Welcome to Headset’s year-end report on the 2016 cannabis industry. This report covers sales trends, product categories, retailers, brands, and demographics, providing information about trends within those areas, as well as ways they interact with one another. The information provided here is based off the sales data collected by Headset in 2016, and will provide you with a clear overview of the current market and some valuable insights into what it might look like going forward.
Though the recent election has many in the cannabis industry concerned, the industry’s consistent growth and expansion should be reassuring. As far as our data shows, the industry is doing just fine. In Washington, sales have consistently increased and product categories have expanded significantly, reflecting increased consumer familiarity with cannabis.
Indeed, overall sales went up by an average of 7% each month, representing almost a doubling of the market from 2015. Flower’s share of that market continued to decline, going from 64% to a little over 58%. This is probably explained by the consistent introduction of new, non-flower cannabis products to the marketplace—everything from breath strips to tomato soup, not to mention a myriad of tinctures, topicals, capsules, concentrates, beverages, and so on ad infinitum.
Most retail stores are doing well in this climate, with product margins ranging from 43-46% on up to 67% and averaging between 52-58%. On the production side of things, bigger brands tend to do a little better, with the top 20 brands taking 32% of overall sales, and the top 100 brands taking 71%. Within edibles, that trend is even more pronounced, with the top 10 edible manufacturers taking 82% of the category’s total sales for the year.
Our demographic data shows that while previous trends around women and cannabis use continue to hold—women do not purchase flower and concentrates at nearly the same rate as men—new product categories are resonating well with them. Nearly half the market for the Tincture/Sublingual and Topical categories went to women in 2016.
This last detail might not be much of a surprise, but nearly 30% of all baskets contained at least one pre-rolled item. Convenience is still king, apparently!
In all, the market has remained incredibly promising. It has also begun to mature in interesting ways, with increasing segmentation along demographic lines and a broader range of product categories. The charts below tell a story of a market that is still young, and still growing by leaps and bounds, but also beginning to find its feet.
Data for this report comes from real-time sales reporting by participating Washington State cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. This report is based on data collected from retailers in 2016. That data is cross-referenced with our catalog of over 63,000 products to provide detailed information on market trends.
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.
On average, sales increased by 7% per month, with total sales in 2016 representing a 180% increase
This growth in sales comes amidst a fairly drastic reduction in price from 2015. The average price per item has decreased over time, stabilizing over the past 6 months at just over $15 per item. Sales growth in 2016 was due, essentially, to people buying more pot. The number of items per purchase increased over 2500% in 2016.
Because sales were up overall, every product category grew to some extent. However, Topicals, Concentrates, and Capsules were the hottest markets, growing at about double the average rate. Beverages, Edibles, and Flower saw a below average growth rate, though the market for Edibles and Flower still doubled in size from last year.
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