Brightfield report: In 2020, 59% of new consumers were women
Americans are ready for legal cannabis and waiting for their legislators to catch up, according to a new survey from the Brightfield Group. Among the findings are that consumption and occasion of use are expanding and though traditional cannabis consumers still make up the majority of the market, people of all types and backgrounds are joining the marketplace.
According to the report, new recreational users made up 6% of consumers in 2020, though they are a diverse group and 59% are women. That continues a trend that saw women overtake men, becoming 51% of consumers in Q1 2021, though the breakdowns vary by state. For example, according to Brightfield, 59% of consumers in Michigan are women, though women make up only 43% of the California market. Colorado and Washington also have majority of female consumers.
Women use more product types than male cannabis consumers — especially gummies — but choose more specific occasions of use, according to the findings. Women also want more effects from their cannabis use and consume to treat mental and physical health conditions more than men.
Recreational customers also continue to be the heaviest users, with 50% reporting they use cannabis five days per week or more and 22% saying they used cannabis multiple times per day in Q4 2020.
“Though this has declined slightly in Q1 2021, new users are entering the market using cannabis more frequently than they were pre-pandemic,” reads the report. “A clear factor in this phenomenon is stress and anxiety.”
The survey also provided a look at usage during the pandemic, with 44% of consumers saying they consumed more because of it, mostly for stress and boredom. More than half of consumers (54%) increased their cannabis spending last year, with the same number (54%) of new users reporting they did so to treat anxiety.
— Brian Beckley
Legalization and the cost of production
A new research paper from a professor at Carnegie Mellon University’s Heinz College predicts that over the next 20 years, further declines in the price of cannabis will lead to expanded use, though the drop in production costs will pose a serious challenge to smaller cultivators as a larger share of cannabis is produced by large-scale producers.
In a paper titled “Radical technological breakthroughs in drugs and drug markets: The cases of cannabis and fentanyl,” Jonathan P. Caulkins used statistics, historical analogy and economic reasoning to conclude that one of the major drivers of the industry moving forward will be the declines in the cost per unit of THC produced, particularly if federal legalization comes to fruition.
“By and large, the markets for the major illegal drugs, including cannabis and opioids, are competitive in the economists’ sense of the term,” Caulkins wrote, noting in another section that cannabis production costs have already fallen by 90-95% over the past 20 years because of state legalization, as well as innovation, economies of scale and what he called the “professionalization” of the industry as it grows from illegality to legitimacy.
“The transition from illegal to legal markets puts downward pressure on production costs,” he said.
Legitimacy and legality also tend to bring with it more experienced and professional employees and practices. Caulkins said the trend of cultivators going from hiring “master growers” to those with professional horticulture experience as business expands was symbolic of the industry’s maturation.
Moving forward, Caulkins said he sees the power in the industry continuing to shift away from cultivators, as the product becomes more of a commodity, with other skills and abilities coming to the fore, such as marketing and brand management. National legalization, though still a bit of a wildcard, could further speed the price decline seen in most legal states as the market begins to stabilize and smaller producers struggle to keep pace.
“National legalization will likely bring additional declines in the price of the basic product and additional economies of scale that will favor larger over smaller operators,” he said in an email to Marijuana Venture, noting that in a national landscape, production may end up moving to states with the most efficient industries and more permissive regulation.
For consumers, however, the future looks bright with more product forms and variety, and basic products dropping in price, though higher-priced, brand-name or boutique offerings should continue to be available, like they are in other industries, including alcohol and chocolate.
However, Caulkins also warns that another wildcard to watch for could be an increase in “ill will” toward the industry as corporatization increases, much how the unscrupulous and self-serving corporate behavior of the tobacco industry diminished the product and hastened its decline among the population.
“It strikes me as plausible that if we go out as far as 20 years, something along those lines could befall cannabis as well,” he said. “It’s hard to claim counter-culture status when it’s produced by big corporations.”
— Brian Beckley
Legal U.S. weed goes to Mexico illegally
Cannabis has been smuggled across the border with Mexico for decades, but in a reversal of fortune, these days much of the smuggled pot travels south, as U.S.-grown cannabis and cannabis products have gained cache in Mexico, according to an August report from the Washington Post.
