CBD is seemingly more popular than Kim Kardashian right now. According to cannabisMD’s Knowledge Navigator, the search term has grown more popular than terms including Beyoncé, Kim Kardashian, kale and being vegan. In less than three years, Cannabidiol has gone from an unclear acronym to a misunderstood cannabis product, to a sought-after remedy driving new product category growth for retailers like Walgreens and CVS.
For those of us in the cannabis industry, the results of de-stigmatizing CBD translate directly into dispensary sales, shining a bright light into the future of this market across the supply chain. This shows as we collectively push to de-stigmatize cannabis consumption, market-by-market across the country, sales will continue to grow for years to come.
The Headset Report is chock-full of insights including sales trends relative to THC products, sales of CBD products by type and analysis of price point. The analysis comes from Point of Sale data from licensed retailers in California, Colorado, Washington, and Nevada.
Overall CBD Sales Trends
Let’s start with an overall snapshot of sales growth in the past year. Growth is consistent across all markets studied and is on pace this year to exceed the already explosive growth we saw from 2017 to 2018. For example, in Colorado, CBD cannabis product sales nearly doubled from $35M in 2017 to $67M in 2018, and halfway through this year, they are already at $47M in sales.
The study breaks down sales of CBD products by category, and as a percentage of total product sales within that category. Results validate what many dispensary operators already know: product sales make up the overwhelming majority of tincture, sublingual, capsule, and topical sales. That’s not surprising when considering over 80% of all tinctures, sub-linguals, and topicals contain some amount of CBD. We can also infer, based on this product category set, that consumers seeking these CBD products are not smokers, are motivated by therapeutic benefit and can not be lumped into a generalized cannabis consumer.
Outside of topicals, tinctures, and sub-linguals, CBD products make up a smaller portion of overall dispensary sales. Edibles have the largest sales volume within the CBD-only product set, but currently, represent much lower sales volume than their THC-only counterparts.
The previous graph gives a snapshot of the current sales volume of CBD products, as compared to products containing only THC, but that doesn’t tell the whole story. The real story is about sales growth. Manufacturers and dispensaries can leverage information about sales growth trends to inform the product development and product inventory mix, bringing greater return on sales tomorrow, and over the next year.
The sales growth of CBD edibles from 2018 to 2019 was 45% as opposed to 24% growth for edibles containing only THC. This sales trend continues to grow in the first two quarters of this year, with CBD growth outpacing THC-only edible sales growth by more than double.
Breaking Down The Edibles Category
The analysis found gummies are the most popular edibles segment with consumers, accounting for 54-65% of total edible sales in California, Colorado, and Nevada.
For operators in more mature cannabis markets where the pricing race to the bottom is crushing, the most exciting data in this study relates to the price of CBD products. This data suggests that consumers purchasing CBD products associate price with quality, and may be making more sophisticated product selections based on therapeutic benefit rather than price. When looking at the CBD Gummies market, California has the highest prices, with an average selling price (ASP) around $26. Washington has an ASP around $22, whereas, Colorado and Nevada have seen a decline in prices, with an ASP between $16 and $18.
Acceptance of CBD products by traditional retailers is not a threat to the cannabis industry, but a driver in de-stigmatizing CBD overall, clearly translating to sales in dispensary environments. Further, it appears evident that while consumers may be likely to purchase CBD products when they are picking up a prescription at Walgreens, they intuitively understand the cannabis industry and licensed cannabis businesses are the most credible sources for real information and high-quality products.