Many people involved in the cannabis market, both skeptics and stakeholders, feared at the beginning of the ongoing inflation and recession that the industry could suffer considerably at the height of inflation. They were completely wrong! Marijuana users in the United States consume the same amount of the drug or even more than they did a year before, despite the fact that day-to-day life has become increasingly tough. This is backed by the results of a recent survey that was conducted by an independent market research organization named Pollfish on behalf of Jushi Holdings Inc.
The cause for this increase in demand is still unknown, despite the fact that most stoners and medicinal users opt to purchase cannabis products that are less expensive in order to battle inflation. According to the recently published World Drug Report 2022 by the United Nations Office on Drugs and Crime (UNODC), the primary factor contributing to the high level of demand is the increased consumption of cannabis in North America as a direct result of legalization, the COVID-19 epidemic, and associated lockdowns. According to the findings of a separate study, the Brightfield Group anticipated that this expansion might lead to the national recreational market reaching $30.6 billion by the year 2025.
Consumption of cannabis amidst ongoing price inflation
The majority of respondents in the Pollfish study on cannabis use, legalization, holiday shopping, and consumption habits, which included 1,000 adults in the United States aged 21 and older, reported that they continue to smoke roughly the same amount of marijuana as they had done a year earlier. This response made up 52% of the total responses. According to Forbes, a further almost one quarter (24%) of respondents stated that they were increasing the amount of cannabis they consumed in comparison to the previous year. According to the findings of the survey, customer interest has shifted away from product branding or strain type and toward THC levels as well as price ranges. The research was supervised by Julian Scaff, who is the head of the Jushi experience and an associate professor at ArtCenter College of Design.
In comparison to the previous year, customers are purchasing a greater quantity of flower, which accounts for a 6% market share, while purchasing a lower quantity of pre-rolls, edibles, tablets, tinctures, and liquids. According to the findings of the study, the fact that manufactured commodities are typically more expensive than flowers is probably the primary factor behind this tendency. And surprisingly, despite the fact that the vast majority of cannabis users are moving toward more affordable options, an average of 29% of consumers are spending more money on marijuana, while approximately 44% are spending approximately the same amount as they were on marijuana a year ago.
In general, 35 percent of people have a monthly expenditure between $50 and $100, whereas 23 percent have a monthly expenditure between $100 and $150. According to a different survey conducted by Reuters/Ipsos, core inflation reached a 40-year high in September. These trends occur at a time when Americans continue to feel the burden of economic uncertainty.
Even though every consumer-facing survey that has ever been conducted on marijuana users has shown that cannabis branding is a myth, many marketers, whose paychecks depend on producing cool logos and boxes, refuse to acknowledge the data that shows customers do not remember what they bought, how big the box was, what colors were on the box, etc. They can only recall the cost of the thing, the effect it had on them, and how far or how long it appeared it would take to obtain it. Why doesn’t branding work for weed? Cannabis is a plant that can develop in as little as eight to twelve weeks, regardless of whether it is grown inside or outdoors; it is a commodity just like tomatoes, kale, and broccoli. The customer will opt for the product with a cheaper price point that fulfills their requirements if your branding is unable to produce a superior broccoli. There is a good reason why Bud and Bud Light are the two beers that sell the most in the United States. They are inexpensive, they enable customers to achieve the results they are looking for, and they are simple to acquire in any setting.
Consumption of Cannabis Prior to the Economic Downturn
It has been estimated that sixteen percent of Americans partake in the usage of marijuana, which is statistically equivalent to the percentages ranging from twelve to thirteen percent that Gallup compiled between the years 2016 and 2021. The number of people in the United States who admit to having used marijuana has increased by more than 100% since Gallup first asked this question in 2013. According to a different survey, 48% of adults report having experimented in some way with marijuana. This is within the range of 43% to 49% that has been recorded in surveys conducted since 2015.
These findings are based on the annual Consumption Habits survey that was conducted by Gallup between July 5-26, 2021. Even while the percentages of males (18%) and women (14%), who admit to using cannabis, are comparable, the smoking rates of other demographic categories are significantly different. To provide further background, approximately one third of young adults (those between the ages of 18 and 34) report smoking marijuana, in comparison to approximately half of adults (those between the ages of 35 and 54), and even fewer adults (those aged 55 and beyond) who report taking the drug. Those with a college degree (12%) and those without one (18%) have a comparable risk of consuming marijuana. Republicans (12%) and Democrats (20%) are both more likely than independents (17%) to report using marijuana.
Some of the most popular cannabis products that can be purchased at dispensaries are vape pens and pre-rolled joints. According to Headset, between the years 2020 and 2021, sales of vape pens brought in a significant amount of money for cannabis retailers, propelling this category to the position of the second-largest by revenue in the U.S. market. In 2021, retail sales of vapes ranked in second place, only behind sales of flowers, in the states of California, Colorado, Michigan, Oregon, and Washington. Vapes brought in almost $2.6 billion, which is equivalent to approximately $8 for each cannabis consumer in the United States.
The cannabis industry continues to be recession-proof
The majority of people who use cannabis are devoted to their habit in the same way that they are dedicated to other essentials such as alcohol, toilet paper, and prescription pharmaceuticals, according to industry experts. Joe Devlin, a former cannabis regulator in Sacramento, California, and currently senior vice president with Ikanik Farms, which is based in the state’s capital city, stated in 2020 that he believed the marijuana industry was “relatively recession-proof” primarily because it had been categorized alongside spirits and tobacco. He was referring to the fact that the cannabis industry had been placed in the same category as these other two industries. He believes that individuals use cannabis as a means of treating themselves and winding down at the end of the day. In addition to this, it is highly unlikely that they will totally remove it from their budgets.
The Decriminalization And Regulation Of Cannabis Within The United States
The use of marijuana for either medical or recreational purposes has been legalized in numerous states in recent years, despite the fact that federal law makes it illegal to do so. The changing legal landscape is in line with the meteoric rise in public support for legalization, a position that is held by the vast majority of Americans. At the national level, efforts are being made by the Congress of the United States to pass meaningful cannabis legislation. In April of 2022, the House of Representatives voted to pass legislation that would make the consumption of cannabis legal across the United States. The Vice President, Joe Biden, has also taken actions that could eventually result in the federal government decriminalizing marijuana.
Cannabis businesses in states where the sale of cannabis for recreational use is legal do not yet have access to institutional finance or the typical banking services because there is no federal legislation to regulate the cannabis industry. The Secure and Fair Enforcement Banking Act (SAFE), which has been adopted by the House of Representatives on many occasions but has not yet been approved by the Senate, would remove such restrictions if it were made a law at the federal level.
Bottom Line
Over the course of the past year, residents of the United States have been forced to contend with historically high inflation, a rapid increase in interest rates by the Federal Reserve, a fall in housing activity, high unemployment, and sluggish economic development. Although cannabis consumers in the United States are still getting used to inflationary pressures, which are relatively new to North America but are quite typical in other parts of the world, they have refused to let it significantly affect their cannabis needs and habits. Inflationary pressures are relatively new to North America but are quite typical in other parts of the world. It is important to note that most dispensaries have started stocking reasonable and low-cost items in order to keep up with client demand and guarantee that customers will continue to have access to legal cannabis.
Laura McQueen is a writer for MJGreenNews.com.
She has been writing for different cannabis websites and publications since 2018.
