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What will adult-use cannabis sales look like in 2023?

State by state, cannabis legalization prospered in Western markets in 2022. But prices will shift as the trend moves eastward. Premium extracts will begin to take over distilled down products while minor cannabinoid sales continue moving in the new year. Looking ahead to 2023, industry research data suggests that cannabis markets will find fresh footholds.

Opportunities shift East

We spoke with Brendan Mitchel-Chesebro, an analyst for the cannabis market research firm — BDSA, about trends to expect in the 2023 cannabis market. Their outlook depends on 2022’s prominent mature markets in the West, including Colorado, California, Arizona, and Nevada, setting the tone for 2023.

We see price suppression with wholesale prices falling and prices at retail falling a lot as well. That led to a stagnation in sales starting in 2022. And in a lot of the mature markets that saw the most price progression, they even saw a slight dip in sales.
That’s the big call out informing several of the major points looking ahead to 2023, which is that the biggest opportunities won’t be in the places where we’ve seen them before. We’re really going to be shifting to the East Coast and the Midwest as the biggest growth opportunities. — Brendan Mitchel-Chesebro, Analyst | BDSA.

New markets

Following New York, the Tri-state area and the general Northeast will have significant potential as capital markets open up. Sales will soon begin in Maryland. Michigan is still a strongly performing market with price compression after transitioning from medical to adult use in the past few years.

Missouri’s market shows promise for a few reasons. But Illinois is shaking some of its early problems with exogenous debate rising over the merits of their new regulations.

New York

BDSA, aligning with recent news of their adult-use launch, points to New York as the most significant opportunity in 2023. Fifteen million adults over twenty-one now have access to non-medical cannabis — millions of tourists annually. Delays lead to constraints, though.

New York had originally planned to launch in concert with Connecticut and New Jersey. By delaying that, they lose that first-mover advantage taken by New Jersey. Another downside of that is the longer they take to get up and run — the more constrained retail availability is going to be. 
In contrast to other markets, New York had a limited medical program. This limited landscape only brought about 175 million dollars in medical sales in 2021. — Mitchel-Chesebro

According to an announcement this summer, New York would allocate 150 turnkey storefront facilities for initial retailers licensed through a state-run social equity program. BDSA doubts they’ll be up and running for a while, though.

They would be able to operate out of these 115 storefront facilities. But they’ve chosen a contractor form and haven’t started construction. So these are all factors that are constraining New York.
A big piece of it does come down to timing, and it does come down to getting retailers up and running. And will they have a system to explain to consumers that this is a regulated retailer? There’s also the publicity issue they’ve been dealing with, which is pretty unique. — Mitchel-Chesebro

Solventless trends

Rosin, one of the more premium cannabis extracts, holds great potential. When asked about solventless form factors, though, Brendan cautioned that it’s difficult to say where gains and product shares are coming from in one category to another. 

What we can speak to are: 
  1. Price trends 

  2. Product share trends within

So on price trends, we see live resin’s average retail price, both actual retail price that we pull from menus across the country and that reported in our other data products, fall really fast. Solventless prices, like rosin and high-quality bubble hash, have also fallen. But they’re still holding a lot higher. And we also see really big gains when looking at shares of dabble sales.
When we look at mature markets like California, Oregon, Colorado, or again, Michigan and Illinois, rosin’s share of total dabble dollar sales has grown from about 8% in January 2021 to about 16% in October 2022. — Mitchel-Chesebro

Rosin sales are essentially doubling while most other dabbable and concentrated form factors have stayed relatively flat.

More rosin and solventless products generally appear as top vape and Edibles SKUs. We see more brands mainly focusing on solventless inputs in their edibles rack into the top five or the top ten as far as top-performing brands monthly in a market.

There was a market standardization for rosin products within the last five years. Today, brands performing well with solventless cannabis extract sales have wider distribution networks, according to BDSA.

Premiumization is pointing to rosin as being the next thing. — Mitchel-Chesebro

Minor cannabinoids in 2023

BDSA’s focuses on legal cannabis markets, which includes their predictions for minor cannabinoids. 

One to look at is if you’re looking at the California market and the top performing brands, all of the brands that are top ten in the gummy category have at least one product with CBN or CBG as of Q3 2022.
So we are expecting that to continue. And we’re expecting more cannabinoids to break out and be recognized by consumers, becoming ubiquitous across certain segments of the legal industry. One that we’re looking at particularly is THCV. — Mitchel-Chesebro

Market nomenclature

Minor cannabinoids found in natural hemp products further assist product education and marketing. Trends in 2023 will continue to accept constituent-based marketing for cannabis products.

When looking at consumer attitudes, our survey data shows that consumers want consistent, repeatable experiences. And when you talk about consumer-facing claims and information that people have on their products, minor cannabinoids or terpene content is much more reliable. They drive consistent experiences more than the descriptors used in the industry, which are Sativa, Indica, and Hybrid. — Mitchel-Chesebro

There’s a lot of focus on THC, although Brendan noted that anecdotal reports suggest that producers add far more information on labels. But do consumers want a terpene-focused market moving into 2023?

Our consumer insights data shows that not many consumers prioritize terpene content and profiles right now. But taste and flavor is the biggest influencer in a lot of markets.
 But about 35% of inhalable consumers say that tastes and flavors are a major influence on their product choice. And its rising number of them, about 18% in Spring of 2022, reported that mood or affect labeling is a major influencer of their product choices, as well. — Mitchel-Chesebro

International outlooks

Premium product sales will climb while price stabilizes in mature markets in 2023. In addition to new markets on Eastcoast, BDSA predicts international cannabis sales in the New Year.

We expect Mexico to start adult-use sales in 2023. Total legal sales in Mexico, we forecast to surpass about $400M in the first year of sales. This will be one of the first of several really big International Market launches. We’re forecasting Mexico and Germany to be two of the top five contributors to Global sales growth between 2022 and 2026. — Brendan Mitchel-Chesebro, Analyst | BDSA. 

We did not ask BDSA about Canada in 2023, although the adult-use regulations and its medical market are under review. So stay tuned for more insights on the medical market in the US next to an expected Consumer Packaged Goods integration within adult-use storefronts.

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