BDSA Archives - Green Market Report

Joanne CachaperoJuly 21, 2022
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4min150

Cannabis data tech company BDSA released findings from its Consumer Insights Survey, which showed that cannabis consumer markets continue to expand as more states approve adult-use cannabis and acceptance of legal cannabis increased among consumers.

BDSA noted cannabis consumer “milestones” that had been achieved, including nearly 50% of Americans currently with access to legal cannabis. Data from Spring 2022 indicated that in states with legal adult-use cannabis, more than 50% of those surveyed claimed to have consumed cannabis within the last six months, which was up 15% from the same time in 2020.

Survey results also showed that the number of consumers that identified as “rejectors,” or non-consumers not open to consuming cannabis, dropped to 23% in Spring 2022, from 31% in Spring 2020.

“In just a few short years, attitudes towards cannabis across the country have shifted rapidly, with the share of those who have ‘bought in’ to cannabis consumption skyrocketing while fewer and fewer report not being open to consuming cannabis,” BDSA surmised. Survey findings also indicated consumers are becoming more knowledgeable about cannabis products and use, and that in Spring 2022, 35% considered themselves “cannabis connoisseurs,” which was up from 25% in Spring 2019. In 2022, 83% of those surveyed said they knew the difference between THC and CBD. BDSA added that consumers are exploring new activities to pair with cannabis, including alcohol consumption.

“There are several consumption occasions, such as hanging out, or relaxing at the end of the day, that present opportunities for both alcohol and cannabis consumption. The share of consumers who report pairing cannabis with different types of alcohol has risen significantly. The share of consumers in adult-use markets who report pairing cannabis with spirits or liquor rose from 12% in Spring 2018 to 22% in Spring 2022, while the share who report cannabis with cocktails doubled to 20% in Spring 2022,” the report said.

Percentages of cannabis consumers that said they combined consumption with other activities including fine dining and exercise also grew significantly in 2022, to more than a quarter of those surveyed. Overall, markets saw significant growth in the last two years, along with increased consumer participation, BDSA said. More mature markets like Colorado and California showed slower growth, which may signal “nearing” market saturation. Somewhat predictably, states that had recently legalized adult-use cannabis had the most rapid growth.

“Colorado saw its consumer participation jump from 41% in Spring 2020 to 51% in Spring 2022, but the markets saw only 1% growth in consumer share between Fall 2021 and Spring 2022. The survey said that the California market saw its consumer participation grow from 33% in Spring 2020 to 47% in Spring 2022 and only saw 2% growth in consumer share between Fall 2021 and Spring 2022,” the survey said.

In medicinal cannabis markets, consumer participation is lower but still showed significant growth from 26% in Spring 2020, to 41% in 2022. Rejecters in medicinal markets also dropped from 34% to 28% over the same time period. Florida, with its large medicinal-only market, saw a notable increase in consumer participation from 24% in Spring 2020, to 49% in Spring 2022.


Debra BorchardtNovember 4, 2021
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8min30

Many people within the cannabis industry have been pushing the notion that cannabis products should be treated the same way as more traditional consumer packaged goods or CPG. A new report from cannabis market analytics firm BDSA, sales data analysis platform Hifyre, and Deloitte Canada dug into the concept of pricing for cannabis products and found some key differences. 

The massive growth of the cannabis industry is the main reason why it is so important to understand these issues and differences. Global legal cannabis sales reached nearly $21.6 billion in 2020, an increase of 50% over 2019 sales of $14.4 billion, due largely to legalization. BDSA forecasts global cannabis sales will continue to grow quickly, to $62.1 billion in 2026, more than double the 2021 estimated global sales of $30.6 billion with a compound annual growth rate (CAGR) of more than 15%. If companies want a big piece of this lucrative pie, then they need to have the best possible market data in order to make smart moves within the company’s product lines.

Pricing

One thing the report determined was that price is a key factor in decisions about what cannabis product to buy. The most recent BDSA Consumer Insights survey, which polls thousands of consumers every six months, found the following: 

  • In states where cannabis is legal for adult and medical use, low price was consistently identified in the top three drivers of product choice. More than a quarter (27%) of respondents said price influences their purchase decision, just behind taste/flavor and high THC content. 
  • In Canada, low price was the leading influencer of product choice, with 34% of consumers stating it matters the most. 

Another reason licensed cannabis companies should closely examine pricing is that the Deloitte study of Canadian consumers found that many cited pricing as a reason why they continued to buy from illegal sources. 

How To Price

So, just knowing that pricing is important to the customer seems pretty basic. The hard part is figuring out how to price a cannabis product. Is it based just on THC content or the potential length of time a consumer stays high? Would consumers be willing to pay more for better tasting edibles or a better psychoactive experience? Smoking dry flower brings in another set of variables. Can bud density be considered when pricing or how well the product smokes?

Pricing is currently all over the place, which confuses customers even more. The report compares California edibles to Canadian edibles. 100 mg of THC averages $16 in California, but can go as high as $50. While 10 mg of THC in an edible in Canada averages $6, but can go as high as $16. That’s a big spread between prices. To be fair, many consumers aren’t doing price comparisons between Canada and California.

