Cannabis Consumers Say Prices Are A Driver For Product Choice - Grow Life 420

Cannabis Consumers Say Prices Are A Driver For Product Choice

November 04, 2021

#KahliBuds #MMJ #CBD #THC

Many people within the cannabis industry have been pushing the notion that cannabis products should be treated the same way as more traditional consumer packaged goods or CPG. A new report from cannabis market analytics firm BDSA, sales data analysis platform Hifyre, and Deloitte Canada dug into the concept of pricing for cannabis products and found some key differences. 

The massive growth of the cannabis industry is the main reason why it is so important to understand these issues and differences. Global legal cannabis sales reached nearly $21.6 billion in 2020, an increase of 50% over 2019 sales of $14.4 billion, due largely to legalization. BDSA forecasts global cannabis sales will continue to grow quickly, to $62.1 billion in 2026, more than double the 2021 estimated global sales of $30.6 billion with a compound annual growth rate (CAGR) of more than 15%. If companies want a big piece of this lucrative pie, then they need to have the best possible market data in order to make smart moves within the company’s product lines.


One thing the report determined was that price is a key factor in decisions about what cannabis product to buy. The most recent BDSA Consumer Insights survey, which polls thousands of consumers every six months, found the following: 

  • In states where cannabis is legal for adult and medical use, low price was consistently identified in the top three drivers of product choice. More than a quarter (27%) of respondents said price influences their purchase decision, just behind taste/flavor and high THC content. 
  • In Canada, low price was the leading influencer of product choice, with 34% of consumers stating it matters the most. 

Another reason licensed cannabis companies should closely examine pricing is that the Deloitte study of Canadian consumers found that many cited pricing as a reason why they continued to buy from illegal sources. 

How To Price

So, just knowing that pricing is important to the customer seems pretty basic. The hard part is figuring out how to price a cannabis product. Is it based just on THC content or the potential length of time a consumer stays high? Would consumers be willing to pay more for better tasting edibles or a better psychoactive experience? Smoking dry flower brings in another set of variables. Can bud density be considered when pricing or how well the product smokes?

Pricing is currently all over the place, which confuses customers even more. The report compares California edibles to Canadian edibles. 100 mg of THC averages $16 in California, but can go as high as $50. While 10 mg of THC in an edible in Canada averages $6, but can go as high as $16. That’s a big spread between prices. To be fair, many consumers aren’t doing price comparisons between Canada and California.

So the next option is to compare prices within the U.S. The report looked at products that are available for sale in different states. For example, the Wana Sour Gummies have an average retail price in Oregon of $8.03, but in Illinois they retail for $27.49. Also in the U.S., Stiiizy Blue Dream cartridge retails for $43.81 in California, but if you are a consumer in Arizona, you’ll spend $61.43. City and state taxations vary along with the costs of doing business in different locales. Yet, more traditional CPG products have standardized pricing no matter where a consumer buys a product. A package of Oreo’s is likely to cost the same whether a person buys it in Texas or New York. Unfortunately for cannabis this is a major point of divergence from CPG.

Maturing markets have seemed to engage in a race to the bottom pricing, with wholesale spot pricing down double digits in mature markets. Value flower is driving that price deflation. However, a Deloitte study found that 86% of millennials are willing to pay more for premium cannabis. Live resin is a great example of this. 75% of these items reside in the premium pricing tier according to the report. Consumers are also willing to pay a premium for edibles if there are unique additional ingredients. 

Another area in which cannabis products diverge from mainstream CPG is the ability to have standardized production. Cannabis strains can vary according to the places it is grown, especially if the cultivation is grown indoor or outdoors. Regulatory requirements within states can also affect the production of a brand.

At this time brands aren’t commanding premium pricing. Most consumers are choosing products based on personal experience or on a recommendation from a friend or budtender. This makes it hard for companies to develop brand awareness over various states, but it does open opportunity for emerging companies to get established since consumers are willing to try new names and products. Eventually it’s expected that brands will begin to register among consumers. Cookies is one of the few breakout brands that has resonated across state lines. 

CPG Sameness

There are some areas where CPG and cannabis are alike. Supply and demand fundamentals are the same for both. If dispensaries are low on supply, they can raise prices and vice versa. In 2019, consumers mostly chose between premium priced flower and mainstream flower. Fast forward to 2021 and consumers can also choose from Value and Discount priced flower. 

In the end, the report concluded that pricing in the cannabis industry continues to change rapidly. The more successful companies are the ones that will be able to pivot and adjust prices quickly according to the customer demands.

The post Cannabis Consumers Say Prices Are A Driver For Product Choice appeared first on Green Market Report.



Debra Borchardt, KahliBuds, 420GrowLife

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