Specialized Cannabis Data An Increasingly Important Tool

By Willis Jacobson
Oct 28, 2020

Many operators are turning to specialized cannabis data to help inform their business practices, a trend that is expected to ramp up as the industry grows and matures.

Representatives of companies that compile data on things like wholesale and consumer trends point to a near future when that information will be necessary for businesses to survive. Strategic, specialized data can have a wide variety of uses – like tracking market trends or selecting inventory – as well as help those companies both learn about and target specific audiences.

The cannabis industry is behaving much the same way as traditional consumer packaged goods (CPG) industries, like beverages, according to Connor Skelly, the marketing director at Brightfield Group, which provides specialized market intelligence reports for the cannabis and CBD industries. Those companies frequently leverage data from various vendors to help drive their business plans.

“Because this is so standard in CPG and more cannabis executives are coming from CPG backgrounds, expect to see the [business] strategies take a more data-driven approach,” Skelly said.

Pumpkin-spice cannabis?

LeafLink, which focuses on wholesale data, provides information through LeafLink Insights, its suite of data products. The company offers a monthly “Insights Flash” report that gives a snapshot of the cannabis industry’s wholesale trends.

Among the takeaways in the company’s October Insights Flash report is that sales in the cannabis industry grew 118% year-over-year from September 2019 to September 2020, and that the total value of merchandise sold on a same-store basis grew 26% over that same period.

The data can get much more detailed, however.

In its October report, LeafLink lists the six top-performing brands of September, as well as the market in which they were most popular. Timeless Vapes was the top brand in Arizona, for example, while Pacific Stone was most popular in California and TasteBudz was most in-demand in Colorado.

Michigan, with a growth rate of 342% compared to September 2019, was the fastest growing state, according to the report, which also looks at trends within individual markets. Edibles and ingestibles, for example, was the most competitive product category in Arizona in September, with 54% of brands selling in the category, which made up only 26% of total sales.

Conversely, the report found that flower was the least saturated product type in Oregon in September, with just 36% of brands selling the category while making up 39% of total sales in the market.

“For retailers, having access to wholesale data means that they can track industry trends, better understanding their profit margins and consumer buying preferences,” said Alex Feldman, general manager of LeafLink Insights. “When it comes time to stock their shelves, retailers can look to key metrics such as product profitability and performance to understand what they should restock and what they should move away from.”

Another sign of the cannabis industry’s growth, Skelly with Brightfield Group said, is the rise of seasonal products, similar to other CPG industries.

“Yes, pumpkin flavors have seen a jump the past couple months on dispensary shelves,” he said. “Also, brands are becoming more sophisticated in how they position products, especially over the past few months where self-care and relaxation are priorities for consumers. This is particularly true in vapes, where more products hitting shelves are positioned for relaxation and combating stress.”

‘Call to action’

Feldman, with LeafLink Insights, noted that having access to accurate, in-depth performance data is key for the survival of any business. He said that’s especially true in cannabis, given the industry’s unique regulations, which vary from market to market.

Consumer preferences also vary dramatically across states, Feldman said, as do the economics of operators in different markets.

“Because of these market-to-market variations, many members of the cannabis community are interested in learning more about what their state looks like relative to other, more mature states,” he said. “At the same time, understanding the driving forces that have shaped a specific market can give a business a competitive edge. As the industry evolves, specialized data will become even more essential to the success of individual businesses.”

The COVID-19 pandemic has shown how impactful market data can be.

Skelly, with Brightfield Group, said his firm found that more than a third of consumers switched to online shopping channels as states implemented shelter-in-place orders, even though many states allowed cannabis dispensaries to remain open in some fashion as “essential” businesses.

“This caused many cannabis brands and retailers to shift their marketing strategy to digital,” he said. 

Skelly noted that e-commerce can be problematic for an industry like cannabis – due to its lack of interstate commerce – but he expects consumers to continue to prefer browsing online, rather than in-person. 

“That was a call to action for many companies to ensure their brands and products aligned with the right consumers,” he said of the pandemic-induced shift in shopping habits.

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