 percent of flower sales were branded, up from only 13.5 percent in June
- As happened earlier with edibles and concentrates, new lines of branded flower are constantly appearing, shrinking the combined share held by the top-five brands from 75.9 percent in 2014 to just 20.7 percent in the first half of 2018
- Despite the activity in flower brands, generic flower strains continue to dominate the market. Blue Dream continues to be the best-selling cannabis strain in most markets. In 2017 Blue Dream accounted for $12.5 million of Colorado flower sales
- The United States will constitute 85 percent of global demand while Canada will make up 10 percent in 2022; an estimated 61 percent of the demand will come from adult-use channels
- As with concentrates, the share of cultivation demand for processing into edibles will grow steadily as the category continues to gain share of consumer spending. In 2017, 143,902 pounds of raw flower were processed into edibles, up from 36,127 pounds in 2014. An estimated 360,844 pounds of raw flower will go into edibles in 2022 – a five-year CAGR of 20.2 percent
The 40-plus 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. Purchase here.
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 includes more than 600 accredited investors who have put more than $190 million behind 180 companies. In 2015 Arcview became a partner in Canopy, 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 5 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.
North 6th Agency (for BDS Analytics)