New data on the California cannabis market is shedding light on the consumers and what they prefer. It turns out they love their flower, vapes and infused pre-rolls according to a recent report from BDS Analytics.
This unregulated marketplace has been light on hard information as other states like Colorado and Washington produced a wealth of retail data. Now a new report describes a state that behaves much more like a recreational market even though legal recreational sales aren’t set to begin until 2018. “Until now, the questions had only anecdotal and inaccurate answers. But with the launch of our California data, we now offer penetrating insights into every aspect of the cannabis marketplace that matters to stakeholders,” said Roy Bingham, Founder and CEO of BDS Analytics.
Size is the reason why California data is so important. In the four months of March through June of 2017, BDS noted that California dispensaries sold $894.85 million of cannabis products, dwarfing Colorado’s $516.39 million in sales. California commands a third of the legal cannabis market in the U.S., while combined sales from Colorado, Washington and Oregon account for 41% of the market.
California was the first state to legalize medical marijuana twenty years ago, while Colorado was first for adult-use legalization. However, BDS’s data reveals a market that already acts like adult-use has been legalized by the products that are being sold. The lack of regulation and ease of entry into the marketplace has created a very competitive retail environment and a crowded market for brands. For example, the top five brands for concentrates in California only control 52% of the market, while in Colorado they control 71% of the market. In edibles, the top five brands own only 42% of the market, but in Colorado they own 49% and in Oregon the top five own over half of the market’s sales. This makes California the land of opportunity for brands seeking to plant their flags.
The state’s customers spend the most money on flower products at $375 million in the second quarter of 2017 or 55% of the market. Flower prices are higher in California than in the other states with indica being the preferred genus. The top strains are similar to other states and include Girl Scout Cookies, Sour Diesel and Gorilla Glue #4.
One place that makes Cali customers different from other states is infused pre-rolls. Like other states, pre-rolled joints capture about 5% of the market, but Californians particularly like infused pre-rolls with an extra THC boost. They will happily pay $14.08 per joint instead of going for the cheaper ($5.12) plain pre-roll. This category owns 31% of these sales.
Concentrates are second in popularity in the state and account for 25% of the cannabis pie or $169 million in sales for the second quarter of 2017. Vape sales in Colorado for the same time period were less than $40 million. Vape pens control the market with 61% of the sales. It’s still a wide open category with the top ten brands owning 66% of the market and a long list of brands falling into the remaining 34% of sales.
Edibles are 12% of the market at $81 million for second quarter sales with gummies and hard candy winning the category followed by chocolate and infused foods. Gummies have eaten up 19% of sales in the candy category.
The state is sprinting towards finalizing its new rules and trying to stay on track for regulated legalized sales to take place in January.. Los Angeles and San Diego both approved new business regulations over the past week, while lawmakers denied advertising restrictions for marijuana promotions on clothing like t-shirts and hats. The state is banning drone delivery of cannabis as car delivery company Eaze raised $27 million for expansion.
With so much money at stake and a market still ripe for opportunity, brands are flooding in to try to capture consumers purchases. Colorado may have been first to create a strong recreational market, but California is poised to steal its thunder.