As state cannabis markets have matured, there has been consolidation of sales among the top players within each market. In Colorado, Nevada and Washington, the proportion of total sales captured by the top five largest brands increased from 2018 to 2019. In Colorado and Washington, the two oldest adult-use markets, the consolidation was most dramatic, with the top brands capturing about one-fifth of the market. California, on the other hand, was an anomaly and the proportion of sales for the top five brands actually decreased slightly from 2018 to 2019. This is likely due to the ongoing regulatory hiccups in CA that have slowed the launch of that market.
For 2020, Headset predicts to see continued consolidation of market share under the top brands within each state market, especially in more mature and stable markets.
The proportion of sales going to products that contained CBD saw fantastic growth in 2018, especially the first half of 2018. However, for most of 2019 CBD market share stayed flat, and even started to decline in Q4 2019.
It’s possible that customers were curious about the CBD hype and willing to try new products in 2018. However, as more hemp-CBD products flooded the market, perhaps customers didn’t need to return to dispensaries as their only source for new CBD products. .
Headset predicts that CBD market share will stabilize in 2020, capturing around one-third of the non-inhalable sales.
The variety of different CBD:THC ratios in infused products has grown year-overyear and we expect this trend to continue. Brands will look to stand out within the CBD:THC market with new options for consumers.
The most common and best-selling CBD:THC ratio is 1:1, that is an equal proportion of CBD and THC in the product. The 1:1 ratio made up 43% of sales in 2017, 41% of sales in 2018, and only 36% of sales in 2019. Sales in a variety of other ratios are gobbling up the remaining market share. In particular products with ratios of > 20:1 have seen strong market share growth (3% of CBD products in 2017, 7% in 2018, 9% in 2019).
Every year more members of Generation Z age into the legal cannabis market (born 1997 or later). We predict Gen Z’s market share will increase to 8-9% of the total market by the end of 2020. Cannabis business owners should learn what makes this age group different as they contribute more to topline sales. As noted in our previous report, Gen Z is more interested in inhalable products than any other age group, and being younger, they are also more price sensitive than other age groups.
As the Canadian market legalizes new product formats at the tail end of 2019 including edibles and beverages, it’s worth looking at the growth of market share for these categories from established U.S. markets. While there is some variability between the states, the edible and beverage category captured between 9% and 15% during 2019 in all of the U.S. markets that Headset monitors. Edibles and beverages in Canada will be limited in package size to 10mg THC, significantly more strict than the limit in any U.S. market. Perhaps this will limit the categories’ appeal to more seasoned consumers, or perhaps it will make the products more approachable for cannabis noobies. Either way, Headset predicts the edible and beverage market share across Canada to settle somewhere above 12% by the end of 2020.