California, the first state to legalize the medical use of cannabis back in 1996 and famous for its rich growing history in the Emerald Triangle, has long been a mainstay and exporter of culture surrounding the cannabis plant.
This rich history has led to an incredibly large sector of their state’s economy. California’s cannabis market hit $6.7 billion in sales in 2016, more than every other adult use cannabis market in the United States combined.
According to New Frontier Data’s market projections released earlier this year, they expect California’s medical cannabis market to be worth $2.4 billion by 2021 and their adult use market to be worth $3.9 billion by the same year.
California has always been a powerhouse when it comes to consumption and cultivation of weed, but who exactly are the consumers powering the demand? What are their preferences, age, gender, annual income, interests? How do brands create and market products to their end users if they don’t really know anything about them? Can we extrapolate data about California cannabis consumers to consumers in other states?
When it comes to cannabis consumers, these questions have largely gone unanswered. For decades, the plant was bought and sold through black market channels, serving a demand but unable to create the infrastructure to understand it, thanks to state and federal law.
But as the cannabis industry develops, more and more pertinent data is being gathered about the people who prop up this multibillion dollar industry…and the results might not be what people expect of “stoners”.
Who are California cannabis consumers?
A survey conducted in California received 10,000 user responses, and their findings challenge stoner stereotypes of a previous time.
Some of the most significant findings to uncover the reality of who cannabis consumers are, versus stereotypes held about them, include:
- 32% of respondents were female, with 59% of females consuming cannabis every day.
- 51% of respondents hold a degree or postgraduate degree, made even more significant because only 39% of California residents hold the same level of education.
- 91% of respondents hold a full-time job, employed in a wide variety of industries, with technology leading all at 19%. Of the vast majority of respondents with full-time employment 58% consume cannabis everyday.
- 49% of respondents have an annual household income exceeding $75,000. The income bracket of $100,000-$149,000 was the most common annual household income of respondents.
- One in five respondents are parents, and 63% of parents surveyed consume cannabis daily.
What aligns nearly all 10,000 respondents? Rallying around the idea of “reduc[ing] or replac[ing] alcohol and pharmaceutical consumption to find natural relief and enjoyment from marijuana.”
These findings show that the average daily cannabis consumer is concerned about their general wellness, gainfully employed, and making an annual household income above the national average, and many are parents.
We know these findings challenge the stoner stereotypes held by those who have a serious misunderstanding of cannabis consumers, but it also challenges marketing norms in the cannabis industry.
These findings show the need for mature marketing efforts that diverge (but can still pay credence to) an outdated era of cannabis. Cannabis brands looking to expand their market share should especially focus on marketing towards female consumers, who are often left out.
These respondents included wellness-conscious individuals who are interested in cannabis products that are sophisticated and safe, and cannabis brands would be wise to align themselves with these customers. Simple examples of this in practice include edible companies making products using organic, healthy food items like granola or dried fruit, rather than sugary cookies and other baked goods; making vape pen cartridges and other concentrates without harmful chemicals and additives; or complying with and communicating strict lab testing protocols to ensure a safe product, even if their state guidelines lack the rigidness.
The cannabis consumer of today is far different than what many would expect. If cannabis brands don’t pay close attention to the incoming data about these consumers and act accordingly, they will lose out to the brands that do.
2016 was a banner year at the polls for marijuana. All anybody hears about today is the booming recreational marijuana market and how the fine people of California, Maine, Nevada and Massachusetts decided to end the mayhem and voted to legalize cannabis. It may come as a surprise that medical marijuana (MMJ) consumers outspend recreational (REC) users by a wide margin but it shouldn’t.
Figures provided by New Frontier Data’s Cannabis Industry Annual Report reports that in 2016, recreational purchasers shopped every two weeks and spent just $49 per transaction. Conversely, medical marijuana patients re-up every 10 days and spend $136 during their dispensary visits.
For a medical patient in regulated markets, cannabis is cheaper (i.e. less taxed) and larger quantities can be purchased in a single visit. From a purely economic standpoint, one who consumes a great deal of cannabis while living in a state with regulated medical and recreational markets is foolish to pay the burdensome taxes on REC items that can’t be differentiated from their MMJ counterpart save for the color of the RFID tag that tracks a plant from seed to sale.
In Colorado, recreational marijuana is taxed at multiple levels whereas medical sales are only subject State and local sales taxes. The Marijuana Sales Tax rate of 10 percent and an excise tax of 15 percent that gets included in the price of the product increase the cost of REC cannabis for the entire supply chain and ultimately is passed on to the end consumer. Costs run close to between 25-30 percent higher on the REC market across the board. Adding the C.R.E.A.M mentality of Wu-Tang Financial Services to this volatile brew sends heavy users looking for cheaper access to cannabis found on the medical market.
Severe Pain is a catchall term that allows many otherwise healthy individuals a way to qualify for state medical marijuana programs. A beer bottle accident from college or residual discomfort from botched surgery may be the cause of Severe Pain, but sitting in a shitty chair all day or having to type on a pre-ergonomic keyboard or lifting heavy objects repeatedly may also induce an unremitting state of anguish only made tolerable by near constant cannabis consumption.
Assuming those who suffer from Severe Pain make up the vast majority of medical marijuana sales is a safe bet. They need to consume more cannabis to relieve their ailments as they’re continuously suffering but not suffering enough that they can’t go to a dispensary and to purchase medication at their convenience. Severe Pain accounts for roughly 93 percent of MMJ cardholders in Colorado. They are the perfect patients.
Increased plant counts—which allow patients to grow more plants and access to securing larger quantities of medicine at dispensaries—are easily attainable when receiving a medical recommendation. Gone are the days of 99 plants for every home-grower or backyard blaster but if you’ve give it just a little finesse it is easy to come away from a Red Card appointment with the ability to buy more cannabis than most would deem necessary.
Let’s just say that a desire to have an extended plant count is mentioned during a medical marijuana evaluation. A doctor will ask a few routine questions. That conversation will probably will look like this,
Doctor: How many plants were you thinking?
You: 24 or 36
Doctor: Why do you want/require an extended plant count?
You: I grow my own cannabis and make edibles for myself.
Doctor: OK. That will cost some extra money. FYI.
You: Far out.
And Then What?
Conversations like these routinely occur with larger plant counts being discussed and upsold. The availability of this mechanism permits patient’s purchasing power to increase dramatically where recreational consumers are barred from buying large amounts of cannabis in a single visit to a retail outlet. As limits on REC purchases were set to dissuade diversion of cannabis product to other states via legal purchases, a loophole of this significance may help to explain increased medical marijuana sales.
The grey and black markets still thrive across the country and have been reinvigorated as new products with snazzy packaging and less conspicuous smells continue to flood the suburbs of Minneapolis and Kansas City and Iowa City while garnering brand recognition and consumer allegiance. Earning 2-3 times return on investment from packaged cannabis products like edibles, vape cartridges and concentrates purchased lawfully but distributed illegally is an easy way to make a little dough without much effort. The laws of supply and demand favor this arrangement for the risk averse.
What Does This All Mean?
The Pareto Principal observes that 80 percent of sales come from only 20 percent of consumers. As it is applied to the cannabis industry a trend emerges where huge orders for multiple pounds of cannabis are legally sold with zero regard for final destination or end consumer. Given the financial benefits and incentives built into making purchases on MMJ market, it is irresponsible to not consider why somebody may require 900 grams of individually packaged shatter.
The numbers never not lie but they might not be telling the truth either.