Custom Cones USA has joined forces with Headset, a cannabis data company, to release a white paper investigating the popularity of products among their customers. Titled "The State of the Pre-Roll Industry," this comprehensive report delves into various aspects of pre-rolls, including sales growth, customer interest across generations, creation methods, packaging, and more.
Harrison Bard, the CEO and co-founder of Custom Cones USA, expressed, "This white paper showcases the ongoing expansion of the pre-roll industry and its potential to become the largest product category within the cannabis industry. We extend our gratitude to our partners at Headset for their collaboration on this white paper, offering reliable information to assist individuals in making well-informed business decisions within our ever-changing marketplace."
Details of the Report
The report gathered data from diverse sources, including over 300 participants: recreational cannabis producers, hemp producers, medical cannabis producers, plant processors, vertically integrated brands, multi-state operators, dispensaries and cannabis brand agencies.
The white paper highlights the changing popularity of various product types by comparing year-over-year category sales growth in the United States and Canada from November 2021 to 2022. According to the paper, pre-rolls, edibles, drinks, vapes, and oil experienced an increase in market share, while tinctures, capsules, and topicals saw a decline.
The key insight derived from this data is that recreational categories like flower, pre-rolls, and vapes drive market growth, while wellness categories such as tinctures, capsules, and topicals are experiencing a decrease in market share.
The white paper reveals significant increases in Canada in terms of year-over-year segment growth. Infused pre-rolls saw a remarkable surge of 1,426%, hybrid strain pre-rolls experienced a growth of 440%, and disposable vapes witnessed a rise of 160%. In the United States, hybrid strain pre-rolls increased by 63%, disposable vape pens by 60%, and infused pre-rolls by 22%.
The white paper highlights potency as a crucial factor influencing consumer choices, as infused pre-rolls offer higher potency than standard pre-rolls. Additionally, the advancement of pre-roll machinery has enabled keeping prices affordable while maintaining high potency levels.
The white paper also discusses an intriguing trend concerning the price compression of cannabis products across various categories. In the United States, prices for beverages, concentrates, edibles, pre-rolls, and vape pens are experiencing a downward trend. Similarly, prices in all categories except pre-rolls are declining in Canada.
The paper suggests that if you are involved in the cannabis industry and concerned about decreasing profit margins, expanding into the pre-roll category can be a strategic move to sustain and enhance profitability. While some have suggested pre-rolls are a way for dispensaries to get rid of lower quality cannabis flower, effectively pre-packaging it for the consumer, many have debated this point in the marijuana industry.
According to Custom Cones USA, 58.4% of companies surveyed confirmed their involvement in producing or selling infused pre-rolls. The white paper further elucidates a correlation between the declining prices of regular pre-rolls and the increasing prices of infused pre-rolls. Furthermore, the report highlights a significant surge in the popularity of multi-pack pre-rolls. Since 2021, there has been an estimated 400% growth in multi-packs containing at least two to five grams of cannabis.
While different generations of adults exhibit preferences for specific cannabis products, pre-rolls maintain a consistent appeal across all age groups. Baby boomers show a preference rate of 12.8% for pre-rolls, Generation X follows closely at 13.6%, millennials at 14.5%, and Generation Z at 14.4%.
Will Canadian Businesses Expand?
In the Canadian cannabis industry, pre-rolls are experiencing significant growth and momentum. Approximately 50% of cannabis companies in Canada are relatively young, being less than three years old. Comparatively, 18.9% fall within the four to five years old category, and 20.5% fall within the six to seven years old category. The white paper emphasizes the industry's maturation, particularly in pre-roll businesses.
Nevertheless, projections and questions regarding future adjustments and changes within the industry exist. One aspect under scrutiny is whether Canadian businesses will expand into the United States. Additionally, there is speculation on how emerging cannabis markets in the United States can match the pre-roll production rates of businesses in more established markets.
In the quest for expansion, the white paper advises cannabis businesses to consider several factors. First and foremost, companies should assess their monthly pre-roll production capacity. Studying the packaging methods and machines employed by other brands in the industry is also important.
Additionally, companies should determine whether pre-rolls are weighed before packaging and be mindful of the average size of pre-rolls, typically measured in grams. These considerations can provide valuable insights for cannabis businesses expanding their operations.
According to the white paper's analysis, pre-rolls are identified as a continuously growing trend in the cannabis industry. Based on the examined data, the paper projects that pre-rolls will surpass flower as the largest product category by 2030.
The convenience of pre-rolls as a consumption method, where one needs to add fire, along with the increasing popularity of infused pre-rolls and multi-packs, will drive the market forward. As the quality of pre-rolls continues to improve, it is foreseeable that pre-rolls will eventually surpass the flower category.
Conclusion
The white paper on "The State of the Pre-Roll Industry" provides valuable insights into the dynamic landscape of the cannabis market. It highlights the continued growth and potential of pre-rolls as a dominant product category within the industry. With compelling data and projections, the report showcases the rise of infused pre-rolls, multi-packs and the convenience they offer to consumers. Notably, pre-rolls are expected to surpass flower as the largest selling category by 2030, driven by convenience, increasing quality, and evolving consumer preferences.
Furthermore, the paper addresses important considerations for cannabis businesses, including production capacity, packaging methods, pre-roll weighing practices, and average size. By acknowledging these factors, companies can make informed decisions to capitalize on the expanding pre-roll market. This white paper is a valuable resource for industry professionals, providing insights and guidance in navigating the ever-changing cannabis landscape.
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