Few people have managed to miss the increasing popularity of cannabis use. However, walk down the road and catch a whiff of that grassy, pungent smell and you might be witnessing a dying breed of cannabis users. As more people use cannabis, they’re increasingly turning away from the raw flower. For investors within the space, the changing cannabis consumption landscape presents challenges and opportunities in product development, marketing and reaching recent consumer groups.
Cannabis becomes a commodity
Although cannabis is famously considered weed, connoisseurs will inform you in the event you’re mixing up your strains. Different strains contain various amounts of THC, the cannabinoid that gets you high, in addition to other non-psychoactive cannabinoids and terpenes, a few of that are said to have a positive effect on inflammation, stress, and more. Each cannabis strain has its own look, smell, taste, and experience.
However, cannabis is becoming increasingly commodified and consumption is moving further away from raw flower. A growing proportion of consumer products are being enhanced with THC and other cannabinoids, thereby losing the experience of a flower strain and its distinctive cannabinoid and terpene combos. Cannabis cultivation is increasingly becoming a large-scale industrial affair, with the dimensions of cannabis plantations limited partly by their market size, because the United States doesn’t allow interstate trade within the plant.
Many larger operations belong to what are referred to as multi-state operators – firms structured to operate in multiple states. If you’ve got ever invested in a cannabis ETF (exchange traded fund), these are the businesses you’ve got bought. Because of their wide reach, their market cap is large enough to take a position in cannabis ETFs. Still, no cannabis company can ship across state lines. What you grow in a single state is what you sell in that state.
In the USA, more people now devour cannabis than alcohol
The commercialization of cannabis coincides with a vital trend that’s spreading cannabis use across all age groups and social classes. More and more cannabis users today are college students and middle-aged women, versus the standard “stoner.” We’re seeing more distilled and infused products like gummies, drinks, and vapes, and fewer flower to examine, grind, and smoke.
Studies on consumption within the USA show that cannabis consumption has exceeded alcohol consumption. This has long been the case amongst younger cohorts. Among Millennials and Generation Z, alcohol consumption has been slowly and steadily declining while cannabis use has increased. This is partly as a result of the conclusion of how harmful alcohol is and partly as a result of the milder effects of cannabis. Cannabis is now recognized as a more harmless drug than alcohol and has lost the heavy stigma it once had.
Growing product categories
For investors, a broader demographic of cannabis consumers opens up a field of recent investment opportunities. Product categories are expanding, creating opportunities for expanded branding and marketing.
Smoking is increasingly seen as unhealthy and unattractive. Familiar products that don’t should be inhaled, resembling chocolate, biscuits and drinks, have gotten increasingly popular. There are powders and concentrates for making cannabis cocktails. Edible products resembling gummy bears and drinks are said to be particularly popular amongst consumers aged 55 and over. a report by New Frontier (2023). The same report also notes that 18- to 24-year-olds are the least more likely to smoke cannabis, indicating the trend of a brand new generation of cannabis users looking to switch alcohol reasonably than smoking. Smoking in some form, whether flower or vapor, remains to be the predominant type of cannabis consumption, however the trend toward other product types is creating opportunities for brand spanking new entrants to fill niches.
There is an increasing popularity in lower dose products, in line with New border. Their consumer report notes a decline in the recognition and frequency of use of blunts, bongs and water pipes, in addition to dabbing and concentrates. At the identical time, we’re seeing a rise in use of edibles, which at the moment are probably the most commonly used type of cannabis. Also on the rise are vapes, beverages, topicals and, to some extent, tinctures.
While cannabis is becoming more common at student parties, we expect it would eventually find its way into bars and other social venues. Twelve states currently allow cannabis consumption lounges of some form. Some states allow the acquisition of cannabis on-site, while lounges in other states are only allowed to supply premises for consumption. While lounges still mostly take the shape of straightforward cafes, this category of multinational could soon evolve into nice speakeasies and dance clubs. This field is wide open for entrepreneurs.
New consumer groups
As cannabis becomes more mainstream, recent goal groups are emerging. As mentioned above, young individuals are the foremost consumers of cannabis. However, the fastest growing group of cannabis users is Seniors over 65 years. Another necessary and fast-growing consumer group is Middle-aged womento alleviate the symptoms of menopause. Pain relief and sleep aids are common uses of cannabis in all cohorts, but especially in these groups.
And as with every medicinal product, whatever people use for themselves, additionally they give to their pets. This makes the pet market a key focus for cannabis investors. Knowing how one can reach these recent consumer groups presents great opportunities for brand spanking new brands and product categories.
Investment opportunities
As marijuana becomes more commodified, opportunities outside of crop cultivation are emerging. Flower prices are falling in most states, making it increasingly attractive to purchase biomass reasonably than produce it. Internationally, nevertheless, markets outside the US have gotten increasingly integrated through the cannabis trade, opening up opportunities to grow cannabis in low-cost and climate-appropriate locations for export. Southern Africa and Colombia are attracting a growing stream of investment.
Cannabis remains to be underdeveloped as a consumer packaged goods (CPG) category. Most packaging is rudimentary and brand constructing remains to be in its infancy. This may perhaps be because cannabis entrepreneurs should not entering from a CPG perspective, but reasonably from a passion for the plant and its health advantages. While this infuses the industry with passion and camaraderie, it also brings with it less professionalism than many other industries. This presents a wide selection of opportunities for investors and professionals within the marketing and CPG space.
There’s a whole lot of invention available within the product development space as well. It seems no state needs one other sweet, chewy gummy bear or pre-rolled cigarette. While these categories remain very talked-about, we expect to see more firms developing better-tasting beverages, healthier edibles, and unexpected products from creative cannabis innovators.
