Akerna Report Says Interstate Commerce Planning Is Building

Cannabis software company Akerna (NASDAQ: KERN) has released its 2021 Mid Year report that highlights upcoming trends as well as recapping the first half of the year. These trends include interstate commerce, the importance of brands, and the quickly growing power of the female consumer.

Interstate Commerce

Scott Sozio who serves as Head of Corporate Development for Akerna wrote that while consolidation and access to capital have been important issues they are laying the groundwork for interstate commerce and the importance of brands. Sozio said, “The recently proposed Cannabis Administration and Opportunity Act (“CAOA”) contemplates interstate commerce. Whether the bill passes or not, interstate commerce is now part of the conversation, and operators large and small will have to develop their plans for how they will compete when state borders open.” He suggested that the consolidation that is happening in the industry today has been focused on accumulating assets and planting as many flags in as many states as possible. He believes this focus will shift to a geographically strategic production location that is positioned to service a national footprint. 

“The first evidence that the larger operators are positioning for interstate commerce came earlier this year when Curaleaf acquired Los Suenos, the largest outdoor grow in Colorado. The announcement noted that the transaction would provide Curaleaf with one of the largest outdoor cannabis cultivation facilities in the U.S. while building on its strategy of constructing low-cost supply chains critical to eventual interstate commerce,” he wrote in the report.  Sozio thinks there will be more acquisitions of strategic supply as companies begin building their national footprints now. 

Big Brands

Akerna thinks that the brands being built today could become the cannabis household names of the future. However, the company said many questions have yet to be answered. “Will a successful California brand resonate in Florida? Will the product be consistent from one state to the next? As in any industry, there will be national brands and niche brands.” There are brands that are flexing their muscle now as they begin to compete on a national stage. Cannabis brand Cookies was recently named by Ad Age as one of the Hottest Brands of 2021. The company is both creating its own dispensaries and selling its product in multiple states. It’s a strategy that many other brands are sure to try to replicate.

Girl Power

James Arhrendt Business Intelligence Architect at Akerna also noted in the report the growth of the female consumer in the cannabis industry. “Since 2019, females have steadily increased their percentage of sales, a total of 3.2%. While that may seem like a low number, it’s actually a significant change considering the vast numbers of cannabis consumers – 14.9 million have purchased in 2021 so far.” Like the rest of the market, women are also buying mostly flower. Even though flower purchases account for 44% of the female spend, concentrate purchases are taking preference over edibles. 

Akerna found that the concentrate category showed a direct correlation between age and the percentage of sales share for females. The report noted that the younger age groups spend more (14% of sales for under 30), and the sales percentage gradually drops in each age group as you increase in age (60+ age group only spends 5%). “Edibles also correlate with age but in an inverse relationship to concentrates. For the under 30 female age group, edibles are only 5.37% of their sales, 30-40 its 6.93% of their sales, and this trend continues up as the 60+ age group spends 19% of their sales on edibles.”

So, it seems that as the importance of the female customer grows, brands and companies will want to adapt and address the desires of this group. Money talks and if this group is gaining importance, it will also gain power.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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