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Media 丨 2021.09.17

Trends in the Colorado Cannabis Market

The United States is trending towards cannabis legalization. More states in the country are beginning to see the benefits of legalization, and pressure is mounting for federal legalization. As the country trends towards legalization, the most mature legal cannabis markets in the country provide an example of how the legalization process will look. Colorado is one of these mature legal weed markets, which has experienced rapid growth over the last years. Colorado demonstrates many trends that the rest of the country may replicate as other cannabis markets reach maturity, from the rise of new product delivery methods to trends in available products and consumer preferences. 


For example, other states are likely to experience similar innovations in the cannabis vaping market. Sales in the state are rebounding from the health scare of 2019, while a trend towards dose control is expected to drive vaping back into the forefront of the entire Colorado cannabis market. For consumers and investors in the cannabis space, Colorado provides a sneak peek into the US’s future of the cannabis industry.

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The Cannabis Market in Colorado: an Overview

Colorado is one of the oldest legal cannabis markets. The state opened its first recreational cannabis retail establishments in 2014, becoming, along with Washington, one of the first two states to do so (Mitchell, 2017). In the seven years since then, the state has developed a prosperous and stable cannabis market approaching a fully mature market structure. According to one report, “price stabilization [of the cannabis market in Colorado] suggests market maturity (Mitchell, 2017).” As the market has developed, price movements have stabilized to match other consumer products with well-established market structures. 


One factor that contributes to market stabilization is market penetration. Colorado has the highest market penetration for cannabis consumption in the nation, at 48%, compared to an average of 43% in all legal states (Yakowicz, 2021). As noted by Kelly Nielsen, head of the analytics department of BDSA, a platform for cannabis sales data, this percentage approaches the market penetration level of a product like alcohol, which has a penetration of around 60%. This high level of market penetration for cannabis in the state stabilizes the market by removing the potential for sudden demand shocks. 


Significant Trends in the Cannabis Market

One trend that is certain to make consumers in other states happy is that the price of cannabis has steadily decreased in Colorado for the majority of the time since legalization. The price of both flower and concentrate steadily dropped between 2014 and 2019. The price of flower dropped by around 59%, and the price of concentrates by approximately 63% during this period (Mitchell, 2017). At the same time, a recent trend towards premium small-batch strains has led to a bounce-back in prices, with prices reaching a 5-year high in January 2021 (Schaneman, 2021). According to analysts, consumers have become more accustomed to the benefits of premium strains and are reluctant to return to lower-quality products. 


In other words, a mature cannabis market such as Colorado illustrates two counteracting trends. While market penetration and efficiency increases push down prices, customers in mature markets also push up prices by demanding higher-quality cannabis. The overall price increases not because of increased market penetration but because of customers’ demand for improved quality. As the market becomes saturated, consumer tastes mature. In some ways, the Colorado cannabis market mirrors the structure of the alcohol market, with efficient production creating low-price offerings while consumer demand for premium products drives up the overall price. 

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Another notable trend in Colorado with implications for cannabis markets nationwide is the rise in the popularity of delivery services. In 2019, the state passed legislation that legalized cannabis delivery for medical cannabis in 2020 and recreational cannabis in 2021 (Ricciardi, 2020). The delivery model changes the interaction between customer and product. With a delivery model, a higher emphasis is placed on brand recognition. Consumers are free to search for products from any brand instead of being limited to the selection available at a particular store. Therefore, the trend towards delivery services coincides with a trend towards increased brand loyalty. Brands have achieved strong recognition in Colorado through employing “advanced marketing techniques such as product drops” and providing premium, limited-supply strains (Schaneman, 2021). As the market stabilizes, certain brands can differentiate themselves from the rest. A similar pattern can be expected in less mature cannabis markets in other states. 


Cannabis Vaping in Colorado: A Trend Within a Trend

The Colorado cannabis market has experienced remarkable growth over the last few years. After years of increasing market share, the vape market hit a barrier in 2019 with the vaping crisis, which led to some hospitalizations and caused health concerns about vape products. However, during 2020 cannabis vaping recovered the share that it had lost in 2019 and returned as one of the fastest-growing market segments (Ricciardi, 2020). One trend that has contributed to this bounce-back is the swift increase in regulation of vaping devices which has satisfied consumer safety concerns.


For example, in 2022, Colorado will become the first state in the country that requires firms to test the cannabis oils and concentrates used for vaping and the emissions caused when the oil is vaporized with a device (Kaplan, 2021). This policy regulates heavy metal emissions that can be emitted from the heating elements contained in some vaporizer devices. Devices such as those made by Cilicon Plus that use ceramic coils as a heating element are likely to become more prevalent in the market as firms realize the advantages of ceramic coils for healthy vaping

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The Cilicon Illuminate, With Temperature Control Technology

A final notable trend in the Colorado vaping market also reflects a larger trend in the cannabis market, the trend towards a focus on dose control by consumers. According to Roy Bingham, executive chairman of BDSA, consumers are searching for “more predictable psychoactive experiences” which has led to an increase in the popularity of edibles and vaping (Ricciardi, 2020). As stated by Bingham, “That’s also one of the factors behind the growth of vaporizers is you can get a very small hit in a consistent way… Vaporizer products are likely to be the No. 1 [growing market segment in 2021].” A final trend illustrated by the Colorado market is mature cannabis consumers having a stronger preference for dose control capabilities. Products such as the Cilicon Plus Illuminate, which includes built-in temperature control, are likely to play a significant role in moving forward in the vaping market. 


Conclusion

For consumers and investors alike, Colorado is one of the key states to study to understand the future of the cannabis industry in the country. After less than ten years of rapid growth, the cannabis market is reaching a point of maturity. With pervasive market penetration and refined consumer tastes, the Colorado market reflects many dynamics that have the potential to be replicated in other states. As markets mature in other states, these dynamics can inform predictions of the trends that will guide market growth. From the popularity of delivery services to the focus on premium brands, to the preference for consumption methods that allow for dose control, market trends in Colorado are leading to a more refined and creative industry that is able to produce innovative and high-quality products. Meanwhile, vaping will continue to play a significant role in this growth as it increases its market share. The market is stable compared to less mature states. Nonetheless, the cannabis market in Colorado is sure to continue to produce exciting innovations in the coming years.