In states that support both medical and recreational cannabis marketplaces, sales in the different channels both reflect each other and diverge. For cannabis industry stakeholders, understanding sales trends and consumer behavior in the different channels is essential business intelligence.
First, let’s address the obvious. Sales within medical markets, over time, become dramatically eclipsed by recreational sales. The variance is surely tied to the recreational market’s ability to easily serve tourists and out-of-towners, while medical markets in Oregon and Colorado (Nevada’s support of two markets is still too young to draw conclusions about trends) limit sales to state residents with medical licenses. In addition, consumers seeking licenses in Oregon and Colorado must pay for them, which also adds to declines in medical sales.
From January through August of this year in Colorado, according to cannabis market research firm BDS Analytyics, sales declined 1.6 percent in the state’s medical channel compared to the same period last year. Two months in 2017 actually saw increases of nearly 15 percent over last year (February and March). But August saw the biggest decline of the year for sales in medical dispensaries — sales of $35.5 million, which represents an 11.7 percent drop compared to last year’s August.
Overall, sales in medical for that time period were $292 million, compared to $733.2 million for recreational.
Declines are more dramatic in Oregon, which last summer finally allowed recreational stores to sell flower as well as edibles and concentrates. The Beaver State’s medical market January through August sold $57.94 million in cannabis, which was a 25.5 percent drop compared to the same period last year. The decline, however, is ratcheting back in Oregon. In January, sales fell by 42.6 percent compared to last year, but in August the decline was just 6 percent.
The medical channel’s nearly $58 million in sales was less than 1/4 of the sales in the recreational channel, which hit $272.6 million during the time period.
While sales do generally decline within medical channels, the marketplace remains robust and, for many brands, important outlets for their products.
The types of purchases surely vary between markets.
So far this year in the medical channel, 51 percent of sales went to flower, while 33 percent were dedicated to concentrates, 11 percent for edibles and 2 percent for pre-rolls. The average pre-tax price was $5.61.
In the state’s recreational channel, flower are not quite as strong, capturing 47 percent of the market. And the popularity of concentrates within the medical channel, too, is weaker in the recreational channel, with 24 percent of the market. However, recreational consumers spend enough on edibles for that category to grab 17 percent of the market. And recreational consumers, too, are much more fond of pre-rolls, which represent 7 percent of sales within the channel. The average price was $8.89, which illustrates one consumer advantage to shopping in medical stores in Colorado — prices are significantly lower.
In Oregon, the breakdown for medical is:
- Flower 49 %
- Concentrate 26%
- Edible 16%
- Pre-roll 5%
- Flower 52%
- Concentrates 21%
- Edibles 13%
- Pre-rolls 7%
Differences between consumers in Colorado are slightly more pronounced than in Oregon. In comparing sales between the states, there is one interesting data point: In Colorado, flower is more popular in the medical channel, while in Oregon market-share for flower is higher in the recreational channel.