Will cannabis consumers buy sustainable products?

Sustainable marketed products chart

Sustainability-marketed products enjoy a price premium over conventionally marketed products. Between 2014 and 2018, that premium grew 5.3% to reach nearly 39.5%.

A growing number of cannabis operators are willing to pay extra for equipment and measures to reduce their carbon footprints, such as installing LED lights and using recycled and/or recyclable packaging.

But do consumers want sustainable products? And—perhaps more importantly—will they pay extra for them?

Adopting sustainable principles in most other industries creates higher operating costs that are passed on to the consumer. That can also happen in cannabis when, for example, cultivators switch to LED lights and other energy-saving equipment.

There haven’t been any studies specifically looking at whether consumers will pay more for sustainably produced cannabis. However, some brands that advertise themselves as sustainable are among the top sellers in their markets, such as Flow Kana and Raw Garden in California.

According to international professional services company Ernst & Young, 30% of U.S. consumers spend more on products they consider sustainable or better for
the environment.

Consumer Studies

Additionally, the 2020 Sustainable Market Share Index published by the New York University Stern Center for Sustainable Business said mainstream branded products that are sustainability-marketed enjoy a 39.5% price premium compared to conventionally marketed branded items.

The NYU study also said sustainability-marketed products were responsible for more than half the growth in consumer packaged goods (CPGs) from 2015 to 2019. And sustainability-marketed products grew 7.1 times faster than products not marketed as sustainable during the same period.

“Our analysis demonstrates that sustainability-marketed products enjoy a hefty premium, continue to grow faster than their conventional counterparts and contribute over half of the growth to overall CPG. It’s clear that brand managers who are not pursuing sustainability strategies will be increasingly left behind,” said Randi Kronthal-Sacco, a senior scholar at NYU who led the research initiative.

Consumers identified as urban, upper-income, millennials and/or college-educated are more likely to buy sustainability-marketed products, according to the study. In addition, middle-income earners, baby boomers and Gen Xers contribute a significant percentage of sustainable-product sales.

Per capita, the top five states for purchases of sustainability-marketed products are Connecticut, Maine, Massachusetts, New Hampshire and Vermont. All of these markets have legalized adult-use marijuana, except for New Hampshire, which has a state-legal medical cannabis market.

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