December 1, 2020

Using data to get into the cannabis industry

Regardless of where you want to enter the cannabis industry, data can help position your business for success.
Written by
Team Headset
Published on
December 1, 2020
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The cannabis industry is growing rapidly and with the added momentum of new states legalizing and possible federal legalization in the future, it's a great time to think about entering the cannabis industry. But regardless of where you want to enter the industry, you need to have an understanding of market trends and the major brands in the market. Whether you are a potential investor, cannabis brand, retailer, or other business, having a firm grasp on market trends and brands will equip you with critical information about the possible opportunities in the market.

To get you more acquainted with the data your business can access with a Headset Insights subscription, we'll highlight some of the major brands in the US & Canada, as well as current trends at the category level. If you'd like to get started today and keep track of cannabis market data, sign up for a free Insights Pulse account.

Who are the major brands in the market?

Identifying the top brands in a particular market can help you determine the best place to start in the industry. For example, understanding how the major brands are performing will expose gaps in segments and categories that can be possible entry points for new products. Potential investors can also find top brands as targets for mergers and acquisitions. Below, we take a look at a handful of market leaders to see what information we can learn about market opportunities.

Edibles in Canada

How to get into the cannabis industry: Edibles in Canada

This graph compares sales trends (dark blue) to market share (light blue) for a single brand. Aurora Cannabis, the market leader in the Edibles category in Canada, saw a significant drop in both market share and sales during the COVID-19 pandemic. Since then, market share has not rebounded at the same extent as sales. From this graph, we learn that this top brand is not quite as dominant in the market as it was earlier this year. This is also an indication that Edibles consumers are welcoming to new brands and varieties of products.

Pre-Rolls in Canada

How to get into the cannabis industry: Pre rolls in Canada

Canaca leads 2020 rankings in Pre-Rolls in the Canadian market, but is seeing a steady decline in sales and a more accelerated decline in market share. This trend seems to begin right after the COVID trough. Market share for this top brand was already fairly low at the beginning of the year and has continued to decline, which indicates a more crowded market. New Pre-Roll entrants in Canada will likely have a harder time standing out in the crowded market.

Edibles in California

How to get into the cannabis industry: edibles in california

The California Edibles market is lead by Kiva. This brand saw a spike in sales during the COVID outbreak but market share was also declining during this period. Market share continued to decline until leveling off in the summer months. Sales are stabilizing at levels lower than they were in January.  Aside from the COVID disruption, this market appears stable overall as this top brand hovers around the same share and sales volume. New entrants to the California Edibles market are more likely to grab market share from existing brands.

Brand mapping

Brand mapping is another helpful tool that can be used to find how brands are growing in their markets. The bubbles represent market share, and the arrows represent movement from the prior 12 months to the most recent 12 months. A growing bubble indicates an increased share of the market, and a shrinking bubble means decreasing market share. The x- and z- axes show the price and volume movements relative to competing brands. In general, when a brand gains share, other brands lose share.

This graph shows the top five Edibles brands in California. WYLD gained share year-over-year, meaning its bubble has grown, and its volume also grew, shown by the bubble moving up. At the same time, Kushy Push moved in the opposite direction, but both brands became relatively cheaper. Plus also lost some share and volume while becoming cheaper. This is interesting since Kanha was able to move in the opposite direction with higher relative prices. This is not explained by a change in SKUs sold by each brand. Instead, Kushy Punch saw a very small increase in distribution (8%), while WYLD nearly tripled distribution (293%). Plus grew its distribution by nearly 40%, but Kanha's distribution was at 117%. Kiva was already the most widely distributed of the brands and remained that way. Consequently, Kiva maintained its market share while becoming slightly cheaper.

What are the current trends in the market?

Understanding trends in different categories will tell you what is gaining popularity in the market as well as what is becoming less popular. This type of data can guide you as you determine what categories provide the most opportunities for investment or growth.

What is declining and where?

How to get into the cannabis industry: category declines

This graph compares declines in categories in various states year-over-year and can indicate what categories are best avoided as potential entry points in the industry. Here, we can see that Nevada has seen declines in most categories. Looking at individual categories, Topicals, Tinctures, and Vapor Pens saw declines in most of these markets.

What is growing and where?

How to get into the cannabis industry: category growth

This graph shows you category growth across select markets. Looking at Canadian markets, Alberta is the most established market and has the slowest rate of growth whereas British Columbia has the highest rate of growth. This high rate of growth is concentrated in Capsules, Pre-Rolls, Flower, and Oil.

How to get into the cannabis industry: fast yoy growth

Many US states are newly opened markets, so there are fast year-over-year growth rates across multiple categories. We see here that California is the definite leader in growth in a number of categories. Flower, Pre-Rolls, Concentrates, and Edibles, in particular, saw year-over-year growth in most markets.

How to enter the cannabis industry

Regardless of where you want to enter the cannabis industry, it will be hard to position your business for success amongst the growing competition without a firm understanding of market trends. Using market-level data from Insights Premium will allow you to identify the gaps and opportunities in the market so you can enter the industry confidently with more chances of success. To keep an eye on high-level trends for free, sign up for an Insights Pulse account, and to learn more about how you can leverage data and insights to enter the industry, sign up for a demo today.

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