Pre-rolls Archives - Green Market Report

Debra BorchardtNovember 29, 2021

A new report from Headset has found that Americans aren’t as into pre-rolls as Canadian consumers. Between August 2020 and August 2021, the market share of pre-rolls in Canada averaged 18.6%, while in the US, the market share of pre-rolls only averaged 9.5%. The only exception it seems is the Massachusetts market. Apparently, they really like pre-rolls in that state.

Cooper Ashley Senior Data Analyst at Headset said he could think of two reasons that could partly explain why the pre-roll market share is higher in Canada than in the US.

Firstly, Pre–Rolls were one of the few product formats that have been available since the beginning of Canada’s cannabis market. A regulation change, dubbed ‘Cannabis 2.0’, allowed previously-prohibited product formats (such as vapor pens, edibles, and concentrates) to be sold in Canadian cannabis retailers at the beginning of 2020 – more than a year after the market originally launched. Most product categories that were introduced in ‘Cannabis 2.0’ still have significantly lower market shares in Canada than in the US. For example, over the previous 90 days, edibles made up about 11% of sales in the US, but only 5% of sales in Canada.
Secondly, Canadian Pre-Roll products tend to be larger. By that, I mean that there tends to be more total cannabis in a single Canadian pre-roll product than in a US pre-roll product. For example, over the previous 90 days the highest volume package size of pre-roll in the US was 1g, but 1.5g in Canada. A tendency towards larger package sizes unsurprisingly pushes up the average price of these products as well. Eg. Over the previous 90 days the average price of a pre-roll product was about $11 in the US and about $18 in Canada. That difference in size and price could cause consumers to think of a pre-roll more as a primary purchase, rather than a low-cost add-on item.

When Americans want to buy pre-rolls, they typically choose the connoisseur/infused segment, which makes up 32.4% of sales. Canadians aren’t as picky and this same segment makes up only 0.1% of sales. Pricing is a possible reason for the large difference in Connoisseur/Infused market share between the two countries. In Canada, they are priced 57% higher than the average item price of the other segments, while in the US they are priced only 18% higher than the other segments.

However, pricing might not be the only reason that Americans are choosing the infused joints. Andrew DeAngelo, Cannabis Industry Consultant, and Strategic Advisor said, “The quality of legal cannabis in the U.S is better in full flower form not in pre-roll form motivating consumers to roll their own rather than getting a subpar pre-roll.”

Scott Grossman, Vice President of Corporate Development at Turning Point Brands (NASDAQ: TPB) (maker of ZigZag rolling papers) agrees with DeAngelo on the perceived quality of cannabis in pre-rolls. He said, “In the U.S., the old pre-rolls were historically viewed as a lower quality flower which may have capped sales—in addition, these items are typically additions to the basket versus the main intent of purchase.” Grossman thinks that Americans prefer to roll their own so that they can control the quality of the product. Despite that, he thinks the perception is slowly changing.

Innovation

“Companies like Old Pal, Space Coyote, etc. have innovated to create shareable pre-roll packs which make a lot of sense, especially during the pandemic—no one wants to pass around a single joint,” said Grossman.”Nearly 30% of the U.S. pre-roll market is driven by infused pre-rolls—ie. flower either dipped in Kief, but more recently, pre-rolls with hash concentrates within (a better form factor).”

More companies are producing mini-pre-roll packages so that people can have the social aspect of smoking joints together but without the passing around of a joint. The smaller size also means fewer unsmoked joints that the consumer now has to store without it falling apart or making a mess. For example, Green Thumb Industries (OTC: GTBIF) sells a package of five mini-pre-rolls called Dogwalkers. The idea is that the little joint is small enough to be enjoyed walking one’s dog.

Cones could be another reason why Americans are rolling their own versus buying pre-rolls. The innovation of selling a cone-shaped empty joint with a small plunger to tamp down dry herb can turn those without joint-rolling skills into a master. Grossman said, “Without question for the consumer. Not only does it make it easier to roll, but new innovation at the cultivation/manufacturing facilities allows the production of pre-rolls at scale (which, to be clear, is still much more labor-intensive than tubes). In addition, a conical joint versus a straight tube/joint actually makes the burn better due to the “Venturi Effect” — because there’s more material on top, it produces a more consistent flavor because you’re burning more in the beginning (and less in the end). This creates less resin and because of increased pressure, it tends to burn smoother. Punchline—a more concentrated hit. Cones also tend to produce less waste (because there is less material near the tip).”

Joint burning performance is also a key issue for these consumers. DeAngelo said that rolling joints at home avoids the joint running problem (burning unevenly) associated with almost all store-bought joints in the US. “A joint that is stuffed by a machine runs like crazy compared to a joint rolled by hand. The way the fibers intertwine works better with a hand roll so the joint burns evenly. Americans are more sensitive to this perhaps. I know I am.”

