Tag Archives: trends

The Cannabis Industry and the Science of Seasonality

By Blaise Lucey
No Comments

Let me be honest: I’ve only been part of the cannabis industry for six months. Before that, I worked at B2B tech start-ups and ad tech companies like Roku and Criteo. The most valuable thing I learned is that most good ad campaigns are linked to seasonality.

When I worked at Criteo, the vast majority of our clients were retail and ecommerce. Seasonality initiatives were critical. The more relevant your ads to an upcoming seasonal event, the more relevant they were to the audience. Think about any window display you’ve seen recently – the CVS near me has had Valentine’s Day products in the window since at least mid-January.

When I worked at Roku, we got to take a look at TV streaming behavior. For example, when Ben Affleck started dating Jennifer Lopez again, searches for their movies and music videos skyrocketed. During the space race, general space-related (think Star Trek) TV content went up.

That’s not seasonality – that’s psychology.

As the cannabis industry matures, businesses should start thinking about what seasonal, psychological and cultural factors impact their consumers. Cannabis consumption could be said to be the art of the business, but understanding what cannabis consumers want is the science. Here are three ways to think about that science:

1. The Science of Stash

One analyst recalls that cannabis sales reached “unimaginable” highs in 2020. He called this “pantry-loading” behavior. Let’s call it “stash” behavior.

The buying behavior of a cannabis buyer who buys an eighth is fundamentally different from someone who buys a six pack. The six pack is gone in a weekend. Which flower buyers are buying an eighth just for a weekend? A week? A month?

During the height of the pandemic, with nowhere to go and a lot of anxiety, dispensaries provided at-home entertainment for cannabis consumers. That’s why sales grew by 46%. Cycles of consumption naturally went up. In this case, I think of streaming TV, too – Netflix added 36 million subscribers in 2020 and Roku saw 58.7 billion hours streamed in 2020.

Is there a correlation? Well, stashing behavior obviously correlates with couch behavior. When people spend more time inside, they’re more tempted to go through their stash and cannabis sales increase.

Cannabis isn’t affected by just regular old seasons – it’s affected by what we could call personal, seasonal patterns. Just like streaming TV, when consumers spend more time inside, they buy more cannabis because they consume it faster.

What is the stash turnover rate for your different audiences? What factors make that turnover rate go faster or slower?

Analyzing stash behaviors can reveal your most loyal and high value customers, and offer new perspectives on how to market to different groups.

2. The Science of Celebration.

One estimate shows that Illinois cannabis sales jumped up by 10% in July due to Lollapalooza. Makes sense – more than 385,000 people attended.

women grow event
“When people are coming into cities for events, they’re picking up cannabis then and there, and likely consuming it in true real-time.”

Looking at our own data, there’s a clear spike around St. Patrick’s Day – cannabis sales are 70% higher than average daily sales in February and 54% higher than average compared to March daily sales. This goes against stashing behavior, because the sales happen on the same day.

This is a different science. When people are coming into cities for events, they’re picking up cannabis then and there, and likely consuming it in true real-time.

Event trends can have a huge impact on cannabis sales and psychology. Where there’s a celebration, there’s going to be cannabis buyers. Event trends often translate to tourism trends. And these cannabis buyers aren’t just tourists to cities, a lot of them are likely tourists to cannabis itself as well – novelty consumers who go into a dispensary for the specific event and pick up a little bit of everything.

That’s an opportunity for new brands and more niche categories (beverages, pills, edibles) to connect with a new group of customers. That said, after that initial purchase, how can the brands stay in touch? That’s where dispensaries and cannabis brands need to come up with new strategies for managing cannabis customer data.

3. The Science of States.

Events like Lollapalooza are regional – and so are cannabis markets. In Massachusetts, BDSA data shows continued growth. In the West Coast, analysts call it a “rollercoaster.”

Note the specific pandemic trend lines. Any state that suddenly saw more than 50% sales one year and a sudden slump the next year at the same is bound to see a market crash. It also made it easy to ignore a lot of structural problems – which states like California are now trying to correct.

Legal cannabis sales are radically different depending on the maturity of the market. Let’s not forget that this goes deeper than just states. Only 32% of the California market even has legal dispensaries open right now.

What are regional trends? What are event trends? What are cultural trends?

The more dispensaries and cannabis brands can proactively market to anticipate these needs – and get the message out there to the right audience segments – the better.

