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Sensitization to the spread of cannabis COVID

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How can we understand COVID cannabis rushes spurs? as such I mentioned earlierThe cannabis bubble caused by the epidemic has now burst. Total cannabis sales in the market are now in decline, but what has happened is a return to market conditions prior to the pandemic.

We can answer some burning questions using real-time sales reports from Headset Insight. Specifically, have we seen a greater decrease in transaction volume or volume?

What are the best and worst products of the last two years? And any customers are now buying less cannabis than they did in 2020 and 2021.

Researching these fundamental issues reveals patterns that we can discern from the data. We know the increase in COVID cannabis use has been real, so let’s discuss the details.

Cannabis transactions drop

This graph shows the average store’s monthly transaction volume in four markets (California, Colorado, Oregon, and Washington). Previously, the headset identified midsummer as the turning point when sales would begin to stagnate and decline.

You can see that point is marked grey dotted line.

The volume of deals is steadily declining. For example, average store transaction volume in California decreased from 7,309 in July 2021 to 6,106 in July 2022.

COVID Cannabis Surge – Shrinking Baskets

Cannabis spread COVID

Once again we look at the average store in each of these US cannabis markets. This time we look at the average trade size or basket size trend. (Cart size is a measurement that describes the number of items a consumer purchases in a single transaction.)

Similar to the previous chart, there is a steady decline in all markets. Consumers generally spend less per trip to cannabis shop.

The average basket size at an average store in Colorado in July 2021 was $59.73.

In July 2022, it was $55.21.

This means that the increase in COVID cannabis use has already been the consumer response associated with the epidemic.

Transaction volume vs. Transaction volume

Cannabis spread COVID

Lower transaction volumes and shrinking baskets contributed to lower overall sales. But which one causes the biggest impact?

The chart above compares relative decreases in average store transaction volume and average basket size by state from July 2021 to July 2022.

In each market, the relative decrease in the volume of transactions is more important than the relative decrease in the volume of the basket.

This decrease indicates that the decrease in the number of transactions had a greater impact on sales than the contraction of baskets.

Of course, this depends on the market. In Colorado, for example, the decline in total transaction volume is roughly twice the decline in basket volume. Whereas in Washington, these two data points are nearly identical.

Class performance in California

It can be difficult to detect sales trends between different product categories. By digging into the data, we can see what contributed to the recent dip in top-line sales.

The chart above shows year-on-year sales growth for various products in California. It then compares it to the total market growth over the same period.

Venus, of course, did well. From July 2019 to July 2020, flower sales growth rates were nearly double the total California market. This is the spread of COVID cannabis at work.

Beverages and vape pens maintained positive growth while sales of topicals and tinctures declined.

Performance class in Washington

The performance of the cannabis market in Washington was similar to that of the cannabis market in California. Zahra saw a massive surge in early 2020, the poster child for the growing spread of COVID cannabis.

Zahra is now correcting while drinks and vapes stay consistent. Like California, tints are in decline. But, unlike California, the spot category experienced positive growth.

Trends among top cannabis spenders before and after the spread of COVID cannabis

Who helped create the increased spread of COVID cannabis? Large cannabis consumers spend more than the average and contribute a disproportionate share of revenue to cannabis industry.

This graph shows the average total spending of the top 10% of cannabis consumers over a three-month period (May to July) over the past four years.

These customers have the greatest (relative) influence on top line sales. For example, the top 10% in California accounted for 30% of all cannabis sales this year.

On average, the top 10% also spent $100 more during the COVID cannabis use increase compared to 2019.

This trend shows that first-tier cannabis buyers were influencing the increased prevalence of COVID cannabis by purchasing more cannabis than the average. It now appears that this trend is in decline.

Comparison of cannabis customers

The chart above compares the top 10% with the rest of the group. Here, we can get to the 10% with the lowest 90% and how it relates to the increased spread of COVID cannabis.

In 2020, all cannabis consumers increased their spending. This is what we mean by the COVID cannabis boom. 90% of California customers increased their spending as did the top 10%.

In 2021, all groups achieved consistent year-over-year spending growth.

With the COVID cannabis boom officially over by 2022, the differences between these two types of customers are obvious.

In both Washington and California, the average client’s summer spending in the top 10% fell significantly more than average client spending in the bottom 90%.

The biggest cannabis enforcers tighten their belts. This causes the top-line market to pull back.

Prevalence of cannabis COVID by age

All age groups follow a similar pattern. Generation X has the highest levels of spending, while millennials continue to contribute the largest total revenue.

The annual growth in average customer spending from May to June is illustrated in the chart above. During the increase in COVID cannabis use in 2020, younger customers spent more. This may be due to the unwillingness of older generations to venture outside the home and visit a retail store.

Average customer spending remained constant in 2021 across all age groups.

So far in 2022, most age groups have recorded a similar average decrease in spending. The only exception is Generation Z with the largest drop in total spending of -11%.

This data indicates that younger customers were also fueling the increased prevalence of COVID cannabis in early 2020.

in summary

The COVID cannabis rush is over. We note this with a decrease in both the volume of transactions and the volume of the basket. However, reductions in transaction volume have a greater impact.

Flowers remain the most volatile, with huge spikes early in the pandemic with major corrections in 2022.

Beverages and e-cigarette products have remained the most consistent during the ups and downs of the COVID cannabis spread.

The top 10% of cannabis consumers increased their spending in 2022 but reduced their spending in 2022 by more than the bottom 90% of customers.

Younger customers have also been responsible for the increased spread of COVID cannabis. But customers of all age groups are now reducing their spending at more or less equal rates.

footnote(s)

https://www.headset.io/industry-reports/understanding-the-recent-sales-declines-in-legacy-cannabis-markets

Grow guide for marijuana beginners.
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