BDS Analytics: Legal California Flower is 77% More Expensive, Market Share Declining

The market share of cannabis flower continues to fall in California, likely representing an even sharper decline for the rest of the United States.

Data from BDS Analytics shows that cannabis flower had a 56-percent share of California's legal cannabis sales for the first quarter of 2017. By the fourth quarter of 2018, it had fallen to 34 percent, with an eight-point drop occurring between the fourth quarter of 2017 and the first quarter of 2018.

New Cannabis Products Post Triple-Digit Gains

Tom Adams, Lead Analyst at BDS Analytics, attributed the 8-percent drop in flower's market share to a combination of taxes and regulations that essentially created a 77-percent price increase vs. the black market. 

Competition with the black market affects flower much more than edibles and concentrates, driving the decline of cannabis flower sales, the analyst said in an email to Benzinga. 

“Hence, it hit legal flower sales the hardest and flower’s share of legal market shrank dramatically." 

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Flower fell 12.6 points between the fourth quarter of 2017 and the fourth quarter of 2018, while concentrates took over half of the lost market share, gaining 9.1 points, according to BDS Analytics. 

Other consumption methods such as edibles and sublinguals saw modest gains as well, Adams said. 

The report notes that cannabis flower could see a further drop as the emergence of new product types and delivery mechanisms hit the market.

BDS reported that softgel pills, teas, gummies, disposable vaporizers and live resin sauce all saw triple-digit gains between the fourth quarter of 2017 and the fourth quarter of 2018.

Analyst Says Trend Is National 

When asked if there is a basement for flower's market share, Adams suggested that a further decline could still be on the horizon.

"Smoking will never go away completely," Adams said, adding that "loose flower sales may get pretty small — less than 10 percent. After all, how many folks roll their own tobacco these days?"

The figures do not bode well for market shares of cannabis flower in other states; Adams said the decline is occurring everywhere.  

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