ARIZONA
Population 7.29 Million
GDP $370 Billion
Largest City Phoenix
Average Temperature 86.3 F
Total Addressable $1.1 Billion
Cannabis Market
THOUGHTS
Arizona is one of the more attractive cannabis markets to recently allow adult use sales. What’s even more attractive is how quickly their legislators were able to implement regulations allowing for sales to commence. In order to determine which product categories have the most upside, we looked at several variables, such as the ideal temperature the product requires, and New Frontier’s historical sales data. Based on this information we believe the most promising product category is vape pens. The vape pen product category currently represents 32% of the total addressable market generating $352 million dollars. These margins, along with the fact that vape pens are optimal for warm environments like Arizona could mean that this product category may lead to fewer returns and higher customer satisfaction rates.
Addressable Arizona Cannabis Market by product sales from 2020
WASHINGTON
Population 7.615 Million
GDP $612 Billion
Largest City Seattle
Average Temperature 56.6 F
Total Addressable $1.3 Billion
Cannabis Market
THOUGHTS
When comparing Arizona to an established market such as Washington, we can start to see differences in consumer preference based on geographic location. Washington and Arizona have populations above 7 million people with each cannabis market generating more than a billion dollars in sales in 2020. From a product sale standpoint Washington and Arizona product category sales distribution is much different. For example, in Washington vape pen sales only account for ~20% of the total addressable. The largest product category is flower generating $546 million dollars in 2020 alone. We speculate that the environment plays a major role in consumer purchasing. With the average temperature roughly 30 degrees lower in Washington than in Arizona, the chances the Vape pen doesn’t function
consistently increases. Colder temperatures tend to drive humans indoors more, where consuming flower is more functional and ingrained as a habit. Regardless of the true reason behind the difference in product preference, it is important to consider multiple variables before bringing a new product or brand to market in the cannabis industry.
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