Marijuana Business Factbook 2019

223 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Chapter 5 Financial & Operational Data: Retailers Medical marijuana dispensaries and retail stores ― collectively referred to here as retailers ― are the face of the marijuana industry, engaging directly with patients, customers and other cannabis companies in the course of daily operations. Because these businesses sit at the end of the marijuana supply chain, their financial performance is one of the most reliable indicators of demand, market size and future opportunity for the entire industry. RETAIL TRENDS • A pattern of growth is emerging in recreational markets of significant gains in initial year-over- year sales growth followed by a tapering off over the next few years. Although sales continue to increase year-over-year in mature recreational markets in Colorado, Oregon and Washington state, the annual rates of increase have declined. This will make growth for individual retailers in those markets harder to come by, as competition among retailers continues to intensify. In cities like Portland, Oregon, and Denver, consumers are often able to purchase cannabis at dozens of stores within a short drive. • New medical markets, including Florida, Maryland, Ohio, Oklahoma and Pennsylvania, are booming. With the exception of Florida, each of these states has made access to dispensaries a priority and eschewed the vertical integration model of retail utilized in more restrictive MMJ states such as Minnesota, New Jersey and New York ― where low patient counts, and high startup and operating costs have put immense financial pressure on retailers. • Flower is still the top-selling product in markets where it is allowed, but consumer preferences continue to move away from flower to concentrates, vape pens and edibles. Vape pens in particular enjoy popularity among consumers because of their portability, discrete nature and immediate effects, especially among consumers who find traditional smoking unappealing. • The number of brands and products in the manufactured cannabis products space ― such as concentrates, vape pens and edibles ― continues to rise, fueled by increased consumer demand and the rapid pace of innovation. That puts pressure on retailers to constantly re-evaluate their product assortment, as stores run the risk of overwhelming their customers with too much choice and being forced to purge low-moving inventory at rock-bottom prices.