Fiddich Review Centre
Sliver

Nevada’s Cannabis Market Contracted in 2022

Nevada has officially joined the list of legacy cannabis markets facing double-digit 2022 sales slumps.

A report by data firm Headset posits that the state has likely reached its peak of consumer demand as overcrowded markets cool down from the lockdowns sales boost two years ago.

The report pointed to a nearly $100 million drop in total revenue last year, a precipitous fall after the state posted more than $800 million worth of annual sales through October 2021.

The findings come as the Sliver State tees up a statewide rollout of consumption lounges after last month announcing license winners.

Sales Per Capita Still High

Despite the price compression, however, the second smallest state market ranks toward the top of the list when it comes to cannabis sales per capita due to the “immense tourism industry,” wrote Dai Truong, managing director at Arlington Capital Advisors and author of the report “A deep dive of the Nevada cannabis market.”

Las Vegas sees roughly 40 million tourists annually and visitor volume in 2022 rose by 27% through October, according to figures released by The Nevada Cannabis Compliance Board (CCB) and the Nevada Department of Taxation (DoT).

When normalizing sales totals for population size, Nevada has the second most sales per capita behind Colorado. The 13.1% downturn in year-over-year sales sits with and behind Washington (-13.1%), Colorado (-16.2%), and Oregon (-17%).

“For context, the rest of Headset tracked markets combined have seen total sales decline 1.7% year over year,” Truong added.

And while the state shares many of the same category trends versus other markets across the country, customers seem to show a stronger preference towards flower (up 3.3%) and pre-rolls ( up 1.4%). In contrast, concentrates have 3.3% less of the total sales than the rest of the U.S. market.

Vapes Win

That same trending decline does not apply to the ever-popular vape pens category, which has grown in the state by 5.1% in the last year and has absorbed most of the void created by flower’s 8.4% drop in total sales share.

When it comes to basket size, the state had lost 12.6% of its value since October 2021, falling nearly $10 on average.

On pricing, the report pointed to the decline in average item price (AIP) sharply declining between Oct. 2021 through Oct. 2022 by 12.2%, nearly in line with the 12.7% fall in AIP for the rest of the market in that same time period.

Still, “while Nevada is experiencing pricing compression along with the rest of the market, their AIP in October of this year is 16.8% higher than the rest of the U.S.,” the report said.

The average discount has grown 7% from 12.8% to 19.8% between October 2021 and October 2022. Lower item prices and higher discounts reduce already strained margins for retailers.

Furthermore, depressed prices and growing discounts “indicate lower profits for retailers that have seen units per basket stay relatively flat over the last 12 months.”

As the race toward national brand recognition churns along, the number of brands throughout the state’s dispensaries has also stalled “and even shrunk by about 6% with 353 distinct brands capturing a sale” in 2022 so far.

A maturing market is partly to blame, in addition to other economic headwinds created by an artificial spike in demand in 2020, as the brand count increased by 40% from 270 brands to 378 between 2019 and 2020.

Post Views: 115

Source link

Related posts

Film Session: Marian – Inside the Hall

Mandy

New media venture in India helping readers discern signal from noise – TechCrunch

Mandy

Metro approval sought to update Lower Broad building | Development

Mandy

Leave a Comment