Cannabis Market Analysis Guide

This industry offers immense growth opportunities. However, understanding the marketplace through a comprehensive market analysis forms the bedrock of a successful business venture. 

Conducting a thorough market analysis allows you to unravel the intricate fabric of the industry, pinpoint potential growth areas, and make strategic business decisions based on concrete data and trends. 

Analyzing the trending cannabis market means  identifying your prospective customers to examining the competitive landscape to analyzing the regulatory environment and the dynamic world of cannabis business market analysis. By navigating these considerations, you will be more equipped to design a business plan well-aligned with the current and future market scenarios.

This article describes critical aspects involved in performing a market analysis for a cannabis enterprise, offering insights into the importance of such an analysis and highlighting the essential considerations to keep in mind.

Qualifying Your Target Market & Identifying Opportunities

When considering a location for your cannabis business, qualifying your target market is essential. If expanding an existing business, you must reshape your products, services, and operations to cater to the new customer base and location. 

For new businesses, it's vital to consider these elements from the initial development stage. To qualify your target market, ask yourself the following questions:

1. What does your new customer  experience look like?
2. How will you identify the changes needed to be successful?
3. Is your target customer base large enough to sustain your business?
4. If not, are the growth projections worth the wait, and do you have enough cash flow to sustain your business until then?

Cannabis Market Analysis and Considerations

Both cash flow and operating within a budget are significant challenges for any new business. To determine the feasibility of your cannabis business plan and assess the potential profitability, consider the following factors:

1. Target Customer Base 

Evaluate your target customer base’s size and growth projections. Be aware of any roadblocks, such as limited qualifying conditions for patients, strict training for doctors, limited licenses, or restricted product offerings.

   2. Competition 

Identify your unique selling proposition and what sets you apart from competitors in the market. Understand the strengths and weaknesses of your competitors and how you can position yourself effectively.

   3. Product

Determine whether your product caters to medical patients, adult recreational users, or both. Verify the legality and availability of your product in the target market. If serving medical patients, ensure there are ample qualifying conditions.

    4. Operations

Assess operational aspects such as access to banking services, electronic payment options, and import/export financial regulations if you plan to engage in international trade.

Expert Market Analytics Companies

Conducting due diligence for your cannabis business includes looking at expert statistics and market analytics. Several companies specialize in providing cannabis market data and insights. 

One notable example is BDSA (formerly BDS Analytics), which offers comprehensive market research, consumer insights, and industry intelligence. BDSA provides valuable data on market size, trends, consumer behavior, and emerging opportunities.

In addition to BDSA, other reputable market analytics cannabis companies include:

1. New Frontier Data: Offers data-driven insights and analytics, market research, and strategic consulting services.
2. Headset: Provides real-time market data and business intelligence tailored to the cannabis industry, including sales data, product trends, and consumer demographics.
3. Arcview Market Research: A leading cannabis investment and market research firm that provides reports, analysis, and insights to investors and businesses in the industry.
4. Note: Most US states also release their own market analysis reports. Check your state’s cannabis regulatory agency’s website for more information.

Understanding Your Target Demographic

Knowing your target market is mandatory, but understanding your target demographic is equally essential. Once you understand your market's feasibility, you must delve deeper and understand the specific demographic your products or services will cