The cannabis industry consists of different products ranging from flowers, extracts, edibles, and so on. With such a wide variety of products, their categories in the market tend to evolve and change with time. What this means is that some of these products possess tiers and sub-tiers that impact which products rank higher before the consumer. It is therefore important to look at what will make a cannabis product high in demand. Read on as we explore what sets a cannabis product out to consumers who set cannabis prices as the bottom line.
Prices, Purchasing Power, and Options
Cannabis dispensaries are organized to differentiate top-shelf products from generic products on the menus. Branding, marketing, and organization in the dispensary have served as key differentiators used to separate these products. The aim is to ensure that the customers can be attracted to the features, benefits, quality, and other traits of such top-shelf products. This is expected to inform the buying decision of such a customer and direct them to the top products in the dispensary. However, trends have shown that the major factor driving consumers buying decisions in 2022 is cannabis prices.
The purchasing power of a consumer is a very important factor that determines what the consumer can purchase market. This means that cannabis consumers are very conscious of the prices of products in line with their purchasing power. While this is predominantly true, the cannabis industry is such that consumers aim to get maximum satisfaction from their products. This means while also considering prices and their purchasing power, cannabis consumers want to get the most for their money.
Cannabis flower prices on the West Coast plunged recently with the prices of outdoor and greenhouse products dropping by 50% from last year. This means consumers that are very particular about the prices of products now have a bigger net of options to choose from.
Jason Bridges as the head of merchandising with Amuse which is one of the largest cannabis distributors in California. He recently weighed in on the discussion about price-conscious consumers in the cannabis industry. Bridges believe that consumers are more price-conscious now than they were a couple of years ago. He added that consumers are normally willing to pay top dollar for flowers with as high as 30% THC due to their quality and potency. However, a number of small brands now possess flowers with high THC content at low prices. Bridges, therefore, believes this has affected the mindset of consumers to seek products with high THC content and low prices irrespective of brands.
How do these products perform in the market?
What will help you understand this market characteristic of cannabis consumers is how cannabis products perform in mature markets. Headset reported on the popularity of cannabis products in mature markets earlier this year. The results showers that the products are consistently ebb and flow based on consumer performance in the market. As the markets mature, edibles and other products are gradually taking prominence from cannabis flowers which normally dominate the market. Other products such as tinctures, sublingual strips, pre-rolls, and beverages are also becoming important. Canada recorded a stunning 3,000% growth in tinctures and sublingual products over the year.
Distinction across groups of products also affects the prices and performances of such products. As stated earlier, some products easily possess tiers and sub-tiers which perform differently and thus cannot be generalized. Flowers for example according to Bridges possess about five different tiers which are more than that of any product. These tiers have different prices and so are expected to be arranged differently and perform differently. Edibles on the other hand are all within the same price range which means their performance in the market depends on the customer’s preference. Other products like vape cartridges and pre-rolls despite their small distinctions are still similar in performance. This means only flowers possess a wide margin in pricing tiers that might influence the customer’s choice.
BDSA analysis also showed the performance of some products of some of these products in the cannabis market in California from 2021. The product that has recorded the most increase in the vape market is live resins. Resins are gradually becoming a household name in cannabis dispensaries as they are top-shelf products with a top stake in the vape market. The analysis from BDSA shows that live resins make up 30% of vape sales in California in 2021. This was a steady increase.10% in 2019. Presently, live resins have grown to more than 75 percent of top-priced products in that category. This trend of live resins is similar to that of flowers in the market where top-shelf products outperform budget buds.
With more subcategories emerging, differentiation in cannabis prices is set to be a major discussion topic in 2022 as products jockey for top-shelf. Consumers have to decide which products have additional benefits and deserve the premium of higher prices. This category is already seen in the edibles market where consumers willingly pay more for additional functional benefits in the gummies. Gummies that have CBD are 20% higher in price than those without. Nonetheless, they have recorded an increase in sales by 40 percent from 2020 to 2021 according to BDSA. Gummy products with minor cannabinoids such as CBN and CBG are also increasing in popularity and performance in California markets.
Bottom line
The performance of cannabis products in the market has shown that the cannabis industry is not like other industries out there. While predictions can be made on which product should perform more than the other, the onus still lies in the hands of the consumer to choose what he wants. With a wide array of products available to meet the need of the consumer, jockeying for the top shelf has become less definite. Purchasing power and prices might be a strong determinant in some regions while benefits are the major factor for some categories. This means ultimately the products which suit the personal preference and capabilities of the consumer should be expected to perform more. Yet, this too is not set in stone so don’t bet on it.
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