Making Cannabis Personal

What keeps becoming apparent is that above all, cannabis is personal. Everyone is looking for something a little different. A consumer’s tastes can change based on all sorts of factors – or not change at all. Different products might suit different occasions. Different messages will talk to different use cases – some people want cannabis that can make a concert better. Others want it to sleep. Dispensaries need to figure out who’s who.

At the end of the day, that’s what makes the cannabis industry so unique. It is an end-to-end experience like no other. From researching products and dispensaries to analyzing brands and products to consuming it, every interaction a consumer has with a cannabis business is very personal. And if they don’t like their personal experience, they won’t come back.

As the industry looks ahead into a competitive 2022, the mission should be simple: make every touchpoint for every customer a great experience, from start to finish.

cannabis close up

The Future of Cannabis: Perspectives from Industry Leaders

By Aaron Green
No Comments
cannabis close up

With 2022 comes a new year for cannabis. Mid-term elections, political forces shifting and several cannabis-related bills in the legislature make federal legalization seem like a reality closer than ever before. On the cannabis market’s side of things, disruptions are always occurring. Consumer spending on different product categories, new technologies for extraction processes, new cannabinoid and medical research and entirely new types of products including things like nanoemulsion tech have all been playing a role in market trends.

As our readers have probably noticed, we’ve been publishing conversations with industry leaders from every corner of the market. For this piece, we wanted to do something different. Instead of showing you a conversation with one individual, we asked the same question to seven different leaders in the cannabis space during interviews. The idea here is to see what interests people most in the cannabis industry. Are they excited about new research? Or new product development trends? Or do they believe a certain market is headed in a new direction?

So, what trends are you following in the industry? Below you’ll find seven responses to that question from various leaders in the cannabis space. We also want to hear from you though. What trends are you following? Leave a comment at the bottom of the article and let us know!

What trends are you following in the cannabis industry?

Brooke Butler, VP of Partnerships at Simplifya

Butler: I am obsessed at this point with the new states that have legalized, especially on the East Coast, like New Jersey and New York. I’m interested in the local jurisdictions and what’s going on with people opting out or opting in and how that’s playing out. The interesting thing about the pandemic is we had so much more cannabis reform than anybody expected. We went fast because suddenly, jurisdictions now need more money. They have budget shortfalls that they’ve got to account for, and I think they’re starting to realize that cannabis is a great way to do that. If I’m in New York, and I don’t have an adult use store, but New Jersey is about to open all their adult use stores, everybody’s going to be driving across state lines and giving that tax revenue to New Jersey. So why not regulate it and make it safe for your constituents, and get tax revenue for your jurisdiction that you can then put to use for education, or community centers and things like that? So, we’re really seeing the evolution of that change and California is a great example of that. We’ve seen a lot of jurisdictions where when the state first legalized back in 2018, they were like, “there’s no way we’ll ever do it,” and they’ve started coming around. That for me is really exciting. I love watching people’s minds shift and trying to figure out what’s really driving that.

Arthur Jaffee, Founder & CEO of ECS Brands

Jaffee: I’m following the regulatory landscape closely. There’s a lot of confusion and complexity around that topic. There are different cannabinoid conversion procedures for delta eight now and all these other derivatives to THC have made things much more complicated from a regulatory standpoint. There’s also been an increase in production of cannabinoids from non-cannabis sources where there’s no evidence at all yet in terms of proving safety. At least with cannabis, we have decades of public use, safety and consumption data that really supports a generally safe product profile. With some of these synthetically derived cannabinoids, people just assume that “bio-identical” guarantees being safe, but there’s no evidence and therefore should absolutely not be assumed. Synthetic cannabinoids require extensive research because the slightest modification in molecular composition can be very dangerous. Evidence is key, and it just doesn’t exist yet. We know that cannabinoids that are naturally existing and derived from the plant are safe, and ultimately designed for the body. when you start manipulating the molecular composition it may be hurtful.

Ricardo Willis, CEO at Hanu Labs

Willis: Hotels and restaurants are a big thing for me. I talked to a few people last night who own a restaurant in Oklahoma, and they’ve gotten one of the first permits to be able to include cannabis offerings in their restaurant. Our products fit well in resort, hotel, or restaurant settings, especially when you want to offer customers a safer device to use. Having been a chef, I can just imagine all this food on the table and then having a vaporizer that is portable flip over on the table, ruining everything. So, I want something that’s stationary. It’s right there, as the centerpiece. Also, people are going to use cannabis in these places, like hotels no matter what. So, do I want somebody using a blowtorch to light their rig? Or do I want someone using a safe device that has automatic shut off and things of that nature. So that’s important.

