COWN - Edibles to Add 1.5 Million New Users to Canadian Cannabis Market
According to a soon to be released market study, over 1 million new cannabis consumers will enter the Canadian marijuana market thanks to the sale of edibles.
At the fifth annual Lift & Co. (TSXV:LIFT,OTCQB:LFCOF) Cannabis Expo, held last week in Toronto, there was much talk among attendees about the next stage of the legal Canadian market, which industry members are already calling “Cannabis 2.0.”
In a presentation at the show, Lift Chief Revenue Officer Jon Kamin and EY Strategic Growth and Risk Leader Ashley Chiu explained that the legalization of edibles is slated to be prolific and widespread.
Chiu said the study projects the entry of 1.5 million new consumers as Canadians gain the option to buy these alternative products.
The Canadian government is set to deliver legislation on the sale of edible products on or before October 17. However, it remains to be seen if actual sales will happen before the end of the year.
“One and a half million consumers are waiting for edibles to arrive,” the researcher said. She and Kamin see the introduction of edibles as a crucial step in advancing the cannabis narrative.
“Edibles will bring down the barriers of consumption,” Chiu said during her presentation.
During the Lift Cannabis Business Conference, a one day event at the expo, Vivien Azer, managing director for consumer research in the beverages, cannabis and tobacco markets for Cowen (NASDAQ:COWN), predicted that no edibles sales will take place in 2019 in Canada.
Researchers offer new consumer breakdown for edible consumption
To better understand how the market will be divvied up once edibles begin selling, Kamin and Chiu broke down the consumer sector into two groups: cannabis consumers and non-consumers.
They further broke down consumers into four categories: canna-savvy, canna-casual, canna-curious and the unconvinced.
Most people believe that the canna-savvy, people who are well versed in existing products and most likely used them before the first round of legalization last October, are the target group for the entire edibles space, but in actuality they are not.
The canna-savvy make up roughly 10 percent of the Canadian adult population, a percentage that is much smaller than what will be needed to help companies grow and appease shareholders.
Kamin added that the unconvinced are likely to never change their minds, and probably even opposed legalization in the first place. They are essentially pointless to the market.
The canna-curious, people who have never used cannabis but are interested, make up a much larger group of potential customers and are the people edibles companies need to be targeting, the researchers said.
Canna-curious consumers comprise 23 percent of the Canadian adult segment and are likely to try novel cannabidiol products, topical treatments and edibles.
This provides a unique opportunity for growers, retailers and marijuana store employees to reach an untapped market through education and information.
Cannabis specialists working in stores will guide curious and new consumers
The panelists explained that four out of 10 cannabis store employees said they would recommend a particular brand of product based on meetings with producers to understand their products’ aims.
The average canna-curious consumer is unaware of what types of products are available or what products they may want. Kamin said that as many as 70 percent of current dispensary visitors have no idea what they are going to purchase before entering a store.
Store employees, known as “budtenders,” are guaranteed to play a crucial role in the legal edibles market since the majority of people in the canna-curious consumer group will enter a dispensary with little to no knowledge of what they want to buy.
Data collected by EY and Lift on the top three questions asked of budtenders shows that 87 percent were asked about the difference between sativa, indica and hybrid.
Seventy-nine percent of the time, they were asked about the specific effects of an item and for product recommendations, including questions such as which strain will help induce sleep and which product aids in relaxation.
While the canna-savvy and the canna-casual — the two groups most comfortable and familiar with cannabis consumption — rely on preference, history and word of mouth, the canna-curious are more likely to trust a healthcare professional’s word when it comes to which products, strains and delivery methods to choose.
In fact, the report found that almost half of the canna-curious say recommendations from healthcare practitioners are very important to them.
These new users are also less likely to purchase online, opting for a face-to-face encounter.
Access to good, relevant information will be key in getting the canna-curious to convert to canna-casual or even canna-savvy, the researchers said.
Chiu and Kamin added that getting the work done ahead of October legalization is also paramount to ensuring that the curious user does not have a negative experience that puts them off cannabis use entirely.
“If we’re able to target (the 1.5 million new consumers) and provide the right amount of education to them, and make it specific to that consumer segment, I think it’s going to be a lot more effective than (broad) marketing techniques,” Chiu said.
Chiu told the Investing News Network the full report will be publicly released in the coming weeks.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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