The 2018 California Cannabis Marketplace in Review

By the time it drew to a close, California’s first year of legal adult-use cannabis had matured into an industry behemoth.

With $2.51 billion in sales during 2018 alone, California is the leading state in the nation, by far, for cannabis sales, eclipsing No. 2 Colorado by 60 percent.

It didn’t kick-off the year with the lead. During January of 2018 Coloradans spent $119.7 million on cannabis, compared to $114.5 among Californians. But Golden State pot consumers pushed Colorado out of the lead in February, and never looked back.

How fast did cannabis sales grow during the year? Consider January versus December. Those sales of $114.5 million in January ballooned to $214 million just 11 months later, achieving growth of 109 percent.

Increased consumer demand explains part of the doubling of sales. But so does the expansion of retail opportunities. Gaining a proper 2018 license in California involved intense planning and paperwork; many dispensaries that were legal in 2017 didn’t get everything done prior to the New Year.

But during the course of 2018, regulators granted licenses to increasingly more pre-existing dispensaries as well as new ones. By December, the state had bestowed its official OK upon 484 dispensary locations as well as 157 delivery operators. The ever-increasing volume of outlets likely will contribute towards increased sales for at least another few years.

For now, though, let’s scrutinize the last month of California’s big year.

The products California consumers bought during December ran the gamut, from eighths of Kosher Kush to distillate-filled disposable vapes to pills, gummies, tea and salves. Consumers in other states bought the same sorts of products, but California stood out: concentrates, with 37 percent of market share, bested flower’s share of 33 percent. Concentrates won, too, during November. In October, the categories were tied at 35 percent and prior to October flower always wrested the most market share. In other states with adult-use sales, flower’s string of monthly victories is unbroken.

Clearly, Californians appreciate concentrates, the majority of which are sold as vape pens. But the category’s recent triumph over flower doesn’t mean consumers are buying less flower. In fact, volume sales of flower during the month experienced a 13 percent boost over November.

What happened? Prices for flower keep nudging down. December’s average price for a gram of flower fell nine percent, to $8.29, compared to November. In August, the average California gram sold for $9.88.

Concentrates prices did slip one percent, to $39.82, between November and December, but unit sales grew by seven percent.

While Flower and concentrates battle for revenue supremacy, Ingestibles market share marches along in the teens, just as in all other adult-use sales. Consumers bought enough Ingestibles in December to harness 14 percent of the market, up two percent from 12 percent market share in January of last year.

But revenues from Ingestibles experienced the most growth between November and December, up 7 percent to $42.5 million. It’s been a stable, sturdy category across the year, one that supported a parade of new product launches.

As in all other adult-use states, candy is the leader among Ingestibles, with 39 percent of the market. But it’s not just any candy that carries the day for the category. Gummies represent 81 percent of the California candy market, rising from 72 percent of the market during January of last year. Californians, Coloradans, Oregonians, Nevadans — pot consumers in all states with adult-use sales love their gummies, with Nevada sales capturing nearly 90 percent of the market in November.

Meanwhile, tinctures grabbed 24 percent of ingestibles sales during the month, and chocolate came in third, with 14 percent of sales.

California’s cannabis market began the year strong, and as the states regulatory structure firmed-up in a staggered fashion across 2018 the industry expanded rapidly, and with increasingly more muscle.

During 2018 the market endured, and finally thrived, despite growing pains. While the industry remains adolescent in California, it is maturing rapidly. At this rate, California during 2019 will further develop as an international powerhouse, as a state wielding enormous influence over the shape, texture and color of the cannabis industry from the Bay Area to Boston to Berlin and beyond.

Retail data sourced from BDS Analytics’ GreenEdge™ Retail Sales Tracking Platform.

Enjoy our California iteration of The State of the State infographic: