A deep dive of the Massachusetts cannabis market

Introduction

Totaling nearly $1 billion in cannabis sales so far this year, the Massachusetts cannabis market is growing larger than more legacy markets in the US such as Washington and Oregon. This highly competitive market, with over 400 retail licenses issued so far and more pending, offers an additional challenge to retailers and brands: vertical integration. Massachusetts is by far one of the most vertically integrated markets in the US, which translates into a high level of brand consolidation in the market. In this report we take a close look at the Massachusetts cannabis market, exploring cannabis sales growth, product categories, brand consolidation in the market, demographics, and more.

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Executive summary

When we examine the Massachusetts cannabis market, we find many trends that set this market apart from others in the US. For example in recent months, many markets have been experiencing declining growth rates as a result of a post-pandemic market correction. In Massachusetts however, sales totaled $132M in July 2022, a 4% increase from July 2021. The Massachusetts cannabis market is also highly vertically integrated compared to other US markets. Because of this, Massachusetts has the most brand consolidation among other cannabis markets, with more than 2/3 of total sales coming from the top 10 brands. While the consumer landscape in Massachusetts is fairly similar to the rest of the US, there is a slightly higher proportion of Generation X consumers and younger Female consumers participating in the Massachusetts cannabis market compared to other markets in the US.

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Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked with Headset’s business intelligence software. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider. In this report we examine sales from US Headset Insights markets. This includes AZ, CA, CO, IL, MA, MD, MI, NV, OR, and WA.

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Size of the Massachusetts cannabis market

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Let’s first take a look at total sales by market so far this year to see how Massachusetts compares to other markets in the US. Since we last explored Massachusetts, sales in this market have surpassed more mature cannabis markets such as Washington and Oregon.

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Total cannabis sales & unit volume

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In this next graph, we look at the monthly total sales and unit volume in Massachusetts since the beginning of 2020. All cannabis retail stores were closed in response to the COVID pandemic, and that is reflected on this graph by an absence of sales during April 2020.

Like all US markets, Massachusetts saw fantastic sales growth during 2021. Unlike many other US markets however, Massachusetts has not had the same level of sales declines in recent months. For example sales in July 2022 totaled $132M, which is a 4% increase from July 2021, while many other states are seeing negative year over year growth.

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Cannabis product category sales in Massachusetts

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Let’s explore product categories next. Here, we look at the category sales share of the top five categories in Massachusetts compared to an average of all other US markets. The sales share to Flower in Massachusetts is very similar to the US average, but there are some significant differences in all other categories. Most notably, Massachusetts has a very high sales share to Pre-Rolls (17.2%) and a very low sales share to Concentrates (4.1%) in comparison to the US averages.

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In the smaller four categories, we can see that Massachusetts has higher than average sales share to Capsules (1.5%), Beverages (1.3%), and Tinctures (1.2%). At only 0.3%, the sales share to Topicals in Massachusetts is less than half the US market average for the category.

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Consolidation of cannabis brands in Massachusetts

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Now let’s explore the level of brand consolidation in Massachusetts. This graph shows the combined market share of the top 10 ranked brands so far this year across several US cannabis markets. With more than two-thirds of total sales going to the top 10 ranked brands, Massachusetts has the highest value on this chart. This is due to the large proportion of sales that are attributed to the ‘House Brand’. Massachusetts is one of the most vertically integrated cannabis markets in the US and most retail businesses in the state also have some level of production capability.

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House Brand by category

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Let’s take a closer look at House Brands. As we mentioned, Massachusetts is one of the most vertically integrated US cannabis markets. However, the prevalence of house-branded products is not the same across product types. In this graph, we can see that more than two-thirds of sales to both Flower and Pre-Roll products are from in-house brands. Concentrates and Vapor Pens are next with 42% and 33% of sales from in-house brands respectively.

It seems that as production complexity requirements for product categories increases, market share to house-branded products decreases. For example, it is simpler to grow and package Flower than it is to produce an Edible, Capsule, or a Beverage.

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Demographic sales share

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In this graph we can see the proportion of sales to customer demographic groups in Massachusetts in comparison to an average of other US markets. The index metric compares the two sales share values. If the index value is greater than 100, then the proportion of sales to that demographic group is higher in Massachusetts than elsewhere in the US. If the index value is less than 100, the proportion of sales to that demographic group is lower in Massachusetts.

Among younger groups like Gen Z and Millennials, Massachusetts sees more sales than average from Female customers and lower than average sales from Male customers compared to other US markets. We also see that Generation X customers make up a larger portion of the market in Massachusetts as well. Baby Boomers contribute almost the exact same amount of total sales to the Massachusetts cannabis market as they do in other US states.

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Conclusion

As we can see from the above data, Massachusetts is a growing cannabis market with unique trends and nuances for businesses to consider. However, the competitive nature of this market can make finding opportunities and developing strategies challenging. Luckily, Headset is here to help! Reach out for a demo to learn how you can find opportunities in Massachusetts and other legal cannabis markets in the US and Canada.

Key takeaways

• So far this year, Massachusetts has logged more total cannabis sales than Washington, Oregon, and Nevada, and is close behind Colorado.
• Massachusetts has seen positive year over year growth in July 2022, unlike many other US markets currently experiencing year over year sales retractions.
• Due to the high level of vertical integration in the market, Massachusetts has the most brand consolidation of any US adult-use market with more than 2/3 of total sales coming from the top 10 brands (including ‘House Brand’).
• The proportion of sales from in-house products varies widely across categories, with Flower and Pre-Roll as by far the most vertically integrated product types.
• The customer landscape in Massachusetts looks fairly similar to the rest of the US, with slightly higher participation from customers in Gen X and from younger female customers.

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