Lastly, pricing is a trend that I’m following closely. We’ve seen a huge dip in the pricing in California flower. I want to see if that trend is going to matriculate over to the concentrates, which is one of my favorite spaces because I’m a dabber. I know that vape carts are losing some steam in the pricing categories. We saw one-gram carts that were $60, several months ago. Now companies are offering one-gram carts at $28. It’s going to affect the industry.

Marc Lakmaaker, SVP of Capital Markets at Audacious

Lakmaaker: I’m looking at how brands develop in markets and what kind of what products resonate. You’ve got the cannacurious coming in, you’ve got new demographics coming in. And then you’ve got the existing cannabis culture. For companies that are authentic, it’s very important to have that connection to the culture. It’s more than just about cannabis, it’s about lifestyle. But then on the other end, there’s a lot of people that are coming in for a variety of reasons, the medical, recreational, whatever. So, what I’m trying to look at is what is resonating with which target groups. What kind of products really hit this spot in terms of branding, but also the actual product offering and trying to see if we’re seeing a movement towards either form factors, or entourage effect kind of products, terpenes, etc. so you know, what do people want.

I’m seeing that increasingly, if they’re cannacurious that are coming in and get acquainted with cannabis over certain period of time, they’ll probably go for a lot of value options. But then same as with certain alcohol cool brands, or fashion or whatever, we are now seeing a movement where the people that have been in the market for six months to a year are I slowly move into the higher ends. I think that’s something that’s happening, where people who have been in cannabis for a while are now becoming more discerning in the products that they’re going for, and how do those mechanisms work.

Sam Andras, AIA, Principal of MJ12 Design Studio and Executive Vice President of Professional Services at urban-gro (Nasdaq: UGRO)

Andras: One of the most fascinating things to me about this industry is everyday there seem to be 10 new technologies.   Eventually, one of those technologies is likely to be successful. You’ve got things like grow pods, you got Agra fi, modular, rooms, modular driver, and semi. This industry is filled with trending technology. And I think one of the greatest challenges as an architect is to understand how to work with the client, to really understand their philosophy and what they’re trying to accomplish and working with their grower. It is important not to restrict a grower to one specific cultivation method, but to explore how you can design a facility that allows a client to modify a cultivation methodology down the road. Designing flexible facilities that can adapt and adopt the future technologies is critical.

Derek Smith, Executive Director of Resource Innovation Institute (RII)

Smith: So, I see the need for MSOs and certainly publicly listed companies, to report on ESG. We are essentially the “E” of the ESG. We have the environmental data on energy, emissions, water and waste, to support the MSOs with that data need. That to me is a perfect storm where there’s pressure to do the reporting and we have a tool and an infrastructure that’s broadly supported, recognized by governments, by utilities, by cultivation operations, supported by the supply chain. We’re here to help serve that need. We’re a non-profit. We’ll protect the data of the companies, and then they can get in the queue to be recognized as leaders for being part of this effort. That to me is an exciting trend right now. Everybody wants to make a commitment and show progress on sustainability and we’re going to help them be able to do that.

Tyler Williams, CTO and Founder at CSQ

Williams: I think the big one right now is the delta-8 THC, especially on the CSQ side. We’re watching that and looking at how we need to adjust our standard. On November 1, we have our next Technical Advisory Committee meeting, and we’re going to be talking about the next revisions to the standard. Delta-8 is going to be one of the things we’re going to be talking about and something that we’ve been watching and trying to educate ourselves on, because there’s not just going to be delta-8, there’s other ones that are coming on the market that are going to be, you know, essentially the same as delta-8, where they’re in this gray area. We don’t want just the government to say, “Nope, you can’t do this at all.” Hopefully we can help the industry a little bit by at least providing some standardization there. That’s probably the biggest trend that we’ve been watching.

Top 5 Trends for Cannabis in 2020

By Melissa Kuipers Blake
1 Comment

To ask this author to identify the top five trends in 2020 for cannabis is akin to asking her to name only five of her favorite Coldplay songs. With so much energy for both topics, a selection of the absolute most favored components of either passion presents quite a challenge. But like the cannabis industry has done for 20 years under its state-legal regime and entirely illegal federal one, this author will endure under the confines of such limitations.

