The cannabis industry in Colorado has been growing at a very steady clip since legalization in 2014. Adult-use cannabis in the state increased by 16% in 2019 and topped $1.4 billion by the end of the year.
Analysts attribute the continued growth to new customers. Sales year-over-year increased in a market first. After kicking off legalization in 2014 with sales of $303 million, Colorado hit $1.1 billion in sales in 2017.
Industry experts tracked trends in other adult-use markets like Oregon and Washington, where sales increase annually. Still, the growth rate normally steadies out or drops as the market matures. They anticipated an 11% market growth rate for 2019, mirroring the pattern from 2017 to 2018.
But they were wrong.
Data from Headset showed that while average item prices in the state’s adult-use recreational cannabis market were flat from 2018 to 2019, the unit volume increased by 15% over the same period. After sifting through the data, analysts attributed the increase to new customers entering the market — specifically, Generation Z — folks born in 1997 and beyond, who experts speculate are moving away from the black market and into the right side of the industry.
Generation Z demographics tend to have higher cannabis consumption rates than the national average and account for up to 6% of spending on recreational marijuana. It’s noteworthy to mention that this group happened to come of age during an era where the stigmas attached to cannabis use were dissolving.
Another growth factor? Price.
The data analysts at Headset identified a crucial trend in recreational adult-use marijuana price points. While Colorado still has the illicit market to deal with, the availability of legal marijuana products at low price points has been good for sales.