The regulated cannabis industry in the United States is well into its second decade, but how products, brands and consumers are evolving remains fluid.
New product types and cannabis consumers are created every day, while sales experts report that veteran users are buying more and seeking greater variety.
Despite this changing industry landscape, a few discernible product trends are emerging:
- A majority of marijuana consumers—roughly three-quarters—are regular users who consume cannabis five or more times per week.
- New and occasional consumers make up a small portion of the market.
- Dollars spent on flower keep growing—even while flower loses market share to other cannabis products.
Heavy users at heart of industry
The Brightfield Group, a Chicago-based market research firm focused on the cannabis industry, reported that 47% of marijuana consumers use cannabis multiple times per day, 17% use daily, while another 10% consume five times per week.
Rather than market to new users, Brightfield’s managing director, Bethany Gomez, said marijuana executives should focus on existing users, the majority of whom consume frequently and spend a lot of money on cannabis.
“That 75% of heavy users is who you want to hit. They are a large group … so there’s a lot of opportunity there,” she said.
Frequent cannabis consumers often buy different products for different occasions, meaning business owners can appeal to them through product variety and affordability.
“Sales of pre-rolls, vape carts and edibles—which grew at a slower clip during COVID—are now enjoying a bigger growth pace because those are more sharable and portable items,” said Cooper Ashley, analytics manager for Seattle-based cannabis data firm Headset.
Overestimating the new consumer market
While some manufacturers and retailers have identified the right product balance, Gomez said many assumptions from cannabis executives are just plain wrong.
“There are a lot of misconceptions about who the cannabis consumer is and how this industry is going to evolve,” she said. “While it very much is a consumer packaged goods industry … those that cater too much to that future consumer—or the consumer that wouldn’t touch a joint with a 10-foot pole—have lost that view of where the heart and soul of the industry is.”
Gomez added: “Most brands are not going to see a lot of success trying to build their brand around occasional users. There’s only so many of them, and they don’t spend that much.”
According to Brightfield, only 6% of all cannabis users are new recreational users, while only 3% are new medical users. Consequently, companies targeting such consumers likely are misjudging the size of that market.
“The actual number of net new users is pretty small as a percentage of the overall consumer group,” she said. “We see a lot of companies trying to build their strategies around that future consumer. And, quite frankly, it’s a fairly difficult strategy to bank on.”
Evolving product market share
Flower accounts for at least 40% of marijuana sales in markets covered by Headset. But non-flower products are part of more valuable and more diverse basket sizes.
In emerging recreational markets such as Illinois, New Jersey and New Mexico, flower is losing market share to other product types, according to Madeline Scanlon, senior insights analyst for the Brightfield Group.
“Flower’s declining share of shelf space in emerging markets doesn’t translate to less flower options but instead more options for cannabis extracts,” she said. “Flower’s share of the market will decline to make room for more diverse product types like edibles, vapes and concentrates in (new) markets.”
Headset’s Ashley agreed: “That is a long-term trend line that we see in every cannabis market. When that new market opens, flower starts with pretty high market share, just because it’s the easiest product to manufacture. … And then, over time, in every single market, flower tends to slowly—drastically at first and then continue slowly—decrease in market share as operators get up and running with other, more complicated product formats.”
This trend translates into opportunity for product manufacturers and highlights the importance of product variety for retailers.