Consolidation

In any new industry this is bound to happen. Particularly one with such massive government oversight and equally massive consumer demand. Original license holders are cashing out. And they should. They were the risk-takers. The originals. They raced to government buildings across the country with boxes of background checks accompanied by teams of forensic accountants, lawyers and lobbyists to walk down a path only recently paved with legalization to seek a license to directly violate federal law. They drew a line in the sand and said, “I’m in.” And the stars have aligned for them to move on in many states due to changes in ownership structures, particularly ones that now provide for out-of-state interests. They deserve to sell that to the next highest bidder for all of the pressure, investment, stress and risk that permeates the foundation of this industry. With state law changes have come multistate operators, many of whom do not necessarily understand cannabis and have probably never used it, but they know an opportunity when they see it. These companies are buying up licenses across the country and creating brand awareness among consumers with an eye toward changes in federal law that would allow for the transportation of cannabis across state lines. Once that happens, the cannabis industry will be treated like every other American producer with massive distribution centers across the country that will mimic the likes of alcohol and tobacco overnight.

Infused Products

The report further found that the edibles category could be worth more than $4.1 billion in Canada and the United States by 2022.No one wants to go to work and smell like cannabis, unless, of course, you work in a grow facility. And even then, maybe you don’t. And employers aren’t exactly excited when employees are present with the distinct aroma when it’s time to clock in. So, what’s a cannabis consumer to do? Eat or drink the product instead. In a world full of energy drinks, dietary supplements, bubbly water infused with fruit (which still doesn’t taste like anything, let’s be honest), it should surprise no one that cannabis is making its debut in a myriad of consumption applications. While most states prevent the mixing of cannabis-infused beverages and alcohol for sale by retailers (consumers can—and do—mix the products on their own), there are no limits on other targets for cannabis products. Most popular: food and drinks.

ArcView Research and BDS Analytics recently identified that consumer spending on cannabis-based food and drink reached an estimated $1 billion in 2017 in the United States and Canada, representing about 11.4% of the total $9.1 billion in consumer spending on consumable cannabis in those two markets. The report further found that the edibles category could be worth more than $4.1 billion in Canada and the United States by 2022.

There are countless food products and infused beverages on the market in America and anticipated this year, which dovetails perfectly with the American predilection for happy hours, brunch, and after-work drinks; minus the hangover, some might suggest. Any cannabis company owner will tell you the future is infused products, whether consumers are buying the oil themselves to infuse at home or asking a company to infuse something for them. The future of cannabis is, indeed, on a menu.

Movement in Washington, D.C.

When the SAFE Banking Act passed off the House floor with 324 yes votes, 91 of which were from Republicans, a collective cheer and wave akin to an invigorated football stadium engulfed the industry. A huge moment. One long-awaited and most needed. Momentum. Movement. Finally, a sigh of relief. One would be naïve to assume such a success in the House will be mirrored in the Senate. It will not. But that sort of statement from one chamber is a message to the other: this issue is not going away. It matters. It’s bipartisan. And employees/owners in the cannabis industry need relief from the heavy hand of the federal government when they go to work every day in full compliance with state law. With every passing day, lawmakers on both sides of the aisle are being educated by the cannabis industry about how to responsibly regulate the products and what true regulation looks like. It’s only a matter of time until these state-level practices are adopted by federal policymakers. Because let’s be honest, elections matter. And 33 states have said yes to cannabis. It’s only a matter of time until the members of Congress from those states take up the issue in a real way. And many already have.

State Legalization

In the last 10 years, 20 states legalized cannabis for medical purposes and 13 legalized it for adult use. Several national polls suggest this trend will only continue in 2020. And unlike the polling in most recent national elections, the predilections on cannabis seem to be accurate. In 2020, adult-use cannabis measures will definitely appear on the New Jersey and South Dakota ballots. Adult-use measures could also appear in Arizona, Arkansas, Missouri, Montana, New Jersey, North Dakota and Oklahoma. Idaho, Mississippi, Nebraska and South Dakota are likely to vote on medical cannabis as well.

Of note, the South Dakota measure would also legalize hemp, which has yet to get the blessing of the Mount Rushmore state. In Mississippi, voters will likely be asked their opinions on legalizing medical cannabis. This is interesting since the University of Mississippi has had the only DEA license to grow their own cannabis for research purposes since 1968, but the rest of the state has been squarely in prohibition with zero allowances for cultivation or possession.

The future is bright for the cannabis industry and its players. For a final ounce of perspective on state legalization, only three states have no legal cannabis of any kind: Idaho, Nebraska and South Dakota. And if Idaho and South Dakota’s polling is any indication, they won’t be on this short list for much longer.

