The COVID-19 pandemic disrupted all aspects of life, and many businesses and industries suffered as well. The cannabis industry was also impacted but was able to adapt and grow during this time. In the graphs below, we compare sales data from Canada and the US to see how COVID impacted cannabis retailers in the two countries. The graphs below include data from California, Colorado, Michigan, Nevada, Oregon, Washington, Alberta, British Columbia, and Ontario. Sales data for Michigan includes both adult-use and medical sales, while the data for the other markets reflect adult-use sales only.
Cannabis sales have grown year-over-year across legal markets in the US during the 2020 pandemic, although there were some variations from state to state. Sales in both Oregon and Washington combined saw an increase in average sales from 21.1% in January to an average of 49.5% in May. In August, Oregon saw 40% YoY growth. Conversely, California reported YoY sales growth between 85%-97% from January to March, but growth rates halved to 45% from April through June and continued to fall to 3.5% in July and rose slightly to 26.9% in August.
Alberta is the only province in Canada with two years of growth, thus YoY data for Canada has not been included here. We will explore month-over-month sales trends in Canada in the next graph.
From this graph, we can see that cannabis sales from February to March grew slightly by 14.8%, but had a decline of 15.2% from March to April. This decline seems to have been driven largely by the intermittent government-imposed shutdowns in Ontario that impacted cannabis retailers. After April, Canadian cannabis sales rebounded, and MoM sales grew at a rate of 11.8% from May to July.
Similar patterns can be found when looking at MoM sales trends in the US. Similar to Canada, for example, the US experienced a slight growth rate of 12.4% from February to March, but also a sharp decline from March to April due to shutdowns. In Nevada, where sales are largely driven by visiting tourists, sales fell 10.6% from March to April. Colorado saw a similar decline of 12.6% because of closures of outdoor recreation areas, resulting in fewer out-of-state tourists.
Different patterns emerge when comparing category sales trends in the US and Canada. In the US, for example, Flower sales continued to be the largest category throughout the pandemic. While this may not make sense at first, given COVID-19 is a respiratory disease and it might be assumed that consumers want to stay away from smoking, but Flower is also the most cost-effective category. Because Flower is a more affordable cannabis product, consumers might prefer Flower during periods of financial distress, like that which occurred during the pandemic.
Product categories sold differently in Canada, but this is likely the case because more types of products were introduced to the Canadian market in January. Beverages, Concentrates, Edibles, Vapor Pens, and Topicals, also known as Cannabis 2.0 products, all became available to Canadian consumers in January. While Flower is still the largest product category in Canada, the graph shows a slight decreasing trend in sales as customers explore the new Cannabis 2.0 products. Sales in Vapor Pens, for example, have been increasing throughout the year so far.
Consumption of inhalable cannabis products (Concentrates, Oil, Flower, Pre-Rolls, and Vapor Pens), and non-inhalable products (Beverages, Capsules, Edibles, and Topicals), also had different patterns of change in the US compared to Canada. From March through August in the US, sales share of inhalables grew 1.2%, while sales of non-inhalables decreased 7%, primarily due to the growth in Flower sales. In Canada, however, sales of inhalables decreased 0.2%, while non-inhalables grew 2.5%. Sales of inhalables likely would have decreased more if it wasn't for the introduction of Vapor Pens to the market in January. Sales of Vapor Pens grew 9.3% from March to July.
COVID also had an impact on how much money was being spent in customer transactions, or basket size. In both the US and Canada, basket sizes started to increase in March. This is an indication that customers have been making fewer trips to cannabis stores due to self-isolation and social distancing during the pandemic, but they have also been making larger purchases when they do go to the store. In the US, basket sizes peaked in April and have remained fairly consistent through August.
In Canada, basket size has fallen nearly $10 since basket size peaked in April. As of August, average basket size is trending towards stabilization to pre-COVID levels. The difference in trends from the US and Canada is interesting and might be explained by the continued uncertainty of the pandemic in the US, which is continuing to drive fewer trips to the store and larger baskets.
To dig deeper into basket size, we look at two components: average items per basket, and average item price. In the US, we can see that the increase in average basket size was primarily driven by growth in the number of items in the basket. Average item price increased only slightly in March with a 3.8% growth, and April with 1.2% growth. Average items per basket, on the other hand increased 7.3% in March and 10.9% in April. These two months, as we saw above, saw the most MoM growth. After May, however, average item price and average number of items per basket stabilized in the US. This may indicate the new normal for average basket size in the US, at least until COVID-19 becomes less influential on consumer behavior.
Canada also saw an increase in basket size from March to April, but growth was driven by both average item price and items per basket. For example, average item price increased 4.6% and items per basket increased 5.9% in March. From March to April, average item price increased 4.9% and items per basket increased 11.6%. Since May, both metrics have been decreasing and might be trending towards a stabilization to pre-COVID numbers.
Despite the global pandemic, the above data has demonstrated that both the US and Canadian cannabis industries are continuing to see growth, although the trends are slightly different in the two countries. Learn more about Insights Premium or sign up for a demo today to see how you can keep track of the impacts of COVID-19 on the cannabis industry or test-drive the industry's leading data set with a free Insights Pulse account.