European medical cannabis markets are not yet mature, and consumer trends are only beginning to emerge as product choice broadens. What can be learnt from the more mature markets that have been operating the other side of the Atlantic?
Roy Bingham, CEO and Co-founder of BDS Analytics weighs in.
In North America, legal cannabis retail sales in 2017 were $9.2 billion. We project that they will grow to over $24 Billion by 2021.
We are confident on our predictions for that growth because, despite US Federal prohibition, state laws have been passed that already pave the way. Cannabis is North America’s fastest growing consumer products industry. Most of its scale comes from five states – California, Colorado, Washington, Oregon and Michigan, but dozens of other States are now driving growth as their local industries grow. The Adult Use markets in States such as Colorado, Washington and Oregon have seen compound annual growth of around 40% for several years.
Fuelling this growth is consumer demand. Our ongoing programme of statistically projectable studies is providing fascinating and useful insights about consumers: 80% of US adults agree there should be some form of legal cannabis use and 64% of Americans agree that it has medical benefits. Despite Federal laws, 54% of US residents and 51% of Canadian have tried cannabis – legal cannabis may be new, but cannabis consumption is not. In Canada, 21% of adults over 18 have consumed cannabis in the last six months. In the legally available medical/adult US states that figure is 23%. 30% to 40% are “Acceptors” – they would consider consuming cannabis in the future and in Canada 47% are rejecters – they would not consider it. Yet although Canada polls lower than the US – Canada has made cannabis federally legal.
Cannabis consumers are extremely diverse. On average they are 40 years of age, male and female, 50% work full time, physically active, social, creative and more satisfied with life than non-consumers. Acceptors skew older and male and rejecters are mostly over 65. Consumers cite both recreational and medical reasons for consumption and relaxation is very high on the list, including managing anxiety, stress and feeling peaceful. Half of consumption is a solo experience and later in the evening is the most popular time. In the US 71% of consumers report consuming at least once per week. 75% prefer inhalables, 20% edibles and 4% topicals. Consumers like to pair cannabis consumption with music/movies, snacks, exercise, fine dining, beer, wine and cocktails.
The US cannabis consumer experience is becoming normalised with boutique stores, sophisticated consumer packaged goods, celebrity endorsements and new generation products. Branded products now represent about 50% of all sales in the more mature States. Consumers are driving rapid growth in concentrates, pre-rolled products and edibles. Flower is growing more slowly than average but is still about half of all sales. Among concentrates, in Colorado, vape products are 40% of all sales and have grown fastest – up 86% 2017 vs 2016. Shatter, wax and oils remain important. In edibles, candy represents almost 50% of sales and continues to grow well, with chocolates at about 20%, beverages, infused foods, pills and tinctures each at 7 to 8%.
Prices of flower have decreased steadily in Colorado and Washington to about $5 per gram and $7 to $9 in Oregon and California. Concentrate prices have also declined in Colorado and Washington to about $23, but have increased in California and Oregon to $33 to $37 on average. Edibles prices have remained more stable in all States, with a weighted average of $13 to $18 per item.
Branded product sales have grown at over 60% annual growth to take about 40% of the market. The top five edibles brands in all four leading States have 40 to 50% of their respective markets. In Colorado and Oregon, the top 5 concentrate brands have even more market share at about 70%. So… these markets are beginning to look mature with some dominant players emerging.
Are these trends likely to be repeated in Europe and elsewhere? If consumers are allowed to drive growth and regulators don’t prevent normal market forces then cannabis products, consumers and behaviours could look very much like other mainstream product markets. However, different regulatory and cultural norms exist in Europe and are already starting to influence medical cannabis markets here. European medical cannabis consumers expect a more standardised, medicalised product, and lightly regulated non-medical markets are not likely to emerge in Europe in the near future. Consequently, we are likely to see different consumer trends emerge, until these factors change.
