It's not news that the cannabis industry is growing. In August alone, California's newly legal cannabis market generated north of $240 million in revenue statewide. And in the last quarter, we saw states such as Michigan legalize adult-use cannabis and Canada process its first legal transactions.
With all of this market velocity, it's easy to assume that most customers are happy merely to be able to legally purchase cannabis. However, consumer data combined with insights from within the industry tells us that perhaps one very large market segment doesn't feel so welcomed: women.
According to a recent BDS Analytics consumer survey, the percent of cannabis consumers who are women has decreased in the last year. Between Q1 2017 and Q1 2018, women as a total percentage of cannabis consumers in California dropped a full 7 percent, from 45 percent to 38 percent. The trend is reflected across the nation: In fact, today women make up a smaller percentage of cannabis consumers in California, Nevada, Washington and Oregon than they did a year ago.
This pattern suggest far more questions than answers. This data is not necessarily telling us that women left the legal cannabis market; rather, it is telling us the growth in the market has skewed male. Exactly why remains a mystery, but one could begin to wonder if perhaps women customers simply aren't finding the products they're looking for.
Women and THC
“It's been my experience that women are much less drawn to high-THC cannabis products, and yet that is what the market currently values,” says Jeremy Plumb, director of production science at Pruf Cultivar.
There is the beginnings of evidence to show there could be a biological component at play. Adie Wilson-Poe, faculty member at Washington University at St. Louis, has been studying cannabinoids her entire career. She confirms that, in fact, men and women may metabolize THC differently. “THC initially has more profound effects in females than in males (both the rewarding and pain-relieving effects), but females develop tolerance more quickly. This could be due to differences in how quickly males and females metabolize the drug. It is also independent of hormones; that is, there is a fundamental difference in male and female physiology when it comes to THC's effects.”
It is a common fallacy that the higher the percentage of THC (tetrahydrocannabinol, the main psychoactive compound in cannabis) in a given product, the “higher” you will feel. THC is just one of hundreds of compounds found in cannabis; the varied factors that determine the effect of a product are far more complex. To put it another way, valuing a cannabis product based purely on its THC content is akin to valuing a cake based purely on its sugar content. Yes, the sugar offers a certain level of sweetness, but it's the complexity of the other ingredients and production methods together that really make a cake.
Perhaps therein lies a clue: What customers want and what's available on the market is only beginning to align. What's been available, legally and illegally, has had very little to do with what effects and experiences consumers actually seek out, until now. Isolated consumption habits had to stay that way during decades of prohibition, resulting in a dearth of knowledge on why, how and what people consume when it comes to cannabis.
“To limit negative side effects, women more often prefer accurately dosed products — and products with balanced phytochemistry,” Plumb says. In fact, according to BDS Analytics, some of the fastest-growing consumer product segments in the last year have been exactly that: low-dose, CBD-rich products that offer a refined, more controlled cannabis experience.
But overall it appears the market is only half listening. While we are seeing growth in new market segments, the financial value of a product still largely hinges on its potency.
Women and boomers don't all want to get high
The overemphasis on THC percentage is costing the cannabis market more than just women customers. “It's important to remember that it isn't just women who want dose control, it's boomers, too,” Plumb says. “It's really just one customer segment that craves highly potent, highly intoxicating products, and right now they are driving the market for everyone else.”
Collectively, women and boomers make up two of the fastest-growing and most underserved markets; interestingly, they have many of the same needs and wants. Both groups want products that are above all else trustworthy and consistent; they want to know what they are getting and that they can expect a fairly similar experience when trying the product again.
“Right now in the market, women and boomers are underserved partly as a result of product mix and availability,” Plumb says. “We are likely to see women spending more as their trust and loyalty are earned.”
So while there are more low-dose products coming into the market, there is a fundamental disconnect between what is valued by the industry and the interests of its two fastest-growing groups of customers. But some argue this is a bigger opportunity than a failure.
“What brands really have here is an opportunity,” says Jessica Lukas, vice president of consumer insights at BDS Analytics. “Many females consume for social and wellness reasons, using inhalables, topicals and edibles throughout a day, week and/or month. As such, better understanding the need state or occasion of consumption is a great way to speak to those consumers in a relevant way.”
In other words, brands could be successful in potentially gaining back momentum with women and boomers if they bothered to ask what they actually wanted. Plumb says, “Some might argue that prohibition in a way caused this divide. Prohibition drove products to become stronger and stronger, and now the market has to equalize in order to serve all customers effectively.”
Trust is the true currency of the cannabis industry
Because the cannabis industry is new, ever-evolving, and still shaking off the paranoia from years of hiding, it operates with one true currency: consumer trust. High-potency THC products certainly cultivate trust with a particular consumer segment, but the pursuit of potency may be alienating more than half the population of consumers in general. Right now, the canyon separating current product mix and current customer needs is bridgeable, as long as brands simply slow down enough to more closely analyze true customer needs. Doing otherwise is costing not just customer satisfaction but potentially millions in revenue.