The Post cited multiple news releases from Mexican customs officials touting seizures at the border, from small amounts of flower and vape cartridges to larger quantities of oil cartridges valued at more than $30,000 in Mexico. One release, from late 2020, announced the seizure of 5,265 bottles of cannabis gummies en route from Arizona.
One Mexican dealer told the Post the demand for California weed has “exploded” and is now an “aspirational” status symbol as buyers want to be seen smoking what rappers in the states are bragging about, such as the Cookies brand. He also noted that while American cannabis may sell for $150 an ounce in a California retail store, the same amount will go for $500 on the Mexican black market.
Mexico’s Supreme Court in July struck down laws criminalizing cannabis, but there has not yet been legislation making it legal to buy or sell, even as legalization speeds from state to state in the U.S.
— Brian Beckley
Colorado sales stall in June
Have we seen the peak of the Colorado market?
Although year-to-date sales still put Colorado retailers on the path for another record-breaking year, the month of June showed the first sign of a fall-off from the pandemic-fueled numbers of the past 18 months.
In June, the latest month for which sales data is available from the Colorado Department of Revenue, cannabis retailers tallied $187 million in sales — a 6% decline from June 2020, when consumers spent $199 million on cannabis, a single-month record at that time.
It’s only the third time since Colorado began tracking cannabis sales data that year-over-year sales for any given month have declined (year-over-year sales declined by less than 1% previously in May 2018 and September 2018).
Sales started to flatten in May, which saw an increase of only about 1% from 2020 to 2021, following the 34% increase from 2019 to 2020.
Overall, total sales are still up 17.5% in the first six months of 2021, a bit short of the blistering 25% sales growth last year, when the final tally reached $2.19 billion. The state’s all-time record for cannabis sales in a single month is $226 million, a milestone set in July 2020.
— Garrett Rudolph
Crash data highlights challenge of gauging legalization’s impact
A pair of studies looking at how cannabis legalization affects drivers show that while legalization may not change any attitudes or behaviors following legalization, crash rates may be up in states with recreational markets.
One of the common concerns when a state legalizes is that a more permissive attitude toward cannabis will lead to more dangerous behavior, such as driving under the influence. But a team of researchers affiliated with The Center for Injury Research and Policy at Nationwide Children’s Hospital in Ohio assessed attitudes regarding marijuana and determined that incidences of drugged driving behavior did not become more prevalent post-legalization. Rather, “marijuana users in states that legalized [recreational marijuana] self-reported driving after marijuana use less than their counterparts (who resided in states where adult-use cannabis remained illegal). They were also less likely to find such behavior [driving after ingesting cannabis] acceptable.”
However, a second study from the Insurance Institute for Highway Safety and another by the affiliated Highway Loss Data Institute show that crash rates spiked following the start of adult-use retail sales in California, Colorado, Nevada, Oregon and Washington. Yet, the preliminary results of a separate IIHS study of injured drivers who visited emergency rooms in California, Colorado and Oregon showed that drivers who used marijuana alone were no more likely to be involved in crashes than drivers who hadn’t used the drug.
“Our latest research makes it clear that legalizing marijuana for recreational use does increase overall crash rates,” IIHS-HLDI President David Harkey said in a press release. “That’s obviously something policymakers and safety professionals will need to address as more states move to liberalize their laws — even if the way marijuana affects crash risk for individual drivers remains uncertain.”
Combined, the five studied states that legalized cannabis and allowed retail sales saw a 6% percent increase in injury crash rates and a 4% increase in fatal crash rates compared with other Western states where recreational marijuana use was illegal during the study period, consistent with earlier findings and insurance records, according to the study.
Despite those increases in crash rates, studies of whether marijuana itself makes drivers more likely to crash have been inconsistent. The latest one from IIHS — which used data collected from injured drivers in three emergency rooms in Denver, Portland and Sacramento — showed no increased crash risk associated with cannabis consumption, except when combined with alcohol.
According to the report, combined-use numbers of alcohol and cannabis could help explain the increase in crash rates as legalization.
— Brian Beckley