The legal cannabis industry has seen a sharp growth in the past several years. With such an increase in demand, many people are wondering how they can get involved and start their own businesses or invest into them at all levels of the market. Despite this, some companies have been able to reduce costs while maintaining higher margins by seeking alternative sources of capitalization like debt financing and bank loans for example.
The “bloomberg report on covid” is a news article that discusses the impact of Covid, a company that created an app to help consumers find and buy marijuana. The article also states how this has impacted consumers because now they are able to purchase marijuana for less.
Even as Americans spend more money on high-end coffee and booze, there’s one item they’re increasingly looking for in quantity and at a low cost: marijuana.
Irwin Simon, Tilray’s CEO, said on the company’s fourth-quarter call last week because Covid-19 encouraged more people to buy for marijuana online, which hurt premium brands. In contrast, businesses such as Molson Coors and Starbucks discussed the “premiumization” trend of customers trading up to higher-priced goods in results calls last week.
Tilray isn’t the only one who’s noticed: a Stifel poll of almost 500 marijuana users in the United States and Canada found the same thing.
In a phone interview about the research, Stifel analyst Andrew Carter said, “Yes, there will be some space for companies who distinguish themselves on quality, but this is a price-sensitive category.”
The top variables that impacted cannabis buyers, according to Stifel’s study, were price, potency, and quantity. According to statistics from cannabis data tracker Headset, Carter also saw a significant amount of turnover in terms of which brands were most popular during Covid-19. This demonstrates that customers are still looking for brands and goods to associate with.
During the epidemic, according to Headset analyst Cooper Ashley, there was also a tendency toward purchasing cannabis flower in bigger container sizes. In an email, Cooper noted, “This implies increasing customer price sensitivity, since the average price per gram of bigger package sizes was (and still is) considerably lower.” “By buying in quantity, customers were able to save money.”
According to Stifel’s research, Canadian consumers are more price sensitive than their southern counterparts. In Canada, nearly a third of consumers indicated it was a high priority, compared to around a quarter in the United States.
On Tilray’s call, Simon was hopeful that the situation will improve when Canadian Covid measures relax. Since most websites display goods by price, he claims that pricing has been more important than marketing in the previous six months.
He claims that with more people out and about, they would be able to “interact with bud tenders” and make impulsive purchases at shops. Customers will “move away from price-based cannabis purchasing,” according to Simon.
Even if the low-cost marijuana trend continues, Stifel’s research pointed to one positive aspect of the pandemic’s impact on the cannabis market: increasing usage, which is expected to continue once Covid stops.
Carter observed that cannabis was the top-ranking “expandable” consumer item in Washington state, which is considered a mature market. In this regard, marijuana beat cookies, chocolate, and alcoholic beverages consumed at home, according to data from Headset and IRI.