Analysis of the Cannabis Pre-Roll Market

Pre-Roll Market Size

PRE-ROLL MARKET SIZE

Additional data from Headset* provides more insight into the current state of the industry. It’s clear that certain factors associated with differences in sales volume between states can and should be examined.

The above chart outlines the correlation between average price per unit and overall market sales data. Based on this chart, there does not seem to be a correlation between annual pre-roll sales and unit price. When viewing the results of the correlation, there does not seem to be a direct relation between annual pre-roll sales and unit price. California and Massachusetts, where the unit price is the highest out of any states, also boast the first and third largest markets by sales, respectively. Washington on the other hand has the second largest pre-roll market and has the lowest average price per pre-roll unit.

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Brand FOCUS: PLATINUM VAPE

PLATINUM VAPE

Why we Love them: Their bright colors and fun, easy visuals make Platinum hard not to like.
Why we docked stars: The gummies are the only product that explore the possibilities of their branding.

Sometimes it pays to be boring.

Boring is good. Boring is the comfort you find in your standard Sunday routine, the no-thought-required way you do your hair, and the same playlist you always use whenever you clean your house. In a world of products that constantly strive to beguile you with flash, unexciting brands can provide a welcome reprieve. Though there’s no right or wrong answer, next time you’re contemplating which direction your brand should take, think about what category you align with most: the trendy, or the reliable?

Simple, professional, and clean – that’s where Platinum comes in. Unfussy and containing no bold personality, this brand is much like your mom’s chicken soup; you may branch out from time to time and try some fancier, new versions, but at the end of the day, when you want something that hits the spot with no muss or fuss, you’ll go back to the original. Though they haven’t reinvented the wheel when it comes to design or packaging, Platinum’s run-of-the-mill style is comforting to those looking for a reliable product. While it’s true that wildly unique visuals are a great way to draw in users who want to try something new, a large portion of the cannabinoid market is morphing into one that wants to get their high in a consistent and reliable way. Platinum isn’t trying to compete with the flashy brands that market themselves with all the bells and whistles – they’re just waiting until you get bored of them and decide to come back home.

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As the industry enters its third summer of cultivation post 2018 Farm Bill, market conditions are beginning to stabilize. Price fluctuations in CBD products seem to have decreased significantly when compared to the volatility we witnessed this time last year. There was also a huge uptick in crude oil derivative pricing, which Hemp Benchmarks has attributed to a flood of USDA organic hemp extract hitting the market. We believe that the cannabis industry will follow suit and that USDA organic certified crops will fetch higher market prices, but in order for farms to obtain this certification, federal legalization is required. Even without access to this certification, the industry’s steps toward product differentiation is a signal of the explosive growth that’s yet to come. The summer of 2021 will be jam packed with riveting headlines, and we look forward to being there with you every step of the way.

Kellan Finney

The recent legalizations in New Mexico, New York, and Virginia are prime examples of an industry hellbent on moving forward. As states like Connecticut, Delaware, Minnesota, and Rhode Island flirt with the idea of fully embracing cannabis, the strategic opportunities continue to multiply. To get ahead of the competition, you need experience, willingness to go out on a limb, and an understanding of the unique challenges that the cannabinoid space brings. That’s where we come in – reading our report will put you three steps ahead of your peers and put the wind beneath your wings so that you can be ready for whatever comes your way.

Bryan Fields

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Synthetic Cannabinoids Manufacturers?

This month, we want to touch on a topic that’s been circling the news quite a bit; how yeast may become the method in which cannabinoids are produced. You probably saw the headline “Vancouver biotech company produces CBG from yeast”, but this isn’t the first company to have successfully produced cannabinoids using a micro-organism such as yeast.10 Chronos Group, as well as several other companies like InMed Pharmaceuticals and CBYeast, have been working on successfully commercializing this technology for quite some time.

A Gmo Feast For Cannabinoid Yeast

The way the technology works is by providing sugar to yeast, and like brewing beer, the yeast uses the sugar to create the target cannabinoid. The difference between this technology and brewing beer is that, in this case, the yeast has been genetically engineered to create a specific cannabinoid. This is done by providing the yeast with a “blueprint”, or genetic code, of the cannabis plant enzymes that are needed to create the target cannabinoid. Even if this technology is successfully commercialized, it will be interesting to see how the consumer market reacts to a “GMO” cannabinoid and if it can economically compete with the traditional production methods.

The main area we believe this technology will be valuable to be the pharmaceutical sector, as it could be easier to obtain a minor cannabinoid such as CBC or CBN through synthetic methods rather than standard agricultural practices. Only time will tell how disruptive this technology will be in space. The important part to remember with synthetic cannabinoids manufacturers is working with a synthetic cannabinoid expert.

As always, please reach out if you have any feedback or there are specific topics you would like us to elaborate on in the future.

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Each month we spend hours analyzing market research, data trends and private conservations to will keep you in front of the ever-evolving cannabinoid industry. Read the entire July Report here

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Forecasting Cannabis Basket size by Sales and GDP of States

While the legal cannabis landscape continues to expand into new state markets, there are several factors influencing executive teams when analyzing these strategic growth opportunities.

Nominal GDP AT CURRENT PRICES 2020 // MAY CANNABIS SALES // 2021 Population BY STATE

Over the past six months, several states have turned into hot markets for MSOs looking to expand. To understand the factors that influence market opportunity and visualize their correlation, we crossanalyzed population, nominal GDP, average basket size in existing markets, and May’s cannabis sales data. California, for example, contains more than 50% of the American adult population eligible to purchase cannabis, in addition to over 54% of the total nominal GDP amongst the 7 adult-use markets evaluated.7,8 This state, however, only accounts for 36% of the total monthly cannabis sales, demonstrating that the population and GDP may not serve as a direct correlation when understanding a state’s market opportunity.9

When you consider the average basket size in each of the states, a clearer picture emerges. In California, the average basket size is only $67.42, whereas in Michigan, the average basket size is $84.09.9 When comparing these stark differences, it is clear that the state’s population doesn’t play as much of a role as the amount each customer spends per trip and number of adults in the state consuming cannabis.

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Each month we spend hours analyzing market research, data trends and private conservations to will keep you in front of the ever-evolving cannabinoid industry. Read the entire July Report here

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JULY 2021

A note from Your Partners

As we enter the hot months of summer and celebrate the birth of our great nation, the
cannabis & hemp industries continue to mature. This is more prevalent in the cannabis
industry, as it seems there’s a new state pushing for adult-use legalization every other week.
This breakneck pace has spurred more mature players with bigger and more daring goals to
enter the space through acquisitions and strategic partnerships. The size of some of these
recent deals have been astronomical. All the while, the hemp industry continues to stagnate
as the federal government refuses to approve CBD as an additive. With so much going on, it
can start to feel like you’re lost at sea with no refuge in sight, but we look forward to being
with you every step of your journey, helping you navigate through any murky waters.

– Kellan Finney

We’re just over halfway through 2021, and the progress the industry has made is
astounding. Connecticut has officially become the 18th state to legalize cannabis, the fourth
state this year, and 36 percent of the U.S. has now gone green. Even more impressive, three
other east coast states (namely RI, PA, and DE) are looking to follow suit. These previously
untapped markets will present areas of growth for current operators and outside
conglomerates to dominate the space and dive into the green rush. As the industry
continues to both expand and consolidate, we’ll be here every step of the way to help
you navigate these shark infested waters.

– Bryan Fields

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