Cannabis trends 2022 in review

How has the cannabis industry presented itself in 2022? What were the overall cannabis trends of 2022? And what can we expect for next year? Who bought cannabis in 2022? What about inflation?

We’ll discuss all of that below. The data comes from Headset’s business intelligence software. They track real-time sales reports from cannabis retailers through their point-of-sale systems.

Cannabis trends 2022 in review

In the United States, overall market sales were relatively flat throughout the year, barring some seasonal fluctuations. Total US sales decreased -1% ($1.60 billion).

Canada has seen a slight uptick over the past year, with sales up 7% year-on-year.

However, not every cannabis market is the same. For example, most Canadian provinces saw positive growth, with the exception of Ontario, where sales were flat.

2022 saw new cannabis trends, particularly in the US, where younger markets grew and older markets declined. For example, Michigan’s emerging cannabis market saw a 32% increase in sales. While the Colorado, Oregon and Washington markets all saw sales decline.

The most popular products

The chart above compares annual sales growth in each product category. Tinctures, topicals, capsules, and flower all saw sales decline in the U.S. and Canada.

Flower’s decline is likely the result of a sales revision following a pandemic-related boom (which we covered here).

The decline in tinctures, capsules, and topical products may indicate that consumers are more interested in recreational uses than medicinal ones, as these products are typically associated with medicinal uses. However, it could also be due to the lower bioavailability of cannabinoids in these products.

Beverages, edibles, vape pens and pre-rolls saw positive year-over-year growth in both countries. This in turn shows that consumers want portable and affordable products and products with better bioavailability.

Both infused and blended pre-rolls performed well in both the US and Canada in 2022. The infused market is now the second largest within the pre-roll market and is on track to overtake hybrid pre-rolls by 2023.

Disposable vape pens were also the cannabis winner in 2022.

Inflation?

In 2022, inflation was higher than we’re used to, and the cannabis industry wasn’t immune. However, despite the word being redefined as “higher prices”, inflation is an increase in the money supply.

Increases in the money supply do not raise prices uniformly across the economy. And here we can see that cannabis prices have actually fallen over the past year.

The slower rate of price declines in Canada compared to the US is likely due to Canadian regulators keeping cannabis prices artificially high. At the same time, they try to keep them competitive against the underground legacy markets.

Understanding revenue changes in the topline is only possible with a basket metric. Here, total revenue can be described as the total number of transactions multiplied by the average transaction size. The chart above shows the changes in these metrics in the US and Canadian markets.

The average basket size decreased in all markets, meaning that customers are spending less per trip than last year. This is likely due to the higher cost of living and the general trend towards lower cannabis prices. Customers get more for their money when prices go down.

Who bought cannabis in 2022?

Who bought cannabis last year? As is usual, young adults are the fastest growing demographic. In both the U.S. and Canada, Gen Z bought more cannabis in 2022 and was the only demographic driving positive sales growth.

Of course, these numbers make sense when you consider that for every day in 2022, one member of Gen Z reached legal age (21 in the US, 19 in Canada). Even if they’re not regular consumers, they’ve probably visited a retail store. And they bought cannabis as a novelty at least once.

An exciting feature is the growth in female Canadian cannabis users, particularly among Gen X. This group has had the most robust growth in Canada, even outperforming male Gen Z users by a tenth of a percentage point.

Summary of cannabis trends for 2022

US cannabis sales growth slowed in 2022 but picked up in Canada. Most Canadian markets posted positive growth in 2022, although Ontario sales remain flat.

Shifts in consumer demand suggest that pre-rolls and vape pens are more popular than tinctures and capsules, which is likely to continue into 2023.

As shoppers exit retail stores with smaller purchases, average item prices have fallen in both countries.

While Gen Z is the only group to see positive sales growth in 2022, Canadian retailers should keep an eye on female Gen X shoppers as a potentially untapped market.