Throughout pop culture, a number of figures have referenced an infamous quote regarding the “three sides of the truth.” There is one party’s recollection of events, another party’s recollection of what took place, and the actuality of what occurred. No one is truly wrong, and no one is lying.
As clichéd as this notion may be, it can be applied to several legacy markets. Some reports indicate cannabis sales are declining, while others suggest sales continue to improve from where they were in 2019. Each party is correct in its own right, but reality sits in the center. Obtained by Headset, comprehensive real-time sales reporting by participating cannabis retailers paints a vivid picture of where sales currently sit and how they compare to the success achieved prior to the coronavirus pandemic in 2019 and during the early stages of the pandemic in 2020.
Revisiting skyrocketing sales during the pandemic
During the spring and summer of 2020, sales spiked in several markets as many Americans adjusted to new social norms and extended periods of isolation. As a result, legacy markets across the country experienced an unprecedented sales boom. Mature markets such as Washington, Colorado, and Oregon enjoyed total sales increases of $20 million or more. The rise in sales led to year-over-year growth in markets like Washington, Colorado, Oregon, Nevada, and California, increasing by 20 percent to 40 percent from the second quarter of 2020 through early 2021.
In recent months, public venues have begun to reopen, some businesses have required their employees to return to an in-person work environment, and schools have welcomed back students for in-person learning. Therefore, the need to use cannabis as a tool to manage self-isolation has dissipated for some. When compared to the success of 2020, the sales decline that has been recorded in 2021 is noticeable. From June 2021 through June 2022, sales in Washington, Colorado, and Oregon experienced declines of 8 percent or more. In comparison, year-over-year growth in the three aforementioned markets from January 2019 through May 2021 was 10 percent or more.
Sales trends such as these may be startling to some, but they do not paint a full picture of what is currently unfolding in the marketplace.
Understanding declining sales in the current year
The sales increases many companies recorded during the early portions of the pandemic were unprecedented. Unfortunately, any data compared to those achievements will appear to reveal an overall decline for the industry. However, sales comparisons can be misleading.
In August 2021, California’s sales totaled more than $180 million, but they fell below $160 million less than one year later. In comparison to the state’s total sales in 2019 prior to the pandemic, volume had increased by more than $50 million dollars. Furthermore, this year’s cannabis sales in Washington, Oregon, and Nevada increased by 7 percent or more when compared to the data recorded in 2022. Most importantly, data projections that set aside the success of 2020 found sales in Oregon, Nevada, Oregon, and Colorado remained on an upward trajectory from early 2019 through the summer of 2022.
While it may feel like sales have been collapsing, data shows the market has grown over the long haul.
A closer look at trends
As home to one of the largest and most fruitful markets, Colorado provides an interesting case study when examining where the industry has been and where it is headed. Similar to several other mature markets in the western portion of the United States, the Centennial State experienced a sales increase in 2020 and a sales decline in 2022—but data shows the market continues to grow over the long haul. However, a more in-depth analysis of the state’s marketplace allows industry professionals to learn more about what has happened in the past few years.
The sales increase experienced in Colorado was largely due to a surge in the average basket size and total basket volume from April 2020 through July 2021. In contrast, total basket volume and average basket sizes have decreased by 7 percent or more from June 2021 through June 2022. A steep decline in basket volume and size suggests the spend per trip is having more of an impact on that state’s sales totals than the number of customers walking into stores.
The sales growth experienced in 2020 and 2021 was unprecedented and should not be seen as the industry’s standard moving forward. The sales growth that has been recorded within the past year reaffirms the notion the marketplace is healthy and continues to grow. As sales growth continues to stabilize, more information can be disseminated and the future of the industry will become clearer.
Cy Scott is cofounder and chief executive officer at Headset Inc., which turns retail data into real-time market insights. Previously, he co-founded cannabis information network Leafly, obtained Kelly Blue Book’s first patent, and assisted TEN: The Enthusiast Network in transitioning publications including MotorTrend and Automobile from print to digital.