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Text Content

WHY DO AMERICANS STILL BUY NON-LEGAL WEED? ILLICIT CANNABIS SALES 3 TIMES HIGHER
THAN LEGAL MARIJUANA SALES

by MG Magazine


May 12, 2024 5:55 PM | 5 min read



--------------------------------------------------------------------------------

20-YEAR PRO TRADER REVEALS HIS "MONEYLINE"

Ditch your indicators and use the "MoneyLine". A simple line tells you when to
buy and sell without the guesswork. It’s a line on a chart that’s helped Nic
Chahine win 83% of his options buys. Here's how he does it.

--------------------------------------------------------------------------------

This article was originally published on MG Magazine and appears here with
permission.

WASHINGTON – Illicit cannabis sales exceeded $74 billion in 2022, outpacing the
country’s legal sales of $28 billion by a staggering 164 percent according
to New Frontier Data’s latest report about cannabis consumers in America. The
stark gap presents clear opportunities for legal operators who can appeal to the
frequent consumers who’ve become dependent on unregulated channels and the
millions of adults who’ve shown an interest in cannabis but remain hesitant to
try it.

To understand the underlying issues driving the industry’s multi-billion-dollar
problem, New Frontier Data surveyed more than 5,500 U.S. adults across all
market types. The demographically representative sample was surveyed during Q1
2023 and includes consumers who rely on a broad range of sources to procure
cannabis.


U.S. CANNABIS CONSUMER IN A SNAPSHOT

 * Approximately 42 percent of U.S. consumers source cannabis from
   state-regulated markets.
   * Thirty-four percent live in adult-use markets.
   * Eight percent are registered patients in medical-only markets.

 * About 24 percent of U.S. consumers have access to state-legal cannabis but do
   not use licensed retailers as a primary source.
   * Seventeen percent reside in adult-use markets but source cannabis
     elsewhere, usually from friends, family, or illicit dealers.
   * Seven percent live in medical-only markets but do not participate in their
     state’s medical program.

 * The other 34 percent of U.S. consumers do not have adequate access in their
   home state and would need policy reform to join the licensed cannabis market.
   * Twenty-three percent live in states where cannabis is illegal.
   * Eleven percent are non-medical consumers in medical states.


CONVERTING ILLICIT CONSUMERS TO RETAIL CUSTOMERS

While most dispensaries are competing against each other to serve the same group
of people who’ve committed to legal markets, there are significant opportunities
outside the current customer pool. According to New Frontier Data’s research,
four key barriers must be overcome when attempting to attract frequent
gray-market customers into licensed-dispensary shoppers.

1. PRICE

Those who buy from gray-market sources often also tend to consume the most the
most often, with 56 percent reporting cannabis use multiple times per day. They
also consume the most flower, with roughly 32 percent using more than an ounce
per month. While they shop frequently and consume the most, they have lower
household incomes than people sourcing from friends and family, who have lower
average incomes than licensed-dispensary shoppers. By most measures, high
inflation affects low-income households the most. To adequately appeal to this
segment in 2024, retailers must provide products at a variety of price points
with attractive promotions including bulk discounts and one-gram deals.
Unfortunately, many markets deal with a level of taxation that makes competing
on price alone difficult if not impossible.

2. PRODUCT VARIETY

Manufactured, non-flower products are the legal dispensary’s differentiator.
Even in adult-use states, fewer than half of surveyed consumers reported having
access to anything but flower, pre-rolls, and edibles. As many as 25 percent of
frequent consumers in adult-use markets who primarily purchase from friends,
family, or dealers do visit dispensaries on occasion for non-flower products
like vape cartridges, concentrates, and topicals. Licensed retailers could do a
better job of retaining these customers with promotions like affordable flower
bundled with non-flower products.

3. PRODUCT QUALITY

According to New Frontier Data, much of the illicit cannabis sold in the U.S. is
high-quality flower grown in California. To compete against the gray-market,
retailers in every legal market must offer in-demand strains with a level of
quality that can meet or exceed what’s being shipped from California farms.
While this holds true for customers who frequently source from friends and
family members, quality and freshness are especially important for frequent
consumers with higher tolerances and experienced palates.

4. ACCESSIBILITY

Frequent gray-market consumers disproportionately live in urban areas and may
not have convenient transportation to a local licensed dispensary. Similarly,
those who primarily source from friends and family disproportionately live in
urban areas and may not live anywhere near a licensed dispensary. In each of
these instances, achieving loyalty is next to impossible. Businesses will need
to work with local regulators to change zoning ordinances and delivery coverage
areas. In locations with a high population of senior citizens like Leisure World
in Seal Beach, California, local dispensaries offer regular shuttle services to
bring customers into the store to address this group’s primary barrier to retail
shopping.


CONVERTING THE CURIOUS HOLDOUTS

While current gray-market customers may be set in their ways or dealing with
barriers that are difficult to overcome, millions of other potential new adult
customers are open to trying cannabis for the first time (or the first time in
decades).

“Roughly two in five (39 percent) potential consumers in adult-use states
described themselves as likely to try cannabis in the next six months,” the
report states. “And the good news is that for any of these potential consumers
who choose to begin consuming cannabis, retail is a likely and attractive source
of cannabis relative to the illicit market.”

New Frontier Data’s insights about product preferences is especially important
here, with 76 percent of potential customers interested in edibles. Half of the
respondents said they would be interested in trying topicals, 42 percent are
interested in beverages, and 28 would like to try tinctures. Only 18 percent
expressed an interest in smoking flower. Although flower may dominate retail
sales across the country, dispensaries properly marketing non-flower products
stand the best chance of attracting a new wave of older, suburban, canna-curious
individuals with disposable income.

This article is from an external unpaid contributor. It does not represent
Benzinga's reporting and has not been edited for content or accuracy.

 

--------------------------------------------------------------------------------

20-YEAR PRO TRADER REVEALS HIS "MONEYLINE"

Ditch your indicators and use the "MoneyLine". A simple line tells you when to
buy and sell without the guesswork. It’s a line on a chart that’s helped Nic
Chahine win 83% of his options buys. Here's how he does it.

--------------------------------------------------------------------------------


ENTER TO WIN $500 IN STOCK OR CRYPTO

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Posted In: CannabisMarketsCannabis Consumptioncontributorslegal cannabis

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights
reserved.




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