So the next option is to compare prices within the U.S. The report looked at products that are available for sale in different states. For example, the Wana Sour Gummies have an average retail price in Oregon of $8.03, but in Illinois they retail for $27.49. Also in the U.S., Stiiizy Blue Dream cartridge retails for $43.81 in California, but if you are a consumer in Arizona, you’ll spend $61.43. City and state taxations vary along with the costs of doing business in different locales. Yet, more traditional CPG products have standardized pricing no matter where a consumer buys a product. A package of Oreo’s is likely to cost the same whether a person buys it in Texas or New York. Unfortunately for cannabis this is a major point of divergence from CPG.

Maturing markets have seemed to engage in a race to the bottom pricing, with wholesale spot pricing down double digits in mature markets. Value flower is driving that price deflation. However, a Deloitte study found that 86% of millennials are willing to pay more for premium cannabis. Live resin is a great example of this. 75% of these items reside in the premium pricing tier according to the report. Consumers are also willing to pay a premium for edibles if there are unique additional ingredients. 

Another area in which cannabis products diverge from mainstream CPG is the ability to have standardized production. Cannabis strains can vary according to the places it is grown, especially if the cultivation is grown indoor or outdoors. Regulatory requirements within states can also affect the production of a brand.

At this time brands aren’t commanding premium pricing. Most consumers are choosing products based on personal experience or on a recommendation from a friend or budtender. This makes it hard for companies to develop brand awareness over various states, but it does open opportunity for emerging companies to get established since consumers are willing to try new names and products. Eventually it’s expected that brands will begin to register among consumers. Cookies is one of the few breakout brands that has resonated across state lines. 

CPG Sameness

There are some areas where CPG and cannabis are alike. Supply and demand fundamentals are the same for both. If dispensaries are low on supply, they can raise prices and vice versa. In 2019, consumers mostly chose between premium priced flower and mainstream flower. Fast forward to 2021 and consumers can also choose from Value and Discount priced flower. 

In the end, the report concluded that pricing in the cannabis industry continues to change rapidly. The more successful companies are the ones that will be able to pivot and adjust prices quickly according to the customer demands.


Debra BorchardtJune 9, 2020
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5min352

Legal cannabis sales continue to grow despite the strength of the illegal market. The new State of Legal Cannabis Markets report from The Arcview Group highlights the strengths of the industry going into 2020, while also acknowledging the challenges ahead.

Arcview partnered with analytics firm BDSA and is forecasting that worldwide spending on legal cannabis will grow 38% to $20.4 billion in 2020. Despite this, the lions share of purchases occur in the illegal markets. The report estimates that in 2019 $214 billion was spent in the illicit channels, while $14.8 billion was spent in the legal market.

This had been one of the biggest arguments for legalizing marijuana. Activists promised that if cannabis was legalized, then the illicit market would crumble because consumers would want to support legal businesses and enjoy the tested products with lots of variety. Instead, states that have enjoyed legal adult-use cannabis for at least five years continue to see 30-50% of sales occur in the illegal market. It would seem that this would not support more legalization, but it could have the opposite effect.

The report suggests that high taxation resulting in higher prices for product in the legal stores is the biggest hurdle. It said, “Local regulators could lower tax rates and/or relax regulations in pursuit of a quicker reduction in illicit-market sales, driving more legal spending and ultimately more tax revenue.”

This will be harder than it sounds. Oklahoma opted for a typical sales tax of 4%, while Washington is at an eye-popping 39%. California attempted to keep cannabis taxes from increasing, but it was blocked. It seems the state is pleased with the money it gets despite the effect it is having on pushing customers to cheaper options.

COVID’s Silver Lining

The COVID-19 pandemic certainly affected the industry for the first half of 2020, but the lingering effects will still be felt throughout the rest of the year. Cannabis was deemed an essential service in many states, but that didn’t mean all companies thrived under that designation. The report suggests that a recession starting this year could have short-term impacts that could be dire for some cannabis companies. Still, there could be a silver lining.

“State tax shortfalls due to recession could prompt more legislatures to proceed with cannabis legalization sooner rather than later,” read the report. It has the support of the population. BDSA’s fourth-quarter Consumer Insights study determined 29% of Americans already consumer cannabis. States that legalized cannabis also experienced an increase in cannabis consumers. In other words, passing new legislation would be popular and in turn increase, the tax revenue as more consumers come into the industry.

New Legalization

The flip side to COVID and new legislation is that with quarantines in place, it’s hard to push through new legal states even though it’s a big election year. 2016 was a big year for new states, but 2020 looks to be less so. Only three states have initiatives on the November ballot. Mississippi for medical use, New Jersey for adult use, and South Dakota for both. With limited federal aid, Governor Cuomo is considering cannabis legalization as a key strategy to generate crucial revenue streams for NYC and the entire state.

New Jersey had tried to pass legislation in 2019, but couldn’t get the three-fifths majority needed from legislators. Now the state is letting voters decide and it is expected to pass. That means sales could begin in 2022 or sooner. The report forecasts that New Jersey could jump from $107 million in 2019 spending to $1.3 billion by 2025.

The issue of federal illegality still looms over the industry. All the legislation that looked promising has stalled. While some thought President Trump might make a legalization move to garner support as his popularity declines amongst his base, he has not signaled any such effort. The Democratic nominee Joe Biden has taken a moderate approach and according to the latest CNN poll, looks to be leading Trump. However, COVID and racial injustice issues look to be the hot button issues, pushing legalization to the back burner


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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