Why The California Cannabis Market Must Evolve To Meet The Needs Of Its Post-Covid Consumers

By Margot Micallef

The most populous state in the nation, California, is rumbling back to life following more than 400 days of shelter-in-place guidance. With it, nearly 40 million Americans are beginning to cobble together their return to normalcy. 

Many businesses that survived the pandemic did so through a series of break-neck pivots - quickly adjusting to the needs of their consumers, and to an ever-changing series of regulations, restrictions, and (occasional) deregulations. 

But as California reopens, the cannabis industry must come to terms with one simple reality - the COVID-19 pandemic continues to fundamentally change the needs of many consumers. 

Fortunately, both for the industry and the people it serves, California cannabis is primed for another leap forward, but only if the industry is receptive to, and ready to meet the demands of, the post-covid consumer. 

How Much Has Really Changed? 

To understand the evolving cannabis market, we need to look back at the height of the 2020-2021 pandemic, and it’s important to remember that these are real people facing unique challenges, and not simply statistics.

• The Kaiser Family Foundation reports a staggering 273.64% increase in reported Anxiety or Depressive Disorders from 2019 to 2021.

• Worker burnout jumped from 42% to 72% during the pandemic, heralding a “Great Resignation,” with more than 4 million people quitting their jobs in April 2021 nationwide.

• But it’s not all doom and gloom, as 62% of Americans have made lifestyle-related changes to improve their health during the pandemic. 

So what does this tell us? 

By reviewing the data (or simply speaking to our friends and family) one thing becomes abundantly clear; the pandemic had a profound impact on our mental and physical well being, and placed a greater importance on health, self-care, and well-earned escapism. 

Cannabis Use In the Time of Covid

Cannabis has seen a steady YoY increase in use as destigmatization and decriminalization give way to broader acceptance and legalization. 

California, the largest legal market for cannabis, proudly celebrated a 57% increase in YoY sales from 2020 to 2021, and part of this is due to the mass shut-down of entertainment, self-care, and wellness facilities during the Covid lockdown. 

As gyms, massage parlors, concert venues, and art studios began shuttering their doors, Californians began looking for new ways to satisfy their health, wellness, and mental wellbeing needs.

This is well documented by the Brightfield Group,which cites 81% of consumers reported using cannabis to help manage the mental strain of the pandemic, and an 82% increase in reported at-home use of cannabis from the same respondents. 

These trends represent a sizable influx of new consumers, as well as an increase in overall cannabis consumption at home. 

But cannabis users aren’t just consuming more, they’re consuming cannabis differently, and the industry must pivot accordingly to meet the growing demand for non-traditional consumption methods.

New Consumption Methods will Open New Markets 

As new consumers enter the market, new products are being developed to meet the demands of a diverse marketplace. 

In Q1 of 2021, the industry experienced:

• A 68.4% YoY increase in beverage sales 

• A 29.6% YoY increase in capsule sales 

• A 36.2% YoY increase in concentrate sales

Not only do these new consumption methods open the door to millions of new cannabis consumers, but it also provides a new venue for cannabis to be consumed in more mainstream settings. 

Picture the casino floor in Las Vegas, where tobacco smoking is prevalent, but smoking cannabis is prohibited (despite the legalization of cannabis in Nevada.) 

Now imagine a cocktail server bringing you a cannabis-infused beverage while at a casino table. Extend this trend into football stadiums, restaurants, and event venues, and you get a peek into how staggeringly large the market is for cannabis-infused beverages. 

Many experts predict that by the end of 2021, cannabis beverages will begin to compete with mainstream alcohol categories, and it’s easy to see this trend extending to additional competitive industries as cannabis consumption methods continue to evolve and attract new consumers. 

Additionally, the return of large events and social gatherings presents a tremendous opportunity for cannabis companies to build brand loyalty across these new consumption methods, especially in the beverage space where becoming the next White Claw or Truly alternative is a multi-billion dollar prize.

Social Equity as a Market Need 

As we look back through the last year-and-a-half of pandemic to better understand the needs of the marketplace, we also need to reflect on the tremendous push for social change and equality that has been front and center for millions of Americans. 

As California’s regulated cannabis market grows, making major strides in social equity will be essential if the current injustices built into the legal system, and cannabis industry, are to be corrected. 

Despite the growing acceptance and legalization of cannabis, people of color are still being arrested and incarcerated at an alarming rate. In New York City, for example, AMNY reports that a staggering 94% of cannabis arrests targeted people of color. 

However, as cannabis sales skyrocket towards the tens-of-billions annually, wealth is largely being generated by white, male-owned businesses. 

MJBizDaily reports that 27% of cannabis companies are owned by women. In California, just 23% of companies are led by those who identify as racial minorities. 

Additionally, as consumers place an increasing emphasis on equality, the industry must evolve to address current injustices - especially in the liberal leaning states where cannabis is currently legal.

The US SIF Foundation reports that portfolios centered around investments in sustainability have grown 42% in the last two years alone, signaling a dramatic shift in socially-conscious investing. 

This creates a perfect storm where social-justice awareness is growing, and we are seeing an increase in the number of investors using their portfolios to push for social change. 

Cannabis brands are therefore presented with two options as we emerge from the pandemic; continue the current path forward and risk alienating an increasingly socially-aware consumer base, or take proactive steps to address the social and economic injustices present in the cannabis industry to the benefit of consumers, the industry, and society as a whole. 

Meeting the Needs of Post-Covid Cannabis Consumers

In the rapidly expanding cannabis industry, it’s easy to adopt an “if you build it, they will come” mindset. Afterall, sales are skyrocketing, new consumers are entering the market, and new legislation is being introduced to legalize cannabis on the federal and state level across the country. 

But the cannabis consumer is disparate, and the reasons for consumption vary from medical to experiential (and everything in-between).

As we emerge from the greatest public health crisis in more than 100 years, industry leaders who adapt to the changes in psychographic and behavioral needs of their consumers will benefit from an increased market share, a lasting strengthening of their brand identity, and a more satisfied consumer.

At Gaby Inc (the California-based Cannabis brand where I am the Founder and CEO), we’ve enjoyed notable post-pandemic success by striving to understand the evolving needs of the cannabis consumer in an uncertain world..

This started with ensuring that the diverse voices in leadership positions across our organization could champion the voices of our equally diverse customer base. By fostering an environment of inclusivity, we’re able to address the evolving needs of our customers; whether that be those who are interested in exploring new consumption methods, or those who want to see their dollars going to organizations which foster and support positive social and environmental changes. 

It’s understandable for cannabis retailers to feel unease about emerging from a global pandemic, but the fundamentals of running a successful operation truly haven’t changed. Listen to your consumer, understand their unique (and evolving) needs, and foster an environment that actively seeks out feedback and involvement from diverse voices.

If you stay in step with your customer’s needs as they organically change with the times, the rest will follow naturally.