Growing competition in the cannabis space

William Honaker

4/2/2018

Many recent news stories about the legal cannabis industry in the United States are chock full of record-breaking revenue and tax figures illustrating the market’s phenomenal growth over the past few years.  But finances aside, what does market growth for the cannabis industry look like from a product perspective?  The latest research findings by Brightfield Group have the answer.

 

With cannabis dispensary and product data now going back over two years, our surveys of marijuana product availability in major US state markets reveal several clear indicators that the market is growing increasingly competitive and crowded. 

One example of this is exhibited by the increase in the variety of branded products available at US dispensaries.  Two years ago, the average US dispensary carried 94 different types of branded marijuana products.  One year ago, that number had grown to 118, and by January of this year, a typical dispensary carried over 150 different branded products.  A more mature market is providing a more diverse offering to cannabis consumers but this also makes it much more competitive. How will you get your products on the shelf in a dispensary that already carries 5 competitor chocolate brands?

 

Additionally, the number of unique brands available at US dispensaries gives insight into the changing nature of the market as it matures.  Throughout 2016 and into the early part of 2017, the number of brands grew, climbing from the low 1700s into the upper 1800s.  However, since the start of 2017, that number has leveled off around the mid-1600s.  Why the decline?  There is some natural volatility to the market: some products may only be available seasonally, while other brands may fall out of the market after being squeezed out by competitors or otherwise failing to gain traction with consumers.  The notable volatility in California at the close of 2017 and early 2018 saw many brands pulled from the shelves as they prepared for the new recreational market and regulations. 2016 in particular was a year of tremendous growth for markets such as California and Oregon, with many brands entering in hopes of establishing a foothold in the booming market.  By 2017, the increase in competition forced out many smaller brands, as evidenced by a slight decline in the number of brands available, despite continual increases in the number of dispensaries and products available. 

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