Posted by Dave Kaplan
6 months ago / April 15, 2021
2020 Was A Banner Year For The Cannabis Vape Industry
Last week, we examined why market share metrics determined by total sales can often be misleading. Using total units sold to determine market shares instead tells a much more accurate story, one that speaks to actual quantities moving through a market at a given time. This metric gives us a much better gauge on a product category’s growth and maturity, independent of other factors.
We also pointed out that the market share decline of vape as a category in the US wasn’t nearly as extreme as it appeared to be on the surface, and that vape market shares actually rose in certain major US markets last year.
The truth is that the cannabis vape industry is indeed thriving and developing at a very steady and healthy rate. Let’s take a closer look at the factors contributing to the sector’s impressive growth using comprehensive, real-time cannabis vape sales data.
Cannabis Vape Sales Keep Climbing
Despite a slight downtick in overall market share, 2020 was the cannabis vape industry’s best sales year on record. A banner year, to be sure!
Cannabis vape sales surged by 29.5% in California last year, despite the COVID-19 pandemic, breaking the $1 billion mark for the first time in the sunshine state. Oregon’s cannabis vape sales rose 14.8% in 2020, improving from $137.6m to $158.0m overall. Colorado and Washington also experienced double-digit cannabis vape sale percentage increases, with climbs of 11.0% and 10.5%, respectively, from their 2019 totals.
In fact, of the five states Greentank diligently tracks, only Nevada experienced a drop in sales last year. Totally understandable given the sharp decline in tourism the state experienced as a result of COVID-19 and how heavily Nevada’s cannabis market depends on tourism for revenue. Fortunately, vape sales have rebounded in Nevada in a big way in 2021, with its Q1 vape sales outperforming that of 2020’s first quarter by more than 15%!
(data sourced from HEADSET INSIGHTS)
More Vape Markets Means More Vape Revenue
Two new rec-legal markets entered the US landscape in 2020, and one of them essentially transformed into a cannabis vape powerhouse overnight! Illinois was projected to generate substantial revenue as a legal cannabis epicenter in the Midwest but no one expected it to surpass Colorado as the second biggest cannabis vape market in the world in just 10 months! Illinois sold more than $300m in cannabis vape products in its first year, accounting for roughly 30% of all cannabis products sold—the highest of any rec-legal market in North America! Even more promising is that the state seems to only be getting started, with 2021 cannabis sales expected to shatter the $1.03B mark reached last year.
(data sourced from HEADSET INSIGHTS)
Michigan also debuted its cannabis market in 2020 and even though vape products there got off to a relatively slow start over the first half of the year, they gained considerable steam in the second half! The result was $198.6m in cannabis vape sales in its inaugural 12 months, a figure that will almost certainly increase this year based on the state’s Q1 2021 sales relative to the same time period one year earlier.
More States Coming Online in 2021 and Beyond
Over the course of 2020, Illinois and Michigan combined pumped nearly half a billion dollars of new revenue into the cannabis vape sector. Canada also debuted its cannabis vape market in 2020 with an estimated $375 million in sales. Thanks to these additional revenue streams, the North American recreational cannabis vape market vaulted over the $2 billion annual mark for the first time!
Needless to say, over $800 million in new revenue for a single year is an outlier; markets as substantial as Canada and Illinois don’t come online every year. But new markets will continue to steadily emerge as legalization sweeps across North America, and each will infuse more capital into the cannabis vape sector in the process.
Recreational cannabis sales are already underway and booming in Arizona, months earlier than expected. Experts predict that sales there are likely to surpass $1 billion by year two. That’s an additional $150-$200 million in annual cannabis vape revenue when factoring in the category’s average market share in the US!
Virginia recently announced it aims to launch its recreational cannabis market by July 1st. Montana’s could open as soon as this fall, and New Jersey and New York are both on pace to launch their markets next year. Also, don’t sleep on Mexico, currently on the cusp of federal legalization and situated to instantly become the world’s largest rec-legal cannabis market when legislation ultimately passes.
Experts will surely debate which markets are most likely to emerge over the next decade, and in which order. But the main takeaway here is that the cannabis vape industry is well positioned to maintain its current rate of growth going forward.