As the year edges closer to an end, a look back at the legal cannabis industry shows some new consumer trends alongside a range of responding business adjustments.
The Three P’s: Price, Price, Price
Wider inflationary pressures, as well as more cannabis-specific economic factors, helped drive the dominance of price sensitivity in consumer decisions.
Price compression in mature markets, such as Colorado and Nevada, pushed brands to innovate and diversify or go out of business. Meanwhile, emerging markets in the Midwest and Northeast experienced robust growth, fueled by new consumer demographics and regulatory changes.
“Consumers really care about price,” Madeline Scanlon, cannabis insights manager at Brightfield Group, told Green Market Report.
Brendan Mitchel-Chesebro, an analyst at BDSA, echoed the importance of cost in purchasing decisions. For example, budget-friendly options, such as shake and trim light, have become more popular – particularly in markets that are emerging and have relatively higher retail prices such as New Jersey – and should continue to cater to price-sensitive consumers.
BDSA’s consumer insights data shows that about 29% of consumers cite low price as a top product choice driver.
“Just because these are budget-friendly options geared towards the budget consumers, doesn’t mean that it’s schwag or bad quality,” Mitchel-Chesebro said. “I’d say more high value is the way I kind of pegged them. A a lot of consumers who consume a lot, they smoke a lot; this is going to be appealing to them, especially when it comes from a reputable brand.”
Changes in Consumption Patterns
Sales data over the year showed that more savviness from tighter wallets has not only influenced buying patterns, but has also led to a noticeable change in consumption habits, Scanlon said.
Brightfield data showed “multiple times per day use…started to dip down,” she said.
Brightfield looks at markets like Ohio, Florida, and Pennsylvania for medical cannabis trends, while also monitoring emerging markets like Maryland and New York.
But consumption frequency findings are a bit more nuanced than many assume, according to Mitchel-Chesebro. He pointed to consumer data that shows 47% of inhalable consumers report using products multiple times a day, while ingestibles are most commonly used on a weekly basis.
The Chemical Cousins
However, Mitchel-Chesebro identified intoxicating hemp products as “probably the biggest new trend” in 2023.
That segment, according to both analysts, is redefining the industry by offering opportunities that bypass the legal and financial complexities of traditional cannabis. Because of that, hemp-derived products breaking into new retail spaces also had the effect of bringing cannabis products into more mainstream channels.
“This is something that offers people outside of the cannabis industry a lot of opportunity, especially when we’re looking at the beverage and the edible space,” Mitchel-Chesebro explained. “I’d say that the biggest thing that people have to look forward to is just the wider distribution opportunities.”
He added: “This isn’t anything new when we’re talking about hemp-derived products. We’ve seen delta-8 products in smoke shops and convenience stores and on e-commerce sites for a long time. But I think this year, we really saw a transition with it becoming formalized, with these products making it into the cannabis channel, (such as in) Minnesota, as well as trends we’ve seen within the broader beverage and alcohol space.”
In addition, hemp-derived products are “showing up in regional and statewide liquor stores and some grocery stores.”
While cannabis beverages account for a minute portion (1%) of total cannabis sales, Mitchel-Chesebro sees potential for growth in hemp-derived alternatives. He pointed to the usual logistical hurdles faced by cannabis beverages, such as refrigeration and bulkiness, and suggests hemp-derived products could provide a solution, offering a more accessible option to consumers.
But consumer safety remains a concern with hemp-derived products, because they face less stringent testing standards compared to legal cannabis.
The primary competition between the chemical cousins happens with edibles and beverages, as inhalable products consumers appear to still favor cannabis over hemp.
“If you look at the last four years, gummies is actually one that has really, really risen,” Scanlon said.
She attributed much of that rise to the hemp-derived market, “because people are being exposed to a cannabis product type outside of the dispensary channel with gummies pretty significantly. And you could say the same for vapes, too. They’ve also seen pretty significant rise since 2020.”
Ditching the Torches
Product innovation has been critical in 2023. Scanlon mentioned the rising popularity of “infused pre-roll wave,” especially “donuts” or “hash holes,” which are pre-rolls with a concentrate snake running through the middle of the cigarette.
The wider rise in pre-rolls has especially driven retailers to offer more joint prepacks, which can be paired with cartridges or disposable vapes as a deal package. The analysts also noted the popularity of more refined dabbing technologies like the tabletop vaporizer, the Puffco Peak, as well as its more mobile iteration, Puffco Proxy.
The focus on vaping technologies, especially around concentrate methods, has particularly stood out for established consumers when it comes to the broader elimination of the torch for dabbing and the focus toward constant temperature for consumption, several smoke shops told Green Market Report. At the same time, making concentrates less messy and easier to consume has become attractive to even more casual users.