More Pre-Roll Differences

Headset also determined in its report that market shares of the Indica and Sativa Single Strain segments in Canada were more than double the size of their market share in the U.S. where Hybrid – Single Strain has more category share than Indica and Sativa combined. “We also find that the Cannagars/Blunts segment owned 4.2% of the Pre-Roll market in the US, while it only held 0.1% within Canada.

While Americans haven’t been big buyers of pre-rolls to date, that could be changing. It seems companies have learned that tossing the crummy trim into a pre-roll isn’t going to sell. Social media accounts have shown various people buying these pre-rolls and then unwrapping them on camera to expose the insides. That exposure may have turned the tide on poor-quality pre-rolls. As consumers spread the word of an improved product, sales are likely to grow and could make this an improving category.

StaffFebruary 12, 2021

Scott Bryant is Co-Founder and CEO of Pineworx, the nation’s premier white-label pre-roll manufacturer, and Tree-Rolls® Hemp Company, a premium hemp CBD pre-roll brand created for the convenience store market. Scott has worn many hats, including accounting, marketing, Sales, brand and product development, and industrial automation engineering.

Mentored by his father in executive business management, Scott had a vision early on to create new, innovative companies. After graduating from Washington State University with a B.A. in Marketing, Scott worked for a top 10 beverage distributor, Columbia Distributing, where he gained knowledge and experience in the three-tier distribution system. With anticipation for exponential growth within the craft brewing industry he joined Hopunion (now YCH Hops) and became the company’s highest grossing Regional Manager – managing over 1000+ accounts across the Western U.S.. Over a 5-year period, Scott played an integral role in developing a nationwide sales force and worked side-by-side with top breweries, helping to introduce many of the world’s most popular hop varieties to the market.

While visiting a San Diego medical cannabis dispensary in 2012, Scott recognized the industry’s need for high quality branded products and utilized his background in Marketing and hops (a close relative to cannabis) to launch one of the nation’s first branded multipacks of pre-rolled joints, Jay’s Pre-Rolls, with co-founder Victor Berrio. Through the company’s success across California, the product helped to de-stigmatize the pre-rolled joint and became a pioneer of the product category.

Identifying a complete lack of product consistency in the market and the non-existence of pre-roll manufacturing equipment, Scott and his team acted on the opportunity to create industry quality standards. In 2014, Pineworx was born as a technology-driven white-label manufacturer focused on producing the finest quality pre-rolls possible.

After the passing of the 2018 Farm Bill, Pineworx transitioned into the hemp space to capitalize on the much broader, national CBD market. As the market emerged, Scott and his fellow entrepreneurs founded Tree-Rolls® Hemp Company in 2019 with an aim to normalize smokable hemp and obtain nationwide distribution into convenience stores, smoke shops, gas stations and other retail locations across the country. Through a passion for giving back to the community, Tree-Rolls® partnered with Trees For the Future (Trees.org) – planting one tree for every product sold.

Executive Spotlight Interview:

Full birth name: Scott Bryant

Title: Co-Founder / CEO

Company: Pineworx

Years at current company: 5+

Most successful professional accomplishment before cannabis:

Prior to the cannabis industry, I spent most of my adult life in beer, wine and spirits – working for distributors and raw material suppliers. From 2010 – 2015, I worked to develop a nationwide sales force for what is now the largest global distributor of hops to craft breweries. Our team led the 25 year old grower-owned company from ~$25MM in annual sales, to over $100MM in under 5 years. Through our hop breeding program and worldwide sourcing, our sales team was a driving factor in the worldwide IPA boom.

Company Mission:

At Pineworx, Our mission is assist our clients in developing the finest pre-rolled products possible – continuously innovating new ways of improving product quality, convenience, sustainability and appeal for the ultimate benefit of our clients and the end consumer.

Company’s most successful achievement:

In 2013, Pineworx’ first project was one of the first branded multi-packs of pre-rolled smokable cannabis products in the U.S. – creating a new product category and spreading distribution throughout the state of California. At the time, there was an underlying stigma that any pre-rolls sold in a dispensary were low quality and not worth the money. We worked for years to eliminate that stigma and show the world that machine-manufactured pre-rolls can match and exceed the quality of hand-rolled products. Today, pre-rolled joints are a standard product in every cannabis retail location.

In tandem with our consumer facing products, Pineworx continued the development of proprietary pre-roll production technology and entered the B2B market, becoming the country’s first marketed white-label pre-roll manufacturer. Existing manufacturing equipment at the time was extremely primitive, forcing our engineers to start from scratch. Through years of R&D and continuous prototyping, Pineworx has set the standard for premium pre-roll smokables and solidified itself as the industry leader in product quality, consistency, and innovation. To-date our company has worked with many industry leaders to develop brands, expand on their production capacity and deliver their customers with the best pre-rolls possible.

Has the company raised any capital (yes or no):

No, we are completely self-funded.

Any plans on raising capital in the future?

Yes, we are preparing for a series A funding.

Most important company 5 year goal:

Continue expanding operations throughout the country and enter the international market, becoming the Phillip Morris of pre-roll manufacturing. We also have plans to re-enter the recreational cannabis space, partnering with select companies across the U.S.