How did the cannabis industry fair in 2022? What were the general 2022 Cannabis trends? And what can we anticipate for next year? Who bought cannabis in 2022? What about inflation?
We’ll discuss all of that below. The data comes from Headset‘s business intelligence software. They track real-time sales reporting from cannabis retailers via their point-of-sale systems.
2022 Cannabis Trends in Review
In the United States, total market sales remained relatively flat throughout the year, except for a few seasonal fluctuations. Total US sales dropped by -1% ($1.60B).
Canada saw a slight upward trend over the past year, with sales ending 7% higher than the year before.
Not every cannabis market is equal, however. Most Canadian provinces, for example, saw positive growth except for Ontario, where sales remained flat.
2022 saw new cannabis trends, particularly in the US, where younger markets grew, and older markets retracted. For example, Michigan’s new cannabis market saw a 32% increase in sales. Whereas the Colorado, Oregon, and Washington markets all saw sales retractions.
Most Popular Products
The graph above compares year-over-year sales growth in each product category. Tinctures, topicals, capsules, and flower all saw sales decline in the US and Canada.
Flower’s decrease is likely a result of a sales correction after a pandemic-inspired boom period (which we covered here).
The drop in tinctures, capsules and topicals may indicate that consumers are more interested in recreational uses than medical, as these products are usually associated with medical purposes. However, it could also be the lower bioavailability of cannabinoids in these products.
Beverages, edibles, vape pens, and pre-rolls all saw positive year-over-year growth in both countries. This again indicates consumers want portable and cost-effective products and products with better bioavailability.
Both infused and mixed strain pre-rolls performed well in 2022, both in the US and Canada. The infused market is now the second largest within the pre-roll market, and it is on track to overtake hybrid pre-rolls by 2023.
Disposable vape pens were also the cannabis winner in 2022.
Inflation?
2022 saw higher inflation than we’re used to, and the cannabis industry wasn’t immune. However, despite the redefinition of the word to mean “higher prices,” inflation is an increase in the money supply.
Increases in the money supply don’t increase prices uniformly across the economy. And here we can see cannabis prices have actually decreased this past year.
The slower pace of decreasing prices in Canada compared to the US is likely due to the Canadian regulatory apparatus that keeps cannabis prices artificially high. While also attempting to keep them competitive with the underground legacy markets.
Understanding topline sale changes are only possible with a basket metric. This is where total sales can be described as the total number of transactions multiplied by the average transaction size. The graph above shows the changes in these metrics in the US and Canadian markets.
Average basket size decreased in all markets, meaning customers are spending less per trip than they were the year before. This is likely due to the higher living costs and the general trend to lower cannabis prices. Customers are getting more for their money as prices decrease.
Who Bought Cannabis in 2022?
Who bought cannabis this past year? As is typical, young adults are the fastest-growing demographic. In both the US and Canada, Gen Z bought more cannabis in 2022 and was the only demographic that provided positive sales growth.
Of course, these numbers make sense when you consider that for every day in 2022, a member of Gen Z was reaching the legal age (21 in the US, 19 in Canada). Even if they are not regular consumers, odds are they visited a retail shop. And they bought cannabis at least once as a novelty.
An exciting standout is the growth of the female Canadian cannabis consumer, particularly in Generation X. This group had the most robust growth in Canada, even beating Gen Z male customers by one-tenth of a percentage point.
2022 Cannabis Trends In Summary
US Cannabis sales growth slowed in 2022 but were up in Canada. Most Canadian markets saw positive growth in 2022, although Ontario‘s sales remain flat.
Shifts in consumer demand suggest pre-rolls and vape pens are more popular than tinctures and capsules, which will likely continue into 2023.
While customers leave retail shops with smaller purchases, average item prices have decreased in both countries.
While Gen Z is the only group to see positive sales growth in 2022, Canadian retailers should keep their eye on female Gen X customers as a potentially untapped market.