The Oregon market industry report

Introduction

This industry report was designed to provide a high level overview of the Oregon recreational market, digging into topline sales trends, category sales trends, demographic data, and customer wallet spend. You can access all of the information and data detailed in our report on a regular basis with Headset's Insights Premium tool. Learn more about accessing more cannabis industry data.

Executive Summary

After becoming legal in the second half of 2015, recreational cannabis sales in Oregon have grown rapidly. From January 2017 to July 2020, monthly recreational sales have grown 253% from $26M to $94M. Compared with other west coast states, Oregon produced the largest YoY growth rate in Q2 2020 (+50.7). When we dig below topline sales data we find that in terms of category sales Oregon is similar to its neighbor to the north, Washington. But there is a fair amount of nuance to Oregon when we look at who is buying and how customer spend is distributed.

Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. Sales data is cross-referenced with our catalog of over 500,000 products to provide detailed information on market trends. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

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Current state of cannabis sales by US market

To start this industry report, we first need to give more context to the Oregon market by looking at all the US states that Headset Insights covers (i.e., California, Colorado, Nevada, Oregon, and Washington). The graphic above shows total Q2 2020 recreational cannabis sales by state on the left axis and year over year sales growth on the right. In terms of Q2 2020 sales, Oregon falls somewhere in the middle of the aforementioned states, but has been growing at the fastest clip (+50.7% YoY), showing that the state’s market has quite a bit of momentum moving into the second half of 2020. Dive deeper into brands and products with Headset Insights.

To start this industry report, we first need to give more context to the Oregon market by looking at all the US states that Headset Insights covers (i.e., California, Colorado, Nevada, Oregon, and Washington). The graphic above shows total Q2 2020 recreational cannabis sales by state on the left axis and year over year sales growth on the right. In terms of Q2 2020 sales, Oregon falls somewhere in the middle of the aforementioned states, but has been growing at the fastest clip (+50.7%YoY), showing that the state’s market has quite a bit of momentum moving into the second half of 2020.

How are west coast cannabis sales trending?

To give more historical context to Oregon’s most recent quarter of sales, in this slide we see west coast states’ recreational sales by month for 2020. From January 2020to July 2020, Oregon sales grew 49.8% from $62M to $94M, outpacing California growth (+16.1%) by 3x and Washington growth (+25.4%) by almost 2x.

How does Oregon compare?

If we cast a wider net on the 2020 west coast state cannabis sales growth and look at year over year sales growth by month, we see a few interesting trends. The first is how both Washington and Oregon cannabis consumers responded to the outbreak of COVID in the US during March. Despite business and supply chain issues with retailers, sales in these two states actually accelerated during COVID, with Oregon peaking at 61.9% YoY growth in sales during May. Conversely, the California market had a sudden and precipitous drop in growth during COVID and it is unclear if that fall in growth has bottomed out yet

What categories are consumers spending in?

Now that we have a sense for the total cannabis market in each state, let’s dive into what categories consumers are spending in. Oregon and Washington are very similar markets in terms of the categories consumers purchase, with the only discernible difference being Oregonians spend slightly more on Flower and slightly lesson Pre-Rolls compared to consumers in Washington.

How are Oregon category sales trending?

If we look at the category sales mix in Oregon by month over the past year we see two interesting inflection points that change the trajectory of category sales. The first is in August/September 2019 when illicit Vapor Pen products caused deaths and hospitalizations across the US, with Oregon reporting at least two deaths linked to illicit Vapor Pen products. This caused a panic among cannabis consumers who typically bought legal Vapor Pen products, resulting in a sharp drop in Vapor Pen sales. The Vapor Pen category sales share has stabilized around ~14% of total sales in Oregon. The second event that changed purchasing behaviors was COVID in the March/April 2020 time frame. Here we see Edible sales and Flower sales temporarily increase as consumers were looking for safe and cost-effective ways to consume cannabis during the initial Oregon shutdown.

What age groups are driving cannabis sales?

The next set of data we will focus on is based on consumer demographic characteristics (i.e., age group and gender). In the bar chart above we see the sales mix of each US state broken out by age group. We can see Millennials make up roughly half of recreational cannabis sales in every state, followed by Generation X who account for about a quarter of sales. The remaining fourth of sales are primarily split between Baby Boomers and Generation Z. It is important to note that while Generation Z is the fourth largest age group in terms of sales, it is by far the most rapidly growing as the consumers in the segment are aging into the market. To put that comment in perspective, if we look at July sales and YoY sales growth we see that Generation Z sales grew 139.3% YoY. The next fastest growing age group (and coincidentally the next youngest) was Millennials, growing 53.6% YoY.

Gender sales growth in Oregon

Now we will evaluate the next set of demographic data, which is gender data. Interestingly enough, Oregon has the highest percentage of female customers out of all the US states Headset Insights covers, coming in at ~39% of total customers. The state with the second highest percentage of female customers is Washington, which has a ~36% share of total customers. In the graphic above we have MoM sales growth over the past year broken out by gender. We see that leading up to the end of2019, growth was similar between genders, but from December through April sales growth among female consumers outpaced that of males, and after an aberration in May sales growth in female customers has continued to grow at a rapid clip.

What do consumer wallets look like in Oregon?

This slide focuses on highlighting the differences in how male and female consumers in Oregon spend their cannabis dollars. Another way to think about the bar charts shown above is if a consumer had $100 to spend, they would spend the percent shown above on each category. The primary takeaway from the chart above is that male consumers spend relatively more on all inhalable categories (i.e., Concentrates, Flower, and Pre-Rolls) with the exception of Vapor Pens. Conversely, female consumers tend to over index their spend in non-inhalable categories (i.e., Beverage, Capsules, Edible, Tincture & Sublingual, and Topical).

Oregon concentrate customer spending

Finally, we will dive into how a specific set of consumers has changed its category spend. The chart above shows the spend of Concentrates customers (e.g. Customers who purchased at least one Concentrates item in a given month) has changed over the past twelve months. Interestingly, in August 2019, just before the Vape crisis hits, we see that Concentrates customers spent 18.2% of their wallets on Vapor Pen products, but this falls drastically and by the time COVID crops up in March, they are only spending 11.5%, which looks to be the new Vapor Pen baseline for these customers. If we look at what Concentrates customers were moving their Vapor Pen spend to over this period of time, it appears they were increasing spend on their favorite category - Concentrates.

Conclusion

Despite being an older recreational market, Oregon is still expanding rapidly even when compared to its west coast neighbors, Washington and California, and we can expect to see this continue. While Oregon has many category level similarities with Washington, it is fairly unique in terms of its demographic make up and has the highest percentage of total customers who are female. Additionally, Oregon cannabis consumers have had unique reactions to events such as the Vape Crisis of 2019 and COVID in 2020, further enforcing the idea that Oregon is a distinctive cannabis marketplace.