Cannabis sales growth in a state where it has been newly-legalized is like an upside down hockey stick, said Jeff Gonick, founder of the New York company Bogart which makes low-THC pre-rolls. Sales start out strong and shoot up to serve existing cannabis smokers “and the generally curious,” he said. After a time though, that first consumer base gets saturated, so the growth in more mature markets, like those in California, Washington, and Colorado, slow or even plateau. After the first rush to market, companies struggle more to find new people who might enjoy cannabis Gonick said.
Changing factors on the ground, mean cannabis entrepreneurs need to know their customers and the products they are looking for.
So who’s out there buying cannabis?
Industry researcher Headset recently analyzed millions of retail transactions from thousands of customers in Nevada, Mass., Colorado, California, Washington, Oregon, Michigan and Arizona in the United States, and Alberta and Ontario in Canada to compile demographic and sales data.
Men Still Dominate Sales
In the US and Canada, men make about two-thirds of cannabis purchases. Canadian women make up a slightly larger share of customers than their US counterparts (37.5% to 33.8%).
Millenials spend the most
Millennials (age 27-42) account for almost half of all cannabis revenue in the US and Canada. Gen Z (up to age 26) and Gen X (age 43-58) spend at lower rates. Customers are on average younger in Canada where the legal consumption age is 18 or 19, compared to 21 in the US.
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Category preferences depend on age
Unsurprisingly, Baby Boomers are the group most interested in functional cannabis, the products formulated to help with aches, sleep, etc. That demographic of customers is also most likely to purchase flower and edibles, over vapes and concentrates. Younger consumers in contrast, are showing a preference for vapes over flower products. They are most likely to buy other new forms of cannabis, like concentrates.
Is Low-Dose the Way to Go for Entrepreneurs?
Gornick’s company, Bogart, makes low-dose pre-rolls so a consumer can smoke a whole joint and not get too high. Low-dose products, beverages, gummies and pre-rolls, make sense he said, “It’s like sipping a glass of wine instead of smashing a bottle of it.”
That hasn’t been the experience of all cannabis entrepreneurs. Kristi Palmer co-founder of the edibles maker Kiva Confections, said while customers claim to be interested in low-dose products, her own sales data shows many want “a powerful, small format. People say they want low but they are buying high.“
Entrepreneurs can agree though, that opportunity abounds. According to Headset, $100m of weed was sold on 4/20 this year.