Cannabis continues to be big business in the U.S. as more markets open up and established markets continue to mature.
Sales for all regulated cannabis products are expected to top $27.1 billion in 2021, up around 25 percent from 2020, according to Kelly Nielsen, vice president of insights and analytics, BDSA. Last year’s sales came in at $17.6 billion, making 2020 a banner year for the cannabis industry as dispensaries were recognized as essential businesses during the COVID-19 pandemic.
BDSA predicts the U.S. market will reach $41.3 billion by 2026.
“Growth for the category has been a function of new markets getting established, such as greater development in the Illinois and Michigan markets, as well as growth within established markets,” Nielsen says. “This year is already off to an exciting start for newly legal markets, with Arizona starting adult-use sales in January and approval for adult use passing in New York, New Jersey, New Mexico, Connecticut, Virginia, etc. To note, we expect sales in these states to start next year.”
While edibles occupy just 13 percent of the total cannabis dollar volume, BDSA says growth in this category is outpacing the industry. The firm expects edibles to make up about 15 percent of the market by 2025.
Gummies continue to rule the edibles market, making up 60 percent of first-quarter edible sales in states covered by BDSA’s product-level Retail Sales Tracking. Chocolate represents about 13 percent of the category, while other candy, such as hard candy, taffy, and caramels, make up another 8 percent.
Beverages represent 6 percent of the category, while pills occupy about 8 percent. BDSA reports beverage sales increased by 50 percent between the first quarter of 2021 and 2020. Pills were up 30 percent over the same period.
Other infused foods, such as baked goods, represent about 5 percent of the category.
The accessibility of edibles continue to draw in consumers. Nielsen says 70 percent of cannabis consumers turn to edibles, and 34 percent prefer edibles over inhalables or topicals.
“Ultimately, the purchase decision to edibles is driven by the overall positive taste/flavor and ease of use,” Nielsen says, adding consumers say taste matters most for chocolate but taste and ease of use are equally as important for hard candy and gummies.
As for function, consumers say they turn to edibles to help them sleep better, relax and mellow out, and help relieve pain, Nielsen says.
Edibles brands to watch
BDSA highlighted several heavy-hitters in the confectionery edibles space. They include:
- Wana: The company’s primary sales are in gummies, but it also offers tinctures and tarts. Wana is the No. 1 edible brand in Colorado and continues to expand its line with new technologies such as Fast-Acting Gummies.
- Wyld: The Oregon company’s primary sales are in gummies. Wyld focuses on quality ingredients at a reasonable price. It has been particularly successful in expanding its geographic footprint, making it the largest edible brand in the U.S.
- Kiva Confections: Kiva offers gummies, chocolates, mints, and taffy. It is the No. 1 edibles brand in California, the largest market in the world. It continues to expand its portfolio with innovative new product benefits, such as inclusion of minor cannabinoids, live resin edibles, and unique flavors.
- Incredibles (from GTI): The company offers chocolate, gummies, and mints. It is the No. 4 edibles brand, with availability across several states.
BDSA also pointed to rising stars outside of the gummy arena. Nielsen notes the brands that are seeing the most success have tapped into a consumer need in their specific region or state. They include:
- Betty’s Eddies: This brand started by leveraging the regional appeal of taffy in Maryland and then Massachusetts. Its start in the Northeast gives it the cache and equity to dominate the taffy space.
- Gron: This brand taps into the consumer need for great flavor specifically within chocolate with its artisan products. Additionally, the low dose taps into the growing micro-dosing market.
- Baked Bros: This brand leverages the consumer experience. It has beverage benefits playing in its favor, such as faster absorption, combined with the “entertainment” benefit as it touts a range of food and drink recipes.
- Breez: With a consistent product, it has made itself a staple in the mint space, particularly in California.
- Cann: This brand has been successful in its ability to go directly after a traditional drinking occasion: alcohol. With a low dose and botanical flavors, it leans into being a refreshing alternative to alcohol without the hangover
BDSA has also identified trends in the edibles space that are expected to evolve.
Interest in products touting specific mood or need-based effects continues to grow. About 25 percent of dollar sales come from products that market or communicate specific functional benefits, with the greatest share — 60 percent — coming from edibles.
BDSA reports about 20 percent of dispensary shoppers say mood-specific labeling influences their product choice. The primary reason for consuming cannabis is to reap some mental health benefit, whether that’s anxiety, relaxation, or creativity.
Additionally, about a quarter of edibles consumers also prefer low-dose edibles, defined as products containing less than 5 mg THC.
Products containing Delta-8-THC continue to launch in all categories. BDSA says it continues to monitor its presence in the cannabis market.
“At the moment, it seems there is confusion about Delta-8-THC from consumers, as it can be made from hemp, and thus sold outside dispensaries.”