Predicting the Boom Out of California’s Market

By New Frontier Data Analysts

What We Have Learned: A New Frontier Data report with greenRush focused on specific demographic trends in the California market, including patient age, sex, location, and spending habits per product types.

August 20, 2017 — With a population of approximately 40 million, California is the largest state in the country, and by far the largest potential market for cannabis products. The greater Los Angeles metropolitan area alone is home to nearly 20 million people, and the San Francisco Bay Area is home to more than 7 million people. By comparison, the established adult use states of Colorado and Washington have approximately 5.5 and 7 million people, respectively.

The implications for the growth of the industry due to the coming implementation of California’s adult use market in January 2018 cannot be overstated. New Frontier Data projects legal cannabis sales in California to reach $2.8 billion in 2017, and $6.6 billion by 2025, with a compound annual growth rate (CAGR) of 12% over the next eight years.

With the pending implementation of adult use in California, the Golden State will become the most-watched and studied market in the world for anyone interested in understanding cannabis industry pricing trends and consumer behavior.

Market growth in California will be fueled not only by increased consumer demand after legalization of adult use, but also by the introduction of new brands and product types aimed at attracting new cannabis consumers, particularly those who prefer not to ingest cannabis in smoked form. Indeed, there has recently been a dramatic increase in U.S. consumer interest for non-flower products, specifically disposable vaporizers, concentrates, and edibles.

Building upon analysis conducted for New Frontier Data’s 2017 Cannabis Industry Annual Report, a new report leverages the breadth of information tracked by cannabis delivery service greenRush – and its proprietary online search, ordering, and fulfillment data – to present a groundbreaking view into the fast-growing, online cannabis ecommerce and delivery environment.

The data for the latest analysis covers the entirety of California dispensary sales tracked through greenRush’s online platform from January 2016 through April 2017. The data includes sales from hundreds of dispensaries across the state, and provides a unique view into consumer demand, product preference trends, and purchasing behavior among patients using ecommerce and delivery services.

Key findings from the report include:

• Overall, the average unadjusted retail value per transaction was $70.67, with men spending slightly more per transaction than women.
• Young adults are driving on-demand sales, with 18- to 34-year-olds making up 80% of greenRush’s customers.
• Flower remains the most popular product category among patients, accounting for 70% of online orders.
• Online consumers are largely buying smaller package sizes, with one-eighth oz. flower packages accounting for 60% of flower sales.
• Online ordering is an evening affair, with 42% of orders being placed between 6PM and 12AM (One-quarter of orders (23%) occurring between 6PM and 9PM.

The report’s analysis focuses on specific demographic trends in the California market, including patient age, sex, location, and spending habits. Additionally, each product is categorized by type: covering flower products, pre-rolls, edibles, concentrates, accessories, and other cannabis products to better understand evolving consumption patterns, such as growing demand among medical cannabis patients for concentrates and vaporizers.

As more states and countries activate adult use markets, such ecommerce and delivery services sectors will present expansive opportunities for growth and customer access where delivery markets are permitted.

Next month, in partnership with industry for-profit networking organization Women Grow, New Frontier Data will release the Cannabis Industry Diversity Report. To participate in the anonymous industry survey, click here. Visit the New Frontier Data website here for more information.