BDSA's analyst Brendan Michel-Chesebro sheds light on the potential of cannabis products on the U.S. cannabis market, highlighting the significant opportunities and risks for 2024.

Opportunities and Risks in Hemp Products

Hemp-derived products, unlike their cannabis counterparts, are not bogged down by heavy taxation and stringent regulations.

This grants them lower operational costs, higher margins, and broader distribution possibilities.

Particularly, the entry of these products into liquor and grocery stores, and their collaboration with major beverage and alcohol distributors, signals a major shift.

Ramp Up In Hemp-Derived Cannabis Beverages

Michel-Chesebro emphasizes the beverage sector as a particularly promising area, given the logistical challenges cannabis retailers face with beverages, such as distribution costs and the need for refrigeration.

However, there are risks involved, primarily concerning consumer safety due to less rigorous testing compared to legal cannabis products.

BDSA's analyst suggests that the entrance of reputable CPG brands into the hemp-derived product space could standardize industry practices and mitigate these risks.

Struggles And Potential Of New York's Cannabis Market

Despite high hopes for the rapid launch of more retailers in 2023, progress has been slower than anticipated in New York.

This sluggishness in opening new dispensaries has hindered the market's ability to compete effectively with the well-established illicit market.

The state's enforcement efforts against unlicensed dispensaries have only recently begun to show results, but more needs to be done to truly impact the illicit market.

Michel-Chesebro suggested increasing retail availability and lowering legal market prices are key strategies for mitigating these issues. However, these efforts are expected to continue facing challenges throughout 2024.

Consumer Trends And Product Preferences In 2024

Looking at consumer trends, Michel-Chesebro predicts the continued strength of infused pre-roll sales and growth in the disposable vape category. He cites a 58% growth in disposable vape SKUs in California between 2021 and 2023 as evidence of the category's burgeoning popularity.

Innovation in this space, such as dual-chamber vapes and improved reliability, has attracted a broader consumer base. Furthermore, premium options within disposable vapes have seen significant growth, catering to consumers who prioritize quality and flavor.

The Economic Logic Of Proprietary Strains

2024 will present the challenges and benefits of developing proprietary strains. While it's a costly and lengthy process, unique strains can help brands stand out and avoid the "race to the bottom" in chasing popular strains.

These proprietary strains often command higher prices – in California, for instance, single-brand strains were priced 34% higher on average than the market average for flowers. This approach can be a powerful differentiator in an increasingly competitive market.

Budget-Friendly Products

Michel-Chesebro also discussed the importance of budget-friendly products like Trim and Shake in price-sensitive markets.

Even though these categories represent a small share of total sales, they hold significant potential, especially in newly launched markets facing supply shortages and high prices.

He notes that low price is the third most commonly cited driver of product choice among consumers, indicating a substantial market for affordable cannabis products.

As more states move towards legalization, these budget-friendly options could play a crucial role in balancing consumer demand and affordability.

Photo by BoliviaInteligente on Unsplash.