EXCLUSIVE: CEO Of Leading Cannabis Research Firm Shares Insights On Midterms, Thanksgiving Sales And Branding

With five statewide and a host of local legalization propositions on the ballot, cannabis reform had mixed results in the midterm elections. What then were the highs, lows or results of the election overall? For Roy Bingham, CEO and co-founder of BDSA, a balance of the midterm elections should start by weighing the different population sizes of the states where marijuana legalization was discussed. 

“North Dakota and South Dakota population is only about 800,000 - 900,000 for each of those two states [meanwhile] Maryland and Missouri have 6 million and became a combined $9.3 million. The first thing is to remember we just added 9.3 million adults to access adult-use cannabis,” Bingham said.

The CEO stressed the importance of cannabis legalization in Maryland where it overwhelmingly won with 67% support, and Missouri, where Amendment 3 passed with 53% support.

“We expect a very large market, Missouri, $277 million in 2023, which is just across the first year, and rapid growth thereafter. We're projecting a Maryland adult-use market to start in 2024. Maybe they'll beat us to it and get started in 2023. But in 2024, we think that that market will be at least $200 million. $215 million is currently in our latest forecast,” Bingham said.

“I think that's important to put things into context. There is a continuation of the ongoing evolution of the industry on a state-by-state basis, and the driver of growth for the industry, of course, is now in these new and emerging markets, both on the medical side and especially when they convert or add adult use,” he added.

“We're primarily focused on consumer adoption, consumer trends, and total retail sales. And that's primarily driven by what's happening at the state level. Certainly, federal legalization will boost the industry and we think that will likely happen in the out years of our projection, probably 2025 or 2026 when it has an impact. But we're not assuming a dramatic impact because by then the vast majority of the population will have access anyway.”

Political Outlook: Talking To ‘Acceptors’

Elections represent a window of opportunity to change laws, and when they pass, they configure a new political landscape that needs to be reinterpreted to move legalization forward. As political discourse radicalizes and conservative politics become mainstream globally, how can the industry talk to conservative voters about cannabis reform?

For Bingham, cannabis legalization in the United States is not necessarily a partisan issue. In fact, conservative voters tend to favor noninterference in the cannabis industry.

“One survey in September showed 76% of Republicans support federal noninterference with the cannabis industry. 65% of Republicans surveyed claimed that they'd approve a measure protecting banks that work with legal cannabis businesses,” Bingham said. “A number of people who lean on the Democrat side are concerned that this becomes a vote winner for the Republican Party or a loss for the Democrats in two years' time because they don't take action or if they don't take the Democrats don't take action. So I don't think it's this tendency to go more conservative that is a major negative for the federal legalization prospects for the cannabis industry.”

Bingham also explained that when states adopt cannabis, especially for adult use, there's a continuing trend of people becoming consumers, including those who've said, ‘no, I'm never going to consume cannabis.’ Although about 20% of adults typically fall into this category, this percentage declines consistently by one or two percentage points most years in most states.

“The group of people that we call ‘acceptors’ are people who are not currently consuming cannabis but have said, well, I'm open to it. (....) about two percentage points of acceptors become consumers. And it's a very consistent thing,” Bingham added.

“I think that slower adopters who may be the more conservative get used to the idea that this [cannabis] is something that other people that they know are doing and it doesn't seem to have any adverse effects and they seem to enjoy it. ‘So [they say] I'll try it.’ And they may become very occasional consumers, but they're not opposed any longer to cannabis. Once people have tried it…(...)...it's to people who haven't tried at all or their last experience of trying.” 

Thinking About Selling Legal Weed For The Holidays?

Turning to more present issues in the US cannabis space, BDSA’s CEO referred to the upcoming Green Wednesday and Black Friday, and the potential boost of retail cannabis. BDSA provides a holistic understanding of the cannabis market by generating insights from point-of-sale data, wholesale data, consumer research, and market forecasts.

We know from cannabis sales statistics that those two days are often bigger than Christmas or New Year's Eve. Typically, Green Wednesday's retail’s B/S enjoys an early spike given the four-day weekend.

In California, in 2021, for example, Green Wednesday was 55% higher than a normal non-holiday November day. People will be looking to find deals and stock up to share with friends and family. However, Bingham noted the opportunity to boost sales comes with a caveat. And a race to the bottom for discounts opens up questions to regulators and cannabis brands.

“There's a lot of promotion that happens in the industry and a majority of promotions so far, unfortunately for brands, are still around discounting. You'll see a significant number of offers of special deals around Green Wednesday, and Black Friday, and I'm sure we'll see a significant uptick in sales. One of the questions for the industry is, are they profitable sales? The second question is: are the sales are good for the brands in terms of attracting new consumers who may then become loyal to their brands? I think that that is a challenge, and I see a significant increase in sales. But are they really just displacing sales that would have taken place on Thursday, Friday, Saturday, Sunday, Monday, Tuesday, and Wednesday of next week? And now you've just sold that for 20% of what you would have sold at normal pricing?,” Bingham said. 

Despite the lack of interstate trade, cannabis companies of all sizes continue to struggle with achieving scale, distribution, branding penetration and profitable margins. And for all that, segmentation is vital. Which segments are coming up or are strong this Thanksgiving that should be a priority for retailers?

“We see a pickup in sales of edibles at this time of the year. I'm not quite sure what the driver for that is, other than the possibility that it's discrete and people are at home on Thanksgiving Day and that can just pop an edible and (...) Mom and Dad, Grandma and Grandpa don't know about it,” Bingham responded.

Pro Tip: ‘Move Away From Demographic Segmentation

The CEO noted cannabis brands need to move away from demographic segmentation and thinking of gender and thinking of age or even economics and think about the psychographics of why people are consuming, when and how.

“It's worth remembering always that the majority of people are consuming for health reasons. It might be anxiety, it might be sleeplessness, it might be a pain, in a very mild form, the anxiety might be around meeting up with family again or being alone over Thanksgiving or something like that. And cannabis has been demonstrated by a lot of people to be very effective at easing those sorts of concerns,” he said.

“Psychographics, attitudes and behaviors as a way to think about people, rather than by age or other demographic. Sounds great when you're talking about the majority of adults in the United States being consumers in the adult-use states. We're talking about a very, very, very diverse group of people. And demographically, it may not be as meaningful as thinking about what they're thinking and why they're deciding what they're deciding,” Bingham concluded.

Photo By Arek Socha On Pixabay

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