Report: Sales of Cannabis Concentrates Expected to Triple to $8.5B by 2022
Concentrates, already nearly a $3B market, appeal to people who are curious about cannabis but would never dream of smoking.
Concentrates have become the hottest cannabis products category, a new report out of BDS Analytics and ArcView Market Research suggests. A category that accounted for only 10 percent of cannabis sales in the U.S. in 2014, is expected to end 2018 with a market share of roughly 27 percent, outpacing the growth of flower and edible sales.
Understanding intake methods.
Before moving onto the details of this report, it's important for readers to understand the different ways a person can consume cannabis. The chart below illustrates the wide variety pretty clearly.
But, which of the consumption methods above fit into the concentrates category? Well, concentrates come in many forms. But in general terms, when referred to marijuana, the word concentrates applies to any product produced by processing cannabis so that it acquires a non-flower form.
Think of oils and vape pens -- which are more than 50 percent of sales -- but the category includes hashish, waxes, dabs, shatter, live resin, etc. You don't really need to know what all of these products are: all that's really important to know about concentrates is that they boast high concentrations of one or several compounds present in the cannabis plant, like THC and CBD, as well as more elevated terpene concentrations.
Back to the numbers.
As mentioned above, the concentrates category was not a big one just four years ago. However, it's rapid growth has led BDS Analytics and ArcView Market Research to expect sales of $2.9 billion for 2018. Furthermore, the firms expects growth in concentrates sales to outpace that of traditional flower sales, projecting $8.5 billion in retail sales by 2022.
But, why are concentrates so popular?
"For consumers, it's a discreet and healthier choice that will likely make cannabis consumers of people who would never dream of inhaling smoke. That will cause the category to represent ever more retail display space, and likely spawn vape-only stores and on-premises consumption venues," the report explains.
And, beyond demand, there's a considerable interest to push concentrates numbers up coming from within the industry. As explained by Tom Adams, editor in chief at Arcview Market Research and managing director of BDS Analytics, concentrates will help trim costs at almost every stage of the supply chain.
"[E]very milligram of cannabinoids delivered to consumers as an extract is cheaper to distribute than as flower," Adams wrote in the report. "But the main savings will be at the agriculture level, where expensive warehouse and greenhouse grows designed to provide pretty buds give way to traditional outdoor growing of a commodity crop. The cost savings -- and broader consumer appeal of concentrates -- will prove critical as the legal market struggles under the weight of heavy tax and regulatory loads to compete with the illicit market."