Cannabis is big business in Colorado, to the tune of $996 million in sales in 2015. In August of last year, after steadily increasing month-over-month sales, the state surpassed $100 million in monthly sales for the first time. This sales total in Colorado was a 42% increase over 2014, and in the industry as a whole 2014 was a 74% increase over 2013. This, despite the constantly dropping price per ounce in Colorado and Washington State. Where are all of these new sales coming from? Are they simply a recapturing of portions of the estimated $30 billion value of the illegal American cannabis marketplace, or is there more at play?
It seems unlikely that this constantly expanding consumer base is coming completely from black market buyers shifting to legal purchases. In fact, according to the Marijuana Business Daily Fact Book, states with medical or adult use dispensaries only 36% of cannabis consumers have moved completely from the black market to legal purchases. The report adds that 31% of consumers in these states have never purchased from the black market while the balance either purchase solely from the black market (17%) or purchase both legally and illegally (16%.) It stands to reason that as cannabis normalizes in states where it is legal customers unwilling to participate in the illegal market are coming to cannabis for the first time.
It’s generally true in consumer industries that casual, mainstream consumers contain vastly more revenue potential than hardcore consumers.
It’s generally true in consumer industries that casual, mainstream consumers contain vastly more revenue potential than hardcore consumers. For example, despite the fervor of craft beer lovers macro-breweries still dwarf micro-breweries in total sales. Much to the chagrin of die-hard sports fans it’s often so-called “bandwagoners” that result in sold out games and increased merchandise sales. It’s becoming obvious that this is becoming true in cannabis as well. Even now, according to the Marijuana Business Daily report, 40% of non-medical cannabis consumers are not daily users.
The cannabis demographic is expanding, and it’s inevitable that we’ll see increased interest from professionals to homemakers. It’s up to industry professionals to create a marketplace that is appealing to these consumers.
We know that the market is increasingly appealing to older consumers, and that more and more women are participating in cannabis. The cannabis demographic is expanding, and it’s inevitable that we’ll see increased interest from professionals to homemakers. It’s up to industry professionals to create a marketplace that is appealing to these consumers. The cannabis culture market will certainly continue to be vibrant and lucrative, but the true potential of the legal market can only be tapped through increased participation.
This means increased thoughtfulness in image rehabilitation and branding, and it means taking an active role in establishing industry regulation. It means leveraging traditional business experience when it comes to retail, logistics, and strategic planning. It means building a forward-looking industry based on professionalism, reliability, and established best-practices. By developing a consumer base that includes every demographic in the country converting the $30 billion illicit cannabis market to legal sales will just be the beginning.