A look at cannabis demographics & consumer behavior in 2020

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January 20, 2021
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Introduction

The cannabis industry is constantly evolving. There are new brands and product types introduced every day. On top of that, there are entire new markets entering the industry at an increasing rate! Headset has real-time data products to answer many critical questions that will help you keep up with this fast-paced industry and grow your business ahead of the curve.

One of the most critical questions any business can ask is: who is my customer? With the Demographics add-on in Insights Premium, you'll find the answer in real-time, allowing you to adjust your business strategy quickly so you can stay ahead of the market. In this report, we'll take a look at how the cannabis consumer landscape has changed from 2019 to 2020, a year defined by unprecedented events, particularly the COVID-19 pandemic. While this report goes into a lot of detail, the data included is only a sample of what you can accomplish with the Demographics add-on. To see what else you can uncover, sign up for a demo, or get started for free with Insights Pulse.

Executive summary

Despite the chaotic events of 2020, the cannabis industry continued to grow. With the changing environment, customer behavior changed as well. Year over year growth in cannabis sales decreased from the youngest to oldest generations from 2019 to 2020 and the oldest generation, the Silent Generation, had negative year over year growth. Gen Z, on the other hand, grew 127% year over year and is becoming an increasingly important demographic group. This trend might indicate that cannabis is a more integral part of life for younger consumers, but COVID-19 also might be playing a part since older customers may be more hesitant to go to a cannabis store during the pandemic.

There are also differences in how Males and Females purchased cannabis throughout 2019 and 2020. For example, both Male and Female customers in the Gen Z group have decreased their spending on Pre-Rolls, but the drop off for Male consumers was more significant. Gen Z Females, the fastest growing demographic group, slightly decreased their spend on Concentrates, while Gen Z Males increased their sales to Concentrates from 10.8% in 2019 to 16.1% in 2020. To keep reading about changes in cannabis consumer behavior, download the report below.

Methodology

All data is directly from our Demographics add-on, available with an Insights Premium subscription, and is aggregated across the California, Colorado, Nevada, and Washington recreational cannabis markets.

Cannabis sales growth by gender

TOTAL SALES AND YOY GROWTH BY GENDER (CA, CO, NV, WA) OF CANNABIS

We first look at how gender impacts cannabis sales. Although Males make up slightly more than two thirds of total recreational cannabis sales, sales to Females grewsome year over year (43%) than Males (37%) between 2019 and 2020. Market share to Females also increased from 31% in 2019 to 32% in 2020.

Cannabis sales growth by age group

TOTAL SALES AND YOY GROWTH OF CANNABIS BY AGE GROUP (CA, CO, NV, WA)

When we look at different age groups, a nice clear trend line emerges: year over year growth decreases as we move through generations from youngest to oldest. All age groups had positive year over year growth, except for the oldest Silent Generation. Gen Z grew their sales by a whopping 127%, with new customers in this age group aging into the market every day by turning 21. We expect this growth trend to continue and Gen Z will become a more important customer segment over time.

The decreasing growth trend with increasing age perhaps indicates that cannabis may be a more integral part of life for younger consumers, whereas it is more of luxury or occasional purchase for older consumers. COVID-19 has also certainly played a role in this trend as well, since older customers may have been more fearful about exposure to the virus and therefore were less inclined to make a trip to the store.

YoY sales growth by age and gender

YEAR OVER YEAR TOTAL SALES GROWTH OF CANNABIS BY DEMOGRAPHIC GROUP

For our final year over year growth comparison, let’s look at demographic groups, split by both age group and gender. Again, we see a trend line with decreasing year over year growth as age increases. And with each generation, Female customers had greater growth than Male customers.

Category wallet share

2019 VS 2020 CATEGORY WALLET SHARE OF CANNABIS

Next, let’s compare 2019 and 2020 category wallet share for Baby Boomers and Gen Z. These two groups had very similar sales totals in 2020, at around $1B. We have previously reported on how consumer preference has shifted through the COVID-19 pandemic, but it is important to realize that those trends are for the entire customer base. For specific groups, we can see that different types of customers purchase different types of products, and different types of customers are also trending to and away from different categories.

