Marijuana Business Magazine - February 2018

of Washington state, Headset serves clients in every adult-use state (except Alaska) and Washington DC.The company also has clients in many medical cannabis states, including Arizona and Illinois. “But fast forward a year or so and we should have a footprint most every- where,” Scott said. Headset employees have some of the comforts of home, including this cannabis-themed pillow. (Photo by Steve Dykes) H eadset is privy to coveted sales data that reveal market trends that marijuana business execu- tives need to know. Below are eight observations from Headset co-founders Cy Scott, Scott Vickers and BrianWansolich, based on data their firmgath- ers from the roughly 300 retailers and 100 product manufacturers that use the company’s software. Products: Headset tracks about 200,000 distinct cannabis products across all legal state markets. Some 2,000 new products are being introduced every week. And there is room for additional new products. “It doesn’t appear to have hit a ceiling yet,” saidVickers, the company’s chief technology officer. Product Prices: “We’re seeing pretty good declines,” Vickers said. For example, in April 2015 the average across-the-board item price was about $32, compared with $21 in April 2017. Some of that price drop is driven by increased sales of less expensive products, like pre-rolls, which drive down the average item price quite a bit. About 90% of pre-rolls are less than $15, 30% of all edibles sales are under $10, and 30% of concentrate sales are in the $20-$30 range. “When a market first comes online, like in Cali- fornia this year, we’ll see pretty high prices in the near term and then it will start to flatten out,” Vick- ers noted. The expansion will mostly focus on California, Nevada, Arizona and New Jersey, if that state goes recreational, Scott said, as well as Canada. “Markets like California are very important to us, so we’re investing a lot of resources in that market to get ahead of 2018 and to be able to support busi- nesses that are operating now,” Scott MEGA 5 Flower: Flower commands a majority of product market share, at about 55%, and flower sales continue to rise month over month because of consumers in new markets. Nevertheless, flow- er’s leading market share is declining as more consumers opt for an immense variety of non- flower products, such as edibles and concentrates. With the exception of one or two months, flower market share has been on a continual decline for the past 18 months, while the market share of edibles and concentrates continues to rise. That’s across all state-level markets, but not all consumer demographics. There’s still a ton of opportunity in flower, Scott, the CEO, noted, but it’s one of the slowest-growing categories. “It doesn’t grow at nearly the same clip as something like pre-rolls and concentrates, which both have over 10% of the market and growth rates of over 200% right now,” Scott said. Market Share: The smallest slivers of the product market are also the fastest growing in terms of sales. Products like topicals, tinctures, capsules and pills probably account for 1% of the market combined, but they are experiencing the fastest growth. Capsules are enjoying the fastest year- over-year sales growth, at almost 300%. Shrinking Shelf Space: Retail shelf space is still available but shrinking quickly. In fact, some smaller manufacturers are already having a hard time capturing or maintaining shelf space. “There’s definitely trouble there,” Vickers said. To be successful, product manufacturers need to be introducing new products “all the time.” – Omar Sacirbey TRENDS 56 • Marijuana Business Magazine • February 2018