Washington State Industry Overview June 2016

The regulated cannabis industry in Washington state continues to show significant revenue growth vs the year prior, with 2016 retail sales numbers for the beginning of 2016 (through May) totaling $229.04M,  producer/processor revenues at $129.66M and total excise tax revenue for the state coming in at $84.73M. Compared to the same time period (January to May) in 2015 we see a 142% increase in combined revenues for growers/processors and retailers. For the same time period, 2015 retailer revenues were at $105.66M, producer/processor revenues at $42.66M and excise tax revenue at $37.1M. Driving some of the growth is the addition of new retail operations opening, as 2016 sees the introduction of 64 new retailers throughout the state, a 33% increase in locations.

Macro Trends 2016

Category Insights

The majority of the industry growth from January to May was in Flower, Vapor Pens, and Concentrates which together contributed to 59% of the total growth. These segments are large so their total dollar growth is expected to be a large percentage of total industry growth.

While Flowers and Vapor Pens contributed the most to total growth Topicals and Tincture & Sublinguals had the largest percentage growth month over month from January to May. These categories are both small and thus they did not contribute as much to total growth.

While Flower still holds the market share from January to May of 2016 of total sales Vapor Pens, Pre-Rolls, and Concentrates have seen high growth leading to their increasing market share during the first half of 2016. The top 5 categories make up 95% of total sales though some of the smaller categories, particularly Tincture & Sublingual's have been experiencing rapid growth in recent months.

Top Vapor Pen Brands for May 2016

The vapor pen category is dominated by two brands, which account for more than 42% of sales. The remaining 58% is divided up among 70other brands. Vapor Pen category sales includes All-in-one Disposable, All-in-one Rechargeable, Cartridge, Refill, and Tanker/Applicator products.

New Brands and Product Impact

The categories experiencing growth in 2016 have seen much of it come from new brands entering the market place. In May Concentrates, Flower, and Pre-Rolls saw over 10% of their sales volume coming from brands that were not sold in the previous year. In addition to many new brands coming into the market many established brands are also putting new products out to increase their market share.

Notable New Products

For 2016 sales by unit volume, the top 10 new products* belonged to just four processors: Gold Leaf Gardens, Northwest Cannabis Solutions, Botanica SEATTLE and SITKA.

Sales Analysis

Flower continues to account for the majority of cannabis sales across the board at 55%, with monthly growth in sales every month of 2016.Most sales fall into the Hybrid, Indica, Sativa and CBD categories, but we have seen some gains around Specialty / Popcorn and Shake & Trim. For the top 5 brands, which account for 23.1% of Flower sales, there are big gains for both Tahoma Flavors and Harmony Farms. Tahoma Flavors took the #2 spot from Northwest Cannabis Solutions and Harmony Farms jumped 6 place from 11th to 5th.

Average Item Price (AIP)

Most sizes have seen a downward trend in AIP since the start of the year with the largest decrease coming from full ounces of flower. Concentrates smaller than one gram have stayed relatively steady while single grams have dropped 11%, fueling a large increase in unit sales.

Sales by Weight

As prices continue to fall, customers are buying larger package sizes. One and two gram flower packs have seen a steady decline in popularity while eighths have grown to cover more than 30% of total unit sales. A similar trend is seen in concentrates where one gram packages now make up a whopping 64% of unit sales compared to 46% at the beginning of the year.

About Headset

Headset is market data and business intelligence for the cannabis industry. Our extensive Industry Report deep-dives into specific brands to better monitor the competitive landscape as well as exhaustive category analysis. Reports are generated via aggregate, real-time transaction data to get a unique and thorough analysis of what’s happening in the Washington market.