After a few hiccups, California’s legal cannabis industry is coming into its own. Which means we have, at long last, the sales data required to answer an age old question: Who smokes the most, LA or SF? Besides the fun of determining who gets bragging rights, anyone working in California’s cannabis industry should definitely be interested in the finer points of its two biggest markets.
First off, let’s define our data set. The data here are from Q4 in 2019 and cover specifically the recreational market. Only stores that reported data for the entire quarter are included.
So what do those data say? In answer to the most pressing question, Los Angeles definitely smokes tough. Looking at category sales data for the two regions, we see that both Flower and Concentrates sell better in LA than the Bay Area. Flower sales are 44% of all sales in LA, and only 38.9% in SF. For Concentrates, it’s 9.6% to 6.5%. For context, the total flower market in California was $366 million in Q4 2019, so a 6% difference is actually a pretty hefty amount of cannabis.
The graph below includes the four categories with the largest gap in market share, and the story is reversed for the other two: Consumers in San Francisco seem to be slightly more health conscious, favoring Vapor Pens and Edibles by several percentage points. It’s also worth noting that one of the most established cannabis vape companies — PAX — is headquartered in SF, while the top-ranked Edibles brand Kiva Confections is across the bridge in Oakland.
Speaking of Kiva, while the brand hails from Oakland, their appeal seems to be statewide. Comparing top brands in the two regions, we see that Kiva is third for both. The big winner statewide is Raw Garden, which occupies both top slots. Select, a Portland brand led by the former CMO of Beats by Dre, also does well in California, with the second and fifth spot, respectively, in the Bay Area and LA.
While it’s certainly interesting to see who’s doing well statewide, what we’re really after here is the differences between the two markets. To that end, some brands are local favorites. AbsoluteXtracts and Plus were top sellers in SF but not LA, while Passiflora and Lowell Herb Co. appear in the top five for LA and not SF. Absolute Xtracts is a NorCal company, so this makes sense. Similarly, LA’s preference for Lowell could be location based, as they hail from Santa Barbara, but Raw Gardens is also based there. Adding to the confusion is the fact that Plus is located in LA County but shows up in SF’s top five. We can’t, of course, determine why a brand works in one region but not the other using only sales data, but the data do seem to suggest some affinity for local products. Just not a very consistent one, perhaps.
Another interesting difference between the Bay Area and LA is that more women participate in the cannabis market in LA. While women in both regions still make up only about a third of the total market, there is a statistically significant difference in the gender makeup of the two markets, with the LA consumer base being 29.6% women compared to 27.6% in SF. This is curious because, if our previous hypothesis, that SF consumers are more interested in wellness because they purchase more non-combustible products, is correct, that would suggest more participation from women. Women typically over index as customers for categories more closely associated with wellness, like Topicals.
Diving into the nerdier side of things, we see that there are also statistically significant differences in average item price (AIP) and basket composition between the regions. LA has a higher AIP but lower total basket size, suggesting that shoppers in SF spend more at lower prices. Data on items per basket corroborate this (see second graph below), with an average of 2.48 items in SF versus 2.15 in LA.
Looking at the difference in average discount between the two regions, we first see that promotions don't necessarily drive SF consumers to purchase more items. SF has a far lower average discount than LA, actually, meaning that people are just buying more products because they’re cheaper to begin with. LA’s model of higher prices and deeper discounts doesn’t, as we see with the difference in average basket sizes, result in higher sales overall.
It should be no surprise, really, that there are such differences between Los Angeles and the Bay Area, given how vast of a market California is, and how different the two regions are culturally. But while it is of course useful to know what sells better where, it’s also interesting to see what’s universal in the California cannabis industry. Brands like Kiva and Raw Garden have obviously hit on a winning formula, while others appeal only to certain regions. This may be due to something as simple as how many resources a given brand has poured into marketing and in which markets, but at the very least these are brands to watch.
Besides brands, the data indicate that people from these two regions clearly want different things from their cannabis experience. The Bay Area seems to be leaning at least a little bit towards a wellness approach, while LA prefers what we would describe as a more “recreational” approach, with better sales for inhalable products. But while LA might beat out the Bay in terms of getting lit, it’s safe to say all of California is smoking tough — $366 million on Flower alone is no joke!