Cannabis As A Consumer Staple - Part 1

Editors Note: This was published with permission from Bengal Capital.
In what should have probably been predictable in hindsight, the U.S. cannabis industry thrived during the COVID pandemic (where it was able to stay open thanks to “essential” designations), recording significant sales growth even in “mature” adult-use markets like Washington and Oregon.
Not many people would have predicted that over a year into a pandemic cannabis sales would be up 30-60%. Maybe that’s because people are focused on looking at what’s new and different about cannabis (and there’s a lot) instead of first looking at how much cannabis behaves like products we know well, we budget for, and buy regularly – consumer staples.

Alcohol, long acknowledged as a consumer staple, saw a very similar pattern to cannabis sales during the pandemic but had the added advantage of being able to sell interstate online:

Consumer staples are widely regarded as recession-resistant – consumers cut discretionary spending first and staples last. Paradoxically, sometimes consumers spend more on consumer staples during a recession by buying more costly products. Marijuana Business Daily research shows this as well – a significant shift in adult-use markets towards more premium-priced dried cannabis.
Again, this looks a lot like consumption patterns in alcohol during the pandemic. The Financial Times research showed that premium and prestige brand alcohol spending was up in multiple categories over the last year, often overtaking standard brands’ growth.

 

Again: cannabis is new and different in many critical ways, but it doesn’t seem to be very different on a fundamental level from other products that consumers make a regular part of their lives (as opposed to a fad or style which comes and goes – I’m looking at you Snuggie).

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