Ask Our Experts: Oregon’s Record Cannabis Sales

Q: I see that Oregon’s cannabis industry set an all-time sales record in May; was that because of the pandemic?

By Molly McCann, Ed.D., Director of Industry Analytics, New Frontier Data

A: It is true that Oregon last month saw legal cannabis sales top $100 million for the first time, a single-month record, with about 90% of that spending in the recreational market, according to the Oregon Liquor Control Commission (OLCC).

The average monthly expenditure for cannabis per consumer in Oregon during Q1-2020 (January-March) was $99; in May that average leapt 44% to $143. Such increases were not limited to Oregon, as in Washington state the per-capita average in consumer spending during May increased 20% over its Q1 average (from $151 to $181), while in Colorado it increased by 45%, from $141 to $204.

While social and behavioral changes spurred by the COVID-19 pandemic definitely factored into the spending increases, seasonality and continued growth of the market were also reflected in the OLCC data as illustrated.

Source: OLCC (https://www.oregon.gov/olcc/marijuana/Documents/CTS/OregonCannabisTrackingSystemData.pdf).

Cannabis consumption and spending typically increase during the summer months, characterized by longer days and traditionally more leisure time. As illustrated, spending rises in March and continues upward through August before decreasing in September. Meantime, as the market grows and matures, the overall trend line for spending moves steadily upward.

Average monthly expenditure per consumer across markets with complete longitudinal data—California (Bay Area/Central/Southern), Colorado, Washington, Oregon, Nevada-Las Vegas Area, Alaska, New Mexico, Maryland, Arizona, and Florida. Source: New Frontier Data.

In looking at average monthly spending per customer longitudinally, spending per consumer is shown as steadily increasing since November 2018. A review of the past 18 months also clearly reflects the disruptive impacts of the COVID-19 pandemic on individual consumer spending throughout April and May, which leapt above $230 per month after not having previously exceeded $200.

During mid-March, in response to shelter-in-place orders and fears of product shortages, many legal cannabis markets experienced surges in purchasing as consumers stocked up. At the time it was expected that spending might subsequently drop in April while those purchases were exhausted; instead, purchasing proceeded apace.

Average cart value and SKUs per cart across markets with complete longitudinal data—California (Bay Area/Central/Southern), Colorado, Washington, Oregon, Nevada-Las Vegas Area, Alaska, New Mexico, Maryland, Arizona, and Florida. Source: New Frontier Data.

Beginning in March, and unexpectedly continuing through April, products and expenditure per purchase (i.e., per cart) increased as consumers made fewer, larger purchases, minimizing interactions with the outside world.

Leading into the summer, consumers seem to be normalizing their habits and routines during lifestyles in lockdown. For those continuing to purchase cannabis, increased spending is either a continuation of stockpiling due to uncertainty about the future, an indication of an increase in cannabis use, or both.

The COVID-19 pandemic ushered in an early summer of sorts, as consumption patterns typically reserved for that season were realized month earlier. Many people have found themselves with more free or unstructured time than typical for April or May (or even a typical summer month), whether due to working from home, or having lost paid hours or jobs altogether.

Additionally, the pandemic has occasioned increased use unrelated to seasonality; many consumers turn to cannabis for managing stress and anxiety, or simple boredom in the lack of traditionally available activities or social gatherings.

Much remains speculative about the autumn and winter in the specter of the pandemic. For the foreseeable summer, expectations include continued disruptions in seasonal patterns as surging rates in cases and potentially worse economic fallout begin to affect consumer spending behaviors for the longer term.