For example, Gen Z consumers consistently spend more on Vapor Pens than Baby Boomers. Perhaps more surprising is that Gen Z increased their wallet share to Vapor Pens in 2020 whereas Baby Boomers drastically decreased theirs. Edibles go the opposite way. Edible share increased among Baby Boomers between 2019 and 2020, while it decreased among Gen Z consumers.

Gen Z category wallet share by gender

GEN Z 2019 VS 2020 CATEGORY WALLET SHARE BY GENDER  OF CANNABIS

Looking at Gen Z specifically, we can see that year over year category trends are different between Male and Female customers in this increasingly important customer group. In general, Gen Z Females were more consistent in their year over year category preference, while Gen Z Males had some bigger shifts in purchasing. Gen Females' slightly increased their Flower spend, while Males in this group slightly decreased theirs. Both genders increased their wallet share to Vapor Pens, but Males had a larger jump from 24.2% in 2019 to 25.9% in 2020. Gen Z Males also significantly increased their Concentrate spend from 10.8% in 2019 to 16.1% in 2020, while Females slightly decreased their spend on Concentrates.

Both genders decreased their spend to Pre-Rolls, but the drop off for Males was much more significant. This might indicate a substitution towards Concentrates during the pandemic for young Males. Both genders also increased their spend towards Edibles, a trend we saw market-wide, but Female Gen Z customers maintained their much higher share to this category than Males, 9.2% vs 5.5%.

Gen Z Female category wallet share by market

GEN Z FEMALE 2020 CATEGORY WALLET SHARE BY MARKET

Now let’s take a look at Gen Z Females, the fastest growing demographic group in cannabis, across four different recreational markets. In this graph, we can see just how different category preference is for this group when looking at Washington, Nevada, Colorado, and California. In California, for example, Female Gen Z consumers’ 2020 wallet share to Vapor Pens was nearly double that of any other market at 32.2%. Similarly in Colorado in 2020, a Female Gen Z customer was likely to spend twice as much money on Edibles than a Washingtonian customer in the same age group.

Vapor Pens growth by demographic group

VAPOR PENS YEAR OVER YEAR GROWTH BY DEMOGRAPHIC GROUP

In this final graph, we dive into the demographic growth for Vapor Pens. As we mentioned, it is critical to not only know where growth is occurring in your business, but also who and what is driving that growth. This graph, which is directly from the Demographic dashboards in Insights Premium, tells us that if you are a Vapor Pen brand, your growth over the last year was driven by younger customers, not older customers. Gen Z Females, specifically, had the highest year over year growth in sales to Vapor Pens than other demographic groups at 136%.

Conclusion

When we dive into an individual demographic group, we see more unique nuances in their purchasing behavior. Similarly, when we explore the differences between individual markets, we also see significant differences in consumer behavior. As the cannabis industry matures and moves towards a national or even international market place we expect to see less and less of these differences between states, but for now, there are big enough peculiarities to make it critical to use market-level data to steer your business decisions.

For example, when we looked at year over year growth trends, it’s clear that Gen Z will continue to play an important role in the growth of the cannabis industry. We predict by 2022, Gen Z will become the third largest age group in our dataset, since they will easily surpass Baby Boomers as more age into the market this year. Gen Z will likely pass Gen X by the end of next year to become the second largest age group behind Millennials.

We also saw a growing number of Female consumers emerge in 2020. By the end of 2021, we expect Females will make up greater than 1/3 of total cannabis sales.

Finally, we observed growth in the Vapor Pen category. The overall market share of Vapor Pens will continue to grow, driven largely by Gen Z’s preference for this product type.

Curious to see how generation and gender impacts category-level sales by market? You can find answers in real-time and inform your business strategy with our Demographics add-on in Insights Premium. Learn more about leveraging our premium tools or get started for free and explore consumer trends today with Insights Pulse.

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