High-CBD products are a small segment of Washington’s marijuana market, but sales of the typically medicinal-focused products are growing — especially among non-traditional customers, according to new data from cannabis intelligence firm Headset provided exclusively to The Cannabist.
Seattle-based Headset delved into point-of-sale data at Washington marijuana retailers to get a sense of sales trends for products high in cannabidiol (CBD), a non-psychoactive compound of the marijuana plant.
While sales of high-CBD products make up a small portion of Washington state’s retail cannabis market, that sector has seen significant growth in the past year. The high-CBD products — which are primarily used for certain medical applications, but have gained prominence among the general retail marijuana population for uses such as pain relief and anxiety reduction — accounted for 3 percent of the total product sales as of October 2016, a 1 percentage point increase from a year before, according to Headset data.
CBD sales in October were $1.8 million of the $60 million Washington retail marijuana market, the Headset analysis showed.
“We think Washington is a good indicator of what to expect everywhere,” said Cy Scott, chief executive officer and co-founder of Headset.
Marijuana in Washington state
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Headset wanted to explore the market dynamics of its home state following the integration of the medical and recreational markets in July 2016, he said.
While the growth is partly attributable to the consolidation of Washington’s recreational and medical marijuana markets, sales of high-CBD products had steadily increased prior to the July 2016 marijuana system integration, Scott said.
Examining data from point-of-sale systems and loyalty programs, Headset found that women account for 32 percent of cannabis sales in Washington, but an even greater portion of high-CBD sales at 38 percent. The age demographic data was limited, but particularly telling: The percentage of high-CBD products of overall sales is just above 2 percent for customers between the ages of 21 and 25 years old and north of 5 percent for customers older than 51.
“The numbers point to women as more willing to utilize cannabis for medicinal or wellness purposes,” Scott said. “(Older consumers) are looking for pain relief, the body effects without the traditional high.”
Additionally, nearly 60 percent of CBD-seeking customers buy in bulk, purchasing high-CBD flower strains in increments of greater than 5 grams, which could indicate an intent for use daily for therapeutic purposes, according to Headset’s report. Only 13 percent of sales of typical THC-heavy flower are greater than 5 grams.
Manufacturers of cannabis-infused products are expanding high-CBD offerings into other categories such as beverages, vapor pens and concentrates; however, capsules, tinctures, topicals and edibles remain the fastest-growing segments for high-CBD items. For example, high-CBD mints were first introduced in Washington during the past year and quickly rose to become the eighth-most popular segment in total sales and 5 percent of the total CBD market, according to Headset.
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BotanicaSeattle has seen the growth firsthand.
The edibles and topicals company watched its Mr. Moxey’s Mints rocket to top-seller status in retail stores and expanded the product line to include a variety of CBD-THC ratios to suit the needs of different types of customers, said Lena Davidson, a BotanicaSeattle spokeswoman.
“(The popularity at the registers) feels like a clear indicator that the demand for this molecule is going to grow,” she said, “as products that are brought to the market that offer it in a unique form that allows consumers to use cannabis that would not have used another cannabis product.”
The growth in demand, however, hasn’t come unfettered.
BotanicaSeattle relies solely on local farmers, and that supply chain is strapped, Davidson said.
“There isn’t an incentive to grow a low-THC-yielding plant at volume,” she said. “There’s a bang for your buck mentality.”
Her company has made inroads with some farmers, but BotanicaSeattle also is at risk from outside pressures, notably the companies that order CBD oil derived from Chinese industrial hemp and cut that into their products.
Producers and processors are allowed to import CBD oil from outside of Washington, but the use of less-expensive oil derived from hemp has created pricing pressures for companies that incorporate CBD oil from whole plants, Headset officials noted in their market report.
“This makes it difficult for those who grow and extract CBD locally to compete, and consumers aren’t currently educated enough to have a preference for ‘homegrown’ CBD products,” Headset officials wrote in the report. “Many processors also argue that industrial hemp lacks the cannabinoid profile needed to yield the full benefits of CBD.”