High cannabis numbers show added market potential
From the prospect of getting high at social consumption lounges to offering more low- dose and lower priced products, some experts say the future looks bright and clear for the cannabis industry along the North Coast of California.
Tamar Maritz, vice president of business development at BDS Analytics, told attendees Wednesday during the Business Journal’s 2020 North Coast Cannabis Industry Conference that the industry will be valued at $57 billion by 2025. This year, the cannabis global spending forecast came in at $20 billion. The U.S. accounted for over half that.
Expected to harness 20% of the nation’s growth by 2025, California still leads the pack of states in legal sales. And for a state hard hit by the COVID-19, the coronavirus outbreak sent delivery and curbside pickup sales through the roof. On March 16, California sales rose 90% more sales than average year to date. The research found consumers were stocking up more.
“People were using it for sleep anxiety during the pandemic,” Maritz said.
Opening up markets represents the mantra of an industry that’s showing far more potential than market saturation.
At this point, 67% of Californians are either consuming cannabis or open to it, according to the research. The remainder rejects the notion of smoking, eating and drinking it. But with 71% saying they use cannabis as a recreational and social substance, much potential exists to expand into not only the consumer segment but with those who don’t. One consumer segment to keep an eye on – 9% of the market is considered “better living loyalists.”
Not your granddaddy’s cannabis
With cannabis coming in enough forms to appeal to everyone, products like CannaCraft’s Lagunitas-inspired Hi-Fi Hops may even demonstrate a greater opportunity to appeal to athletic types no matter what demographic they fall into. Hi-Fi Hops, which was introduced in January 2019, is essentially an IPA-flavored sparkling water. There’s even a root beer float-induced beverage called Keef, which blends the flavors of root beer, orange and cola.
“We’re excited about the beverage category,” CannaCraft’s New Markets President Bill Silver told the conference attendees and fellow panelists. After the conference, Silver told the Business Journal he uses Hi-Fi Hops before trail runs to hydrate and gain health benefits on aching joints from CBD (cannabidiol).
As baby boomers age away from smoking marijuana in large doses unless for medicinal purposes, products such as these represent a growth market two-fold. Boomers are recreational warriors who don’t allow injuries, aches and pains to get in the way of athletic pursuits. Some cannabis products like Hi Fi Hops also come in low doses of THC (tetrahydrocannabinol), another production trend panelists singled out for its market potential.
Alana Joyce, senior compliance counsel at Eaze, pointed out the huge potential in providing products to help those “stressed out about COVID.” There’s also an untapped market of users wanting to consume less than 3 milligrams of CBD. The cannabis delivery platform’s regulatory specialist also advocated for products to come in smaller packages.
In a discussion on branding, Joyce insisted cannabis providers steer away from little fruit shapes or “childish” designs.
“That makes me cringe,” she said, reminding the industry to avoid appealing to minors at all costs. Cannabis products are legally only sold to those over age 21.
“(Packaging) is so critical to the branding,” said Cy Scott, co-founder and CEO of Headset Inc. — a cannabis business analytics company.
An entrepreneur at heart, Scott noted more potential in cannabis companies offering cannabis in vape pens.
“It’s had its challenges, but it has opportunities with the Gen Z group,” he said, particularly for those in ages 21 to 23 and “as more people become 21.”
Scott also views cannabis topicals and capsules increasing their market shares in the coming years, even though they represent a small segment of sales now.
Overall, BDS research discovered that 71% Californians who inhale cannabis products also consume edibles.
Most of the panel agreed the low price-point products should do well in an uncertain economic climate, especially since many of the consumers are using the products to calm jittery nerves.
“Consumers now are sensitive to price,” he said, adding that alcohol is seeing the same market trend. “The lower price products are doing well. We expect to see the same trends continue with cannabis.”
The conference was underwritten by Farella Braun + Martel law firm.
Editor’s Note: This story has been updated to reflect clarifications on statistics used to describe the cannabis industry.