The Cannabis Vape Market Is Poised For Record Sales in 2021
As we predicted several months ago, this past summer ended up being the cannabis vape industry’s most successful season to date. Cannabis vape sales surged to new record highs in the U.S. for the months of June, July and August, peaking at $218.4 million in total revenue over the course of July.
The difference makers, it turned out, were not California, Colorado or Oregon, whose summer sales totals were actually slightly down from a year ago, but rather the combination of revenue generated from new markets and increased sales in medical states that powered the cannabis vape industry to unprecedented heights over the summer.
Now that summer is over, the question has become whether this success within the cannabis vape space will be sustainable going forward. We strongly believe that the industry will continue to thrive for the following reasons:
The Progressive Development of Nascent Markets
If you’ve been following the cannabis industry over the last year, then you’re likely aware of how the state of Illinois burst onto the adult-use scene like a rocketship. In fact, through its first eight months, Illinois has done a staggering $197 million in cannabis vape product sales, excluding batteries—that’s more than Oregon and Nevada’s 2020 vape sales combined!
But not every new market has experienced Illinois’s overnight success. Massachusetts and Michigan, which legalized recreational cannabis sales in late 2018 and 2019 respectively, have each had to navigate temporary state-imposed cannabis vape bans since coming online. Although the bans have since been repealed for both states, cannabis vape sales there have not taken off at nearly the same clip as Illinois.
That having been said, we are starting to see more consistent and healthy growth out of both of these markets in recent months. After disappointing cannabis vape sales totals of $2.6m in April and $5.7m in May, Massachusetts posted new record sales totals in June ($12.5m), July ($16.9m) and August ($18.4m). The same pattern is emerging in Michigan, where cannabis vape sales over the last four months have spiked after getting off to a slow start in its first quarter.
This steady development bodes well for the cannabis vape space’s future outlook, given the 11 million potential consumers in these states aged 21 years or older, and the millions more living in neighboring states where cannabis is not yet legal for recreational use. As vapes continue to escalate in popularity as a cannabis delivery method in these markets, increased sales are sure to follow.
The Emergence of Other New Markets
Although Maine and Vermont both legalized cannabis for adult-use in 2018, neither state had made significant strides toward instituting regulated and taxable retail systems until this past year. The fruits of those efforts both recently materialized in October when Maine launched its long-awaited recreational cannabis market and Vermont officially legislated a retail system of its own, scheduled to debut in 2022.
We suspect vape sales in both states will increase gradually over time, similar to the patterns we’ve seen in Michigan and Massachusetts over the last 12 months. But the main takeaway here is that the vape space now has two additional revenue streams going forward that will not only cater to the residents of Vermont and Maine but also to the enormous demographic of cannatourists living in nearby New Hampshire and upstate New York.
On a related note, New Jersey, South Dakota, Arizona, and Montana could all join Vermont and Maine as the newest rec-legal U.S. states before the end of 2020. Adult-use cannabis has made it to the November ballot in each of these states and it will be up to voters to decide whether they want to join the green rush. The addition of just one of these states would be a tremendous boon to the cannabis vape space. The addition of all four would essentially ensure the vitality of our corner of the industry for years to come!
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