The Cannabis Industry Still Lacks Credible Market Analysis And Insight
Why haven't stalwart analyst firms taken the plunge into the cannabis market ?
In the U.S. economy, top tier financial analysts including JP Morgan and lesser-known but equally reputable industry analysts, such as Gartner and Forrester, play a powerful role in the creation, definition, and analysis of various markets. In the startup world, Gartner’s Magic Quadrant (a series of market reports that rely on qualitative data analysis) is highly influential. Once an industry category earns real estate in the Magic Quadrant, it has officially ‘made it.'
The cannabis industry has zero presence in the Magic Quadrant, unfortunately. But it can also only claim one single, simple, resource-light analysis report, courtesy of Gartner's Emily Moquin, who typically covers the parenting, food, and beverage markets—cannabis is not Moquin's beat.
What is holding the industry analysts back from devoting actual resources to cannabis? Is it federal legalization? That argument is dated as cannabis is now legal for adult use in 11 states while 47 US states currently allow for some form of medical cannabis use. The markets in Colorado, Washington, and Oregon have quickly matured into full-fledged, thriving industries.
Despite this, neither Gartner nor Forrester have yet to publish or invest resources in developing breakthrough cannabis market analysis. The word on the street is mum.
I'm not alone in my disappointment with their continued absence. George Jage, the former CEO of Dope Magazine and current founder of cannabis startup, Jage Media, is someone who has worked with industry analysts for decades and understands the credibility they bring to the table. During a recent conversation, he said he was, "hopeful they will jump in the game soon. Cannabis is already a massive CPG category, and yet we see the Gartners and Forresters still standing on the sidelines, holding out solely based on what we see as an unwarranted and perceived risk.”
How would my life as a business owner change if Gartner were in the picture? Let’s say instead that I owned a bank. As the owner of that bank, it is my job to make sure that my operations and service teams are operating a peak efficiency. It is also my job to make sure that my store is selling the banking products our customers want the most, while at the same time providing them with a banking experience that makes them feel delighted. Did you know that retail bank owners can consult their own Magic Quadrant to gain the exact types of insights they are seeking?
What are my choices right now as a cannabis retailer? There is no Cannabis Magic Quadrant, nor any cannabis-specific analysts covering the space. There are cannabis-specific, data analytics startups out there, such as Marijuana Business Daily, New Frontier Data, Jage Media, CB Insights and Headset, but they don't really compete with a Gartner or Forrester in terms of scope and resources.
Headset publishes monthly, quarterly, and yearly cannabis market reports, some of which are really useful and best of all free, such as this one about seasonality trends in cannabis consumers. It was drafted specifically for weed producers, but there are nuggets of information included that retailers like myself would be smart to at least consider. For example, according to the report, the most popular time of day for Baby Boomers to buy cannabis is between noon and 2:00 p.m. Knowing this, your storefront could start offering lunchtime specials specifically for seniors. Later in the day, when those consumers are at home are hitting the bong, your marketing can throw some Happy Hour specials directly at the Millennial consumers. Then finish the day by offering closing time specials specifically for the Generation X crowd.
This useful data seems like a win, right? It is because it is free (for now) and one of only a few publicly available data sources related to cannabis trends. But keep in mind, producing data reports is not Headset’s core function. Rather, Headset is a Software as a service (SaaS) platform. The reports it publishes are not intended to be scientific (potential errors could exist) and therefore, they don’t dive very deep. If I want to know what cannabis customer engagement via mobile and smartphones might look like in 2019, or if omnichannel is even possible in the cannabis industry, I’m not going to find that information in a Headset report. That’s the level of detail only a Gartner could provide, and since Headset's data analytics are not the main feature of its software platform, these free reports could easily disappear from public viewing someday soon.
The question remains - when will Gartner or Forrester jump on board with a full suite of resources devoted to the cannabis industry? Other startups similar to New Frontier Data and CB Insights will soon emerge, perhaps taking more of a step towards providing industry analysis, consultation, AND data analytics, rather than just data analytics. Who knows? Maybe a smart, former analyst at Gartner or Forrester has already taken the steps to build that firm and is just waiting for the right moment to launch it?
For Gartner, specifically, to simply hover around the cannabis market and drop weak hints at analysis, while waiting for federal legalization is a poor strategy. The money is flowing like water right now. According to the Headset report, I linked to earlier, in September of 2019 the state of California generated over $200 million in retail revenue, while Colorado produced nearly $150 million and Washington just over $100 million. Those three states alone combined to generate over $450 million in retail revenue is just one month. Cannabis is a billion-dollar industry and whether anyone wants to admit or not, it is still in its pioneer stage. Meaning, it is ripe for the taking.
The financial analysts’ have already staked a number of cannabis and CBD claims. At this point, they are likely wondering when they too will get access to a juicy cannabis Magic Quadrant. Forrester? Gartner?