Maturation

Once upon a time, drug dealers applied for legitimate cannabis licenses. They were denied. And some tried to dodge the regulated marked to continue selling on street corners and out of back doors. Some still do. But now we have a cannabis industry with true regulation and what this author likes to call “adult supervision in the room” on the cannabis conversation and those leading it. A week doesn’t go by without a Wall Street investor or Silicon Valley tycoon asking for advice on where to invest in the cannabis industry. Huge retailers are calling to ask if they can sell it. Alcohol and tobacco interests are hugely, well, interested. And the industry is being led by the likes of former baby car seat manufacturers, former food and beverage lobbyists, young entrepreneurs, and tech geniuses. Now that these individuals are invested and committed, they will continue to professionalize the industry by leading on public-facing initiatives teaching consumers how to use cannabis responsibility, how to determine a much-needed standard for impairment, and to overall improve the reputation of a product once fully illegal, and now partially legal, and soon on its way to fully legal.

The future is bright for the cannabis industry and its players. Only daylight ahead and the billows of bureaucratic smoke are parting hopefully—eventually—with regard to the incongruity between state and federal law on the issue. That’s a lot of ink to say that the next few years will be monumental for the cannabis industry. And if you’re a Coldplay fan, you just caught the reference to my favorite song from the legendary Brit ensemble.

Analyzing National Trends for Marijuana Policy: Q&A with Matt Karnes

By Aaron G. Biros, Matthew A. Karnes, CPA
1 Comment

According to Matthew Karnes, founder and managing partner of GreenWave Advisors, LLC, looking toward the growth of the cannabis industry requires analysis of the changes in state and federal laws. “Eventual rescheduling or de-listing of marijuana as a federally prohibited drug, will hopefully lead to consistent and uniform national regulation and taxing authorizations that will ultimately change the structural and economic landscape of the industry,” says Karnes in an article here.COLOR-PIC-200x300

Looking at the sales trends in current legal states is a viable option to make financial projections, but much of that relies on the changing legal and political landscape of our country. According to Karnes, because it is impossible to accurately predict federal rescheduling or full legalization, investors must look at short, medium and long term trends to guide their decision making process. Cannabis Industry Journal sat down with Matthew Karnes to discuss some of the foreseeable trends.

 

Cannabis Industry Journal: What are some of the trends happening presently, that you can expect to continue?

Matthew Karnes: Just as states continue to pass legislation in some form of legalization measure, there is talk at the federal level of minimizing interference with state policies and removing prohibition statutes. We can see this national progression continuing until rescheduling cannabis eliminates the current obstructions that have limited industry growth.

Where states continue to roll out legislation to legalize cannabis, the rate of retail and cultivation license granting will have a large effect on the growth rates for each given state. Free market approaches as seen in Colorado and California will allow for faster growth rates than more restrictive states.

Recreational and adult use measures being introduced are notable disruptions in the medical sector that once fueled legalization. Medical research and development of strains for specific ailments is still in its early stages due to the impact of federal policy on research.

With an eye forward to eventual federal rescheduling or possible de-listing it is reasonable to assume that uniform national testing and operational standardization protocols will eventually be implemented at least as a baseline binding thread that will steadfastly assure consumers of an expectant consistency of product.

CIJ: Where do you see medium term trends taking the industry?

Matt: With more and more states legalizing cannabis in some form, we can expect the federal government to make a policy change. This will be accomplished via a DEA policy change or through congressional avenues in conjunction with federal agencies like the FDA, USDA and Department of Agriculture administering regulations.

With FDA or Department of Agriculture implementing cannabis policies, we can expect increased interest from outside the industry in research and development of cannabis-based drugs. This will lead to a medical market with more targeted medicine with precise dosing. We can expect more physicians to gain comfort in treating ailments with cannabis as well.

The recreational market will expand greatly with normalized commerce, enabling larger cultivation operations and infused products brands could grow to the national scale with interstate commerce.

CIJ: Where do you see the industry going long term?

Matt: When the cannabis industry matures down the road, we can expect multiple offshoots occurring. The recreational industry will involve local, regional and national policy much like the alcohol industry, and will likely resemble a liquor store model with individual “mom and pop” type businesses.

We anticipate that the medical market will recalibrate as more targeted products with precise dosing and efficacy are developed. At that point it will experience increased competition and consolidation. Without medical research and clinical trials, we cannot accurately project the growth of the medical sector.

Regulations involving tax revenue will most likely use a similar mechanism that states use for alcohol and tobacco taxation. Entities like state liquor control boards will oversee cannabis regulations. When that time comes, the cannabis industry will no longer be a novel idea and will become another conventional ‘consumer staple.’