Data Brings the Consumer Cannabis Market Into Focus

CHICAGO —The U.S. will remain the largest market for cannabis products in the world, and CBD beverages have a critical role to play in breaking that segment into the general public, according to shopper intelligence expert Larry Levin, who recently presented an array of stats and insight on the growing U.S. cannabis market.

Levin, executive vice president of market and shopper intelligence at IRI, earlier this month delivered the webinar “Understanding the U.S. Consumer Cannabis Market,” which explored consumption, growth, channels, convenience stores and the overall evolution of the market.

Click through for a glimpse of the highlights and analytics from Chicago-based IRI and Boulder, Colo.-based BDSA …

Cannabis is getting to be a universally accepted product, Levin said, and consumer adoption is growing at rapid rates.

“Along with universal adoption comes rapid innovation: edibles, beverages, across the store,” he said. “There is continued innovation within cannabis. It really is now a mainstream product available in many channels, particularly the CBD (cannabidiol) format.”

Edibles lead the way in consumer preference, he added, with 73% consuming edibles and 33% preferring edibles.

In mature markets, edible consumption continues to grow, he said, and that among the three in 10 cannabis acceptors:

• 46% would consider edibles.
• 23% would consider inhalables.
• 53% would consider topicals.

2020 edible sales were at $1.5 billion, 13% of total sales, and candy takes the lead within dispensary edibles, driven by gummies, which account for 86% of candy sales.

Meanwhile, CBD beverages, which represent 70% of all edibles sales, “have really become a critically important area for new product innovation,” he said.

The U.S. will continue to be world’s largest market: BDSA forecasts a global $56 billion market in 2026.

Of that total:

• $41.2 billion will be spent in the U.S.
• $6.4 billion in Canada.
• $8.3 billion in the rest of world.

In 2020, global legal regulated cannabis spending by region for medical and adult use was:

• $17.6 billion in the U.S.
• $2.6 billion in Canada.
• $1.1 billion in the rest of world.

Legal cannabis isn’t just marijuana, as CBD consumption from marijuana and hemp is rising.

“For a lot of people who use cannabinoids, 84% use CBD,” Levin said. Among U.S. cannabinoid consumers, 16% use marijuana only but 64% use both marijuana and CBD, and 20% use CBD only.

Among U.S. CBD consumers:

• 46% use hemp-derived CBD only.
• 23% use both marijuana and hemp-derived CBD.
• 31% use marijuana-derived CBD only.

With cannabinoids like CBD crossing into general retail, IRI and BDSA forecast a $50 billion U.S. cannabinoid market by 2025.

In 2019: the total is $14 billion, of which:

• $10.5 billion from THC cannabinoids in licensed dispensaries.
• $1.6 billion from other cannabinoids in licensed dispensaries.
• $2.2 billion from non-THC cannabinoids in general retail.
• $0.5 billion in Rx cannabinoids.

In 2025: total is $50 billion, of which:

• $29.7 billion from THC cannabinoids in licensed dispensaries.
• $4.8 billion from other cannabinoids in licensed dispensaries.
• $13.2 billion from non-THC cannabinoids in general retail.
• $2.4 billion in Rx cannabinoids.

“There is growth as more and more states legalize THC and legalize dispensaries,” Levin said, adding that these numbers show this is a ripe opportunity. “To put it another way, in 2025 we think 26% of all sales are going to be non-THC cannabinoids in general retail,” Levin said.

CBD food and beverages in mainstream retail channels have increased 31% in two years, and CBD’s share of total MULO+C (multioutlet and convenience stores) sales is now 10%

Multioutlet is food/grocery, drug, mass merchandiser, Walmart, club stores, dollar stores and military commissaries.

Looking at CBD sales in convenience retail:

• The c-store share of CBD edible sales is 43%.
• The MULO+C share of CBD sales is 35%.

“It’s really important as a buyer or retail operator in convenience to think about your portfolio and where CBD plays a role, because it is contributing outsized growth,” Levin said. “When you think that convenience generates about 19% of all CPG sales, but here it’s 35% for total CBD, it really is a big opportunity. The numbers are relatively small right now, but the growth opportunities are huge.”

In 2020, 10% of CBD sales were in mainstream retail (which includes food, beverages, confections); however, in 2025, 28% of CBD sales are projected to be in mainstream retail.

“There are real concrete opportunities for our different manufacturing clients and retailers who are thinking maybe about private label to be capitalizing on these opportunities BDSA and IRI have identified in the marketplace,” he said.

Legal cannabis is evolving, with 72% of adults 21 and older in fully legal states consuming cannabis or are open to consuming cannabis, while 28% are rejectors and would not consider consuming cannabis in the future (but that percentage continues to decline).

“The market is continuing to grow,” Levin said, adding that there is no one cannabis consumer. They span generations, gender, socioeconomic backgrounds, motivations, need states and more.

He added that about 24% of the U.S. population 21 or older knows what cannabinoids are and can articulate the definition.

“The industry needs to bring the consumer along on the journey. What the category is about and the benefits. This will pay dividends down the line,” he said.

He added that marijuana consumption is multipurposed and multifaceted, with 73% using it for recreational and social needs, 62% for health or medial, and 39% consuming it for both recreational and social and health or medical reasons.

Consumers seek health and wellness benefits from CBD edibles/ingestibles:

• Relieve pain.
• Sleep better.
• Manage stress/anxiety.

However, as channel distribution evolves, the size and important of dispensaries cannot be ignored as it “dominated CBD product sales today and in the foreseeable future,” Levin said.

• Projected 2021: $6.8 billion (dispensaries: 32%) c-stores; 6%.
• Projected 2025: $20.4 billion (dispensaries: 24%) c-stores: 5%.

“Dispensaries sales will still double, still be huge, be just under $5 billion,” Levin said. “But more importantly, we’re going to see a tripling of the rest of the market, and that is just an incredible opportunity, going from $4.7 billion to $15.5 billion in just a few years. That represents incredible opportunities for all of the channels and certainly the convenience channel that today is getting about 6% of $6.8 billion but is looking at 5% of $20.4 billion (in five years).”

Legal cannabis is “really going to disrupt every consumer industry and they represent amazing opportunities for every consumer retail outlet,” Levin said. “It really does create the opportunity to innovate, develop and learn as more and more consumers adopt. Eliminate the confusion, teach the market about what we have available and realize the c-store really is the leader and we have to continue to drive outsize growth.”