Summer 2018 will bring more than warmer temperatures — the season will also turn up the heat on the cannabis market. As Colorado and Washington enter their fifth summer of legal recreational cannabis sales, and California prepares for its first, it is time to examine What’s Hot in Pot(TM).
Let’s consider what already is a sweltering marketplace, regardless of the season. Legal cannabis sales in North America were $9.2 billion in 2017, and we project they will grow at a 27 percent CAGR to more than $24 billion by 2021. What not long ago was an illegal marketplace, now is North America’s fastest growing consumer products industry. Most of the sales come from California, Colorado, Washington, Oregon and Michigan, but dozens of other states are fueling growth. California, Massachusetts and Nevada are prepping for their first summer of legal cannabis sales. Recreational markets in Colorado, Washington and Oregon experienced compound growth of roughly 40 percent for several years.
Prior to legalization, we understood little about cannabis Consumers. Now, we know much more about them thanks to our ongoing North American program of statistically projectable consumer surveys produced by our Consumer Insights team. We know:
- They are diverse
- About 40 years old
- Close to 50% Men, 50% Women
- Physically active, social, creative, and more satisfied with life than non-Consumers
- Nearly three-quarters of Consumers enjoy cannabis once a week and pair cannabis with music, movies, snacking, exercise, fine dining, beer, wine, and cocktails.
Cannabis is a sales bonfire, and we are getting to know cannabis Consumers. But we return to the question: What are they buying? What is hot?
In more mature recreational markets like Colorado, one important trend is the marketplace migration from grams and ounces of bulk Blue Dream and OG Kush to branded products. Cannabis branding comes with celebrity endorsements, CPG-like packaging, and sleek displays with new-generation products — everything from THC-infused kombucha beverages to pills designed for sleep, energy, or relaxation.
Sales of branded products have grown more than 60 percent CAGR to capture roughly 40 percent of the overall cannabis market, and about 50 percent in mature markets. The top five edibles brands in California, Colorado, Washington and Oregon each possess between 40 and 50 percent of their respective markets. In Colorado and Oregon, the top five concentrates brands have close to 70 percent market share.
Flower remains the most popular single category, representing about half of all sales (and some of the flower, too, like Willie’s Reserve is branded). But growth in flower sales does not come close to growth trajectories in other categories, like concentrates.
The hottest big-category product in Colorado, in terms of growth, is vapes. The vape market in Colorado today represents 40 percent of all concentrate sales. Between 2016 and 2017, vape sales expanded by 86 percent.
Candy is experiencing rapid growth. The edibles marketplace supports a diversity of products — from tinctures to boxes of truffles. Candy now captures about half of all edibles sales.
Another area of growth — products containing CBD. CBD branded products represent a small portion of the cannabis market, but CBD-oriented products sold in dispensaries (which also contain THC) experienced rapid growth during the first quarter of 2018. See the What’s Hot in Pot list below for more details about the rise of CBD products.
Our “What’s Hot in Pot” List of Big Gainers
We focus on Colorado and Oregon because the two states have more than a year’s experience with recreational cannabis sales, and both have medical and recreational sales channels. Overall growth for all cannabis products in the two states was up 9 percent.
Top 10 Year-Over-Year Growth, First Quarter 2018
- High-CBD gummies, 925 percent growth on sales of $5.4 million
- High-CBD chocolate pieces, 530 percent growth on sales of $796,600
- Chocolate pieces, 166 percent growth on sales of $1.5 million
- High-CBD candy, 102 percent growth on sales of $20 million
- High-CBD tinctures, 111.5 percent growth on sales of $8.1 million
- High-CBD vape, 105.5 percent growth on sales of $4.8 million
- Vape, 69 percent growth on sales of $69 million
- Live Resin, 69 percent growth on sales of $15.5 million
- Dropper, 59.5 percent growth on sales of $3 million
- Gummy candies, 53 percent growth on sales of $11.6 million
So there’s a taste of what’s hot so far in 2018. The legal cannabis market is blazing in more ways than one. And just think about it: California’s adult-use retail is slowly rolling out, much slower than many had assumed and hoped. That massive state market is very much still in its infancy. As California begins to reach its projected potential, and with more states coming on-board throughout 2018 and beyond, the cannabis industry will continue to lead the charge as the fastest growing industry in the United States. Very hot indeed.
Co-Founder & CEO