New report examines growth of Pre-Roll industry

Custom Cones USA has partnered with cannabis data company Headset to release a white paper on product popularity among its customers. The report, titled “The State of the Pre-Roll Industry,” examines multiple facets of pre-rolls, from rising sales growth to generational interest and manufacturing, packaging methods and more. “This white paper demonstrates the continued growth of the pre-roll industry and its potential to become the largest product category in the cannabis industry,” said Harrison Bard, CEO and co-founder of Custom Cones USA. “We thank our partners at Headset for collaborating on the white paper to provide a wealth of information people can trust to make informed business decisions in our evolving market.”

Data for this report was collected from more than 300 “recreational cannabis producers, medicinal cannabis producers, hemp growers, plant processors, vertically integrated brands, cannabis branding agencies, dispensaries, and multi-state operators.”

The white paper compares annual category sales growth in the US and Canada between November 2021 and 2022 and explains which product types are gaining or falling in popularity. “…[P]Re-rolls, edibles, beverages, e-cigarettes and oils saw market share increase, while tinctures, capsules and topicals saw market share shrink,” the paper reads. “The big takeaway from this data is that ‘recreational’ categories (flower, pre-rolls, and vapes) are driving the market, while ‘wellness’ categories (tinctures, capsules, and topicals) are shrinking.”

Year-over-year, the segment grew: infused pre-rolls grew 1,426% in Canada, blended pre-rolls grew 440%, and disposable vapes grew 160%. In the US, mixed strain pre-rolls are up 63%, disposable vape pens are up 60%, and infusion pre-rolls are up 22%. The white paper cites potency as an important factor in consumer decision-making about which product to purchase, as enriched pre-rolls are more potent than standard pre-rolls, and advancements in pre-roll machines also allow for price increases to keep low and maintain the effectiveness high.

The paper also looks at an interesting trend showing price declines in cannabis products across all categories (beverages, concentrates, edibles, pre-rolls and vape pens are all trending down in the US, and also in Canada all prices are down in all categories except Pre-rolls “In other words, if you are in the cannabis sales business and are concerned about declining margins, pre-rolls are a category to expand into to maintain and increase profitability.”

Custom Cones USA added that 58.4% of companies confirm that they produce or sell enriched pre-rolls, and the white paper explained a correlation between the price drop for regular pre-rolls and a price increase for enriched pre-rolls. Multi-packs with pre-rolls are also on the rise, with an estimated 400% growth since 2021 in multi-packs of at least two to five grams.

While different generations of adults prefer certain types of cannabis products, the pre-rolls remain fairly constant across generations: Baby Boomers are at 12.8%, Generation X at 13.6%, Millennials at 14.5%, and Generation Z at 14.4%.

In the Canadian cannabis industry in particular, pre-rolls are on the rise. About 50% of cannabis companies are less than three years old, compared to 18.9% who are four to five years old and 20.5% who are six to seven years old. The whitepaper notes that the industry, and particularly the pre-roll companies, are maturing. However, there are projections of how the industry will adapt and change over time, with questions being asked about whether Canadian companies will expand into the US or how new cannabis markets in the US will be able to accommodate pre-rolls in the US produce at the same pace as companies in mature markets.

For cannabis companies looking to expand, the white paper also states that companies should consider how many pre-rolls they can produce per month, what machines or methods other brands use for packaging pre-rolls, and whether they pre-roll pre-rolls weigh or not before packaging and the average size of a pre-roll in grams.

In summary, the white paper identifies pre-rolls as a trend that will continue to rise. “After reviewing the data, we expect pre-roll trends to continue, so much so that we expect pre-rolls to overtake flowers as the top-selling product category by 2030,” the whitepaper predicted. “They’re the most convenient way to consume flowers — just add fire, and the rise of infused pre-rolls and multipacks will continue to propel the market.” So it’s not far-fetched to think that pre-rolls are the flowers category “ will be overtaken if the quality of the pre-rolls continues to improve.”