Kicked off by a big bump on the long Fourth of July holiday weekend — now the second-highest cannabis sales event of the year behind 4/20 — the summer months are becoming increasingly important to industry retailers, as customers in legal states regularly include cannabis in their gatherings and celebrations.
“People are enjoying having some time off work. And what do they think of in celebrating? People think of relaxation, and then they think of cannabis and alcohol sales typically,” says BDSA co-founder and CEO Roy Bingham.
BDSA has been tracking cannabis sales since 2015 and despite the potential of a recession looming over consumers, analysts with the company are predicting cannabis sales will continue to increase through the summer — and maybe even cut into the market share of consumables like craft beer.
“It’s largely a continuation of trends that we have been seeing for many years now, of course, but with a concern about the recession, or at least about consumers’ wallet and ability to spend — and therefore, willingness to experiment,” Bingham says, with consumers tending to look for a bigger “bang for their buck.”
Marijuana Venture recently caught up with Bingham to discuss this summer’s sales predictions and the potential effects of the nation’s rising inflation on the cannabis market.
Marijuana Venture: Let’s start with inflation. Do you think inflation will be a problem this summer for the cannabis industry?
Roy Bingham: I’m not saying it’s not a problem. But I think it will be less of a problem than for most other consumer goods. Of course, people are feeling the pinch and having to carefully allocate the funds they have available to the things they want to spend them on. But cannabis is one of the more counter-recessionary products in terms of people’s priorities.
Remember, there are medical consumers out there for whom it is essential, as much as any other medicine. And then there are people who have cannabis as a major part of their recreational lifestyle who might cut out alcohol before they cut out cannabis. So it will continue to do better than most anything else in a tough environment.
MV: What do you expect for sales this summer?
RB: In general, for the industry, this is a less buoyant time than we’ve seen before in the mature states. So states like California and Colorado are not seeing growth. The new states, mainly in the East and the Midwest, are continuing to see substantial growth, so they will continue to break records through the summer. But the well-established states are a more competitive environment.
MV: What sort of product trends are you seeing?
RB: There is a significant evolution of product choices that people are making, and in some cases, it is driven by that share-of-wallet question. So people are going for smaller cartridges, for smaller pre-roll packaging, for example. And they are going for smaller amounts of flower. That’s happening in the mature markets.
In the newer markets, it can be going the opposite way with people choosing five- or 10-pack pre-rolls, for example, or larger cartridges — but they’re getting a discount for buying a larger volume item. Part of that is because the prices are much higher in New England and in the Northeast. So you see both trends, and we always have to be careful because this is a state-by-state industry.
MV: According to BDSA, beverage sales have been increasing, and the company is predicting that trend to continue. What are your thoughts on beverage sales for this summer?
RB: Beverage sales, as a proportion of total cannabis sales, are still fairly small. It’s only in the 1-2% range and varies from one state to another. There are a lot more beverages available and a lot more companies have launched them. But there’s a lot more buzz around beverages and perhaps some companies have actually cracked the code when it comes to a consistent experience, a predictable onset and a predictable offset, which is what every consumer is looking for. They want to know that when they consume a beverage, it’s similar to the experience they’ve gotten used to with vodka or a glass of wine or a beer, that it is predictable. There are a lot of hot brands coming along promoting this.
And of course, social gatherings, like we have over Independence Day, are a significant cannabis consumption period as well as an alcohol consumption period. From our consumer surveys, which we’ve been doing since 2015, we know that a significant number of consumers choose events like this in which to consume cannabis, and they’re going to experiment or pass the beverage around. We see the likelihood of a significant increase in beverage consumption. At the same time, it is combined with alcohol consumption. In fact, we’ve seen a 7% increase in the number of alcohol consumers who are now consuming cannabis in over just a one-year period. So that may be a little bit of concern to the alcohol industry, that people will be saying “a little less alcohol and a little bit more cannabis” in the form of cannabis beverages.
MV: There’s an interesting note in your data about cannabis challenging the craft beer space for the summer months. Tell me a little about what you’re seeing here.
RB: In our consumer surveys, it has become apparent that a lot of cannabis consumers are a disproportionate number of craft beer consumers as well, and especially in certain states where craft beer is a bigger thing like Colorado, for example. So it’s likely that if people are increasing their cannabis consumption, partly due to beverages, they are likely to reduce her alcohol consumption. And if their main alcohol is craft beer, it might have a little harder impact on craft beer.
MV: While the Fourth of July helps kicks off the summer season, another long holiday weekend marks its other bookend. What do you predict for this year’s Labor Day weekend?
RB: Given historical sales data from BDSA retail sales tracking, Labor Day is expected to provide a boost to cannabis sales. Mondays typically are one of the slower days for cannabis sales, but in 2021 in the Colorado market, Labor Day saw a daily dollar sales total that was about 10% higher than the average daily dollar sales total for Mondays in September 2021. Furthermore, the weekend leading up to Labor Day 2021 saw a significant sales boost compared to the other weekends in September 2021.
This interview has been edited for length and clarity.