Are you marketing cannabis products online and wondering which product categories will be most profitable for your business? In this article, we break down marijuana derivative products and the projected percentage sales of each in the USA.
Marketing Cannabis Derivative Products Online
The cannabis market in Canada is about to get much larger as we wrap up on 2019 and slide into legal cannabis v2.0 in 2020. I’m talking about the expected official launch of cannabis/marijuana derivative products in Canada during the fourth quarter of this year.
The country’s regulator, Health Canada, says that laws for selling new marijuana derivative products goes into effect on October 17, 2019 – a year to the date when recreational cannabis was legalized in Canada.
According to The Motley Fool, marijuana derivatives are non-dried-flower marijuana products, such as edibles, nonalcoholic infused beverages, vapes, topicals, and concentrates, to name a few.
So as you may expect, it’s a very exciting time in Canada for current and future cannabis companies and canna entrepreneurs who are marketing cannabis products online.
Whether you’re currently selling flower and are now expanding into THC edibles, vapes, concentrates, and infused beverages, your marijuana marketing strategy will also need to expand to include the promotion of these new high-demand products.
Cannabis marketers in the USA have been legally selling marijuana derivative products for some time, which is why we’ve seen Canadian cannabis companies pushing to get into the US hemp market.
THC edibles may be a challenge for marijuana companies in Canada, but hemp-derived, CBD derivatives look to be a major source of revenue for Canadian and US cannabis companies over the next few years.
Regardless of if you market your cannabis products in Canada, USA, UK, and other parts of Europe, the question is, how profitable is each cannabis derivative product and where will most people in the USA spend their hard-earned dollars?
Below we discuss a recent report from a US investment bank detailing what US sales of cannabis flower and its derivatives will look like as we get into 2020.
Why Marketing Marijuana Derivatives is a Big Deal
There’s a huge demand for marijuana edibles from the young adult demographic. There is a younger generation of cannabis users who prefer not to smoke weed but to consume cannabis through alternative options.
It’s super important for new cannabis companies to gain the trust of this young adult market so they can effectively market and promote the different ways to consume cannabis and CBD products that don’t include smoking.
In addition, edibles and other marijuana derivatives offer your business much higher margins than you likely get on sales of flower. Oils, Edibles, and infused beverages won’t face oversupply or pricing issues.
What Our Data Shows
While it may be true that the younger demographic is buying CBD and THC edibles online, we’ve found another demographic who’s equally as interested in ingestible marijuana derivatives.
In recent campaigns we’re running for current clients, we’ve seen that people over 45 are just as eager to buy CBD or THC edibles online.
- 57 conversions (sales of edibles online)
- 513 clicks
- 14.57% CTR
- $2.40 CPC
- 11% Conversion Rate
- 65 conversions (sales of edibles online)
- 566 clicks
- 17.5% CTR
- $2.11 CPC
- 11.42% Conversion Rate
As you can see from the data above, the market for edibles seems to include both the young, middle-aged and elderly – and – it’s actually cheaper marketing to older people.
Focus Your Marijuana Marketing Strategy on These Derivative Products
So with all this data and information about marijuana, cannabis, flower, oil, edibles, and other derivatives, where does a new, or existing, cannabis business focus there marketing?
Let’s take a look at the sales breakdown for cannabis products in the USA.
Cowen Group did some super good research and Canadian grower OrganiGram Holdings has been nice enough to make public.
Here’s what we found when looking for the most popular marijuana derivative products and where you should focus your cannabis marketing. This is where US consumers will spend their cannabis dollars.
1. Dried Flower = 43% of Sales
Some things will never change. While smoking may not be healthy, or popular, among the younger crowd (18-34), good old weed/dried flower is projected to be the leading source of sales in the USA, by a significant amount.
This is likely because 80% of cannabis users consume 20% of the weed. It also could be because flower is much cheaper than other derivative product options.
However, selling flower on your website could get you banned from some ad platforms that actually do allow for CBD advertising.
For example, we’ve had an issue with running native ads for CBD oils and edibles for a current client using the Outbrain ad platform. The only issue to not getting the campaign approved was that the client sold flower on their website.
Once we removed that product category from the website, the ads and campaign was approved and has been successfully driving highly targeted traffic to the client’s website, while building our conversion funnel and remarketing program.
2. Vape Pens = 23% of Sales
At the time of publishing this data, vape pens were projected to be second only to dried flower and represent 23% of the sales of cannabis derisive products in the USA.
But this will no doubt change with the recent news of cases in the USA of vaping lung disease, which includes double-digit deaths.
If you’re selling vape pens, tread very carefully.
3. Edibles & Infused Beverages = 13% of Sales
As mentioned above, edibles are in demand from almost everyone 25+ and, they are a high-margin source of revenue for your cannabis company. The same will be the case for infused beverages containing CBD and/or THC.
So far in the USA, adding CBD to food and beverages is illegal, for now. The FDA is currently reviewing CBD to establish guidelines on potentially adding the substance legally to food, beverages, and dietary supplements in the not so distant future.
However, in Canada, beginning by the end of this year edibles and other derivatives become fully legal. It’s game on!
4. Concentrates = 9% of Sales
Here’s a cannabis category that is/will be super popular with those 18-24 years old. Young people seem to like the faster onset and the higher potency of “dab” or concentrates.
It’s also important to note that concentrates can be used with vaporizers, meaning two of the three top-selling derivatives pretty much go hand-in-hand.
5. Pre-Rolls = 7% of Sales
Does it surprise you that pre-rolls are on this list? It shouldn’t if you consider that smoking weed is increasing with baby boomers and older Americans. Pre-rolls are a quick and dirty way for them to get there fix.
Works for them and can work well for your business because your pre-roll points will come with a decent additional margin for the convenience. This is a premium you’ll be happy to collect and some customers will be happy to pay for.
6. Tinctures, Oils, Sprays, Caps, & Topicals = 5% of Sales
The final category of derivatives is a combination of tinctures, oils, capsules, sprays, and topicals.
This ranking surprised me. I expected this combined category to at least represent sales of double digits in the USA. 5% of sales of all derivatives seems a little low for these products.
We Can Help You With Marketing Your Cannabis Products Online
Do you need some help with marketing your cannabis products online?
We can help you with managed services including cannabis SEO, daily Social Media Management, Blog Content Writing, and Digital Adverting on Google, Facebook, and 3rd-party ad networks that allow for marijuana advertising.
Please call us for a free 30-minute consultation or contact us to request a quote.
We’re Ready To Help You Grow!