It’s no secret that people are buying legal cannabis at unprecedented rates these days. Sales numbers grow year after year, and reports have predicted that the cannabis market will top $20 billion in just a few years. At Headset, we try to dive deep into those numbers, using our uniquely structured dataset to to see not only how much is being sold, but what kinds of products are being sold and who is buying them.
For this report, we’ve used demographic data, drawn from customers who have voluntarily signed up for rewards programs with our Washington State retail partners, to look at everything from brand preference to price sensitivity across the generational spectrum. Unsurprisingly, cannabis is most popular with Millennials, who grew up in a world with much more liberal views on the plant. However, Gen Xers buy nearly as much cannabis as Millenials, and Baby Boomers are a significant part of the consumer base as well. They’re in here too. Data for Generation Z—those born in the mid-90s to mid-2000s—is not, as only a tiny fraction of them are of legal age.
Anyone seeking insights into what Gen Xers or Millennials are looking for when they hit the pot shop will find this report very useful. However, it also offers interesting observations on each generation’s preferences and values, and how those are reflected in their purchasing habits. Crafting specials and promotions based on those sensibilities will be a key part of marketing success as the industry broadens and welcomes a new, more age-diverse customer base.
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 in the state of Washington from September 2017. That data is cross-referenced with our catalog of over 150,000 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.
Millennials have dominated the market since we began looking at the data, holding 49% of the total market share in 2016, with a slight increase to 51% in 2017.
Flower was still the largest overall category regardless of generation. Interestingly enough, however, the second place category was different for each generation. For Millennials, it was Concentrates, which make up 13% of sales to their generation. For Gen X, it’s a tie between Concentrates and Vapor Pens. Boomers like Vapor Pens and Pre Rolls, while the Silent Generation goes for just Vapor Pens. In terms of consumption of flower by volume, Millennials, Generation X, and Baby Boomers all split their spend in a remarkably similar way.
Flower was still the largest overall category regardless of generation. Interestingly enough, however, the second place category was different for each generation. For Millennials, it was Concentrates, which make up 17% of sales to their generation. For Gen X, it’s a tie between Concentrates and Vapor Pens. Boomers like Vapor Pens and Pre Rolls, while the Silent Generation goes for just Vapor Pens. In terms of consumption of flower by volume, Millennials, Generation X, and Baby Boomers all split their spend in a remarkably similar way.
Within flower, the overwhelming preference across all generations is hybrid strains, as shown in the chart below. The Silent Generation smokes a little less hybrid and a little more straight Indica or straight sativa, but the breakdown is pretty much identical for the other generations
Each generation appears to have a different leading brand. Phat Panda, Northwest Cannabis Solutions, and Artizen Cannabis—all top Washington State producers—are universally liked. Their products occupy the top spots across age groups.
Over the last year the average basket size has declined for all age groups. Millenials, however, haven’t slowed down much. Their baskets declined by only 18%, while Gen Xers and Boomers saw a 25% decline. The Silent Generation saw the largest decline at 40%.
As might be expected, given the much-publicized economic woes facing Millenials, average basket size is smaller the younger the age. The average item price (AIP) in a Millennial’s basket is only about $14, while AIP is about $17 for Boomers.
Over half of the items purchased by Millenials were under $10, corroborating the AIP data from above. Gen X made just under half of its purchases below $10, while Boomers and the Silent Generation had the most pricey purchases. The Silent Generation purchased nearly 10% of its items at over $40. Can’t take it with you when you go, right?
Lastly, data shows that women make up a larger part of the market for Gen Xers and Boomers than other generations, at 35% and 38%,respectively. For Millennials, women make up about 31% of purchases, while the Silent Generation is the most male-dominated at only 22% sales to women.
Conclusion and Predictions
Obviously, all the cannabis marketing directed at Millennials is on target, as they dominate the market. That said, our data also shows some interesting preferences for their older counterparts. Topicals, often used for the treatment of aches and pains, are obviously popular with people whose bodies have a bit more wear and tear.
This data also offers some interesting insight about price sensitivity, showing that Millennials are, as might be expected, more attracted to items with a low overall cost. It might make more sense to buy an entire ounce, if you break down the cost per gram, but if you’re just finding your feet in the workforce, that $6 pre-roll special might be a godsend.
It’s also interesting to note that, while basket sizes have decreased (perhaps the novelty of legal weed is wearing off a bit), Millennials have decreased the least. They were already buying more affordable items, but it may be a sign that their consumption is more durable than that of other generations. To some extent, Millennials have grown up with cannabis as a normal fact of life, even before its legalization. That they might see it as more of an essential than a luxury makes sense.
While this data provides an interesting window into the purchasing habits of the current cannabis market, smart entrepreneurs will be watching Gen Z closely. Given how much Millennials enjoy cannabis, its safe to assume that the next generation of cannabis consumers will be even more enthusiastic when they hit legal age. Especially if, instead of Reefer Madness and D.A.R.E. videos, they’ve seen their older siblings and even parents enjoying safe, legal cannabis with no ill effects.
Headset is market data and business intelligence for the cannabis industry. Our extensive Industry Report deep-dives into specific brands to help businesses better monitor the competitive landscape and perform 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 and other states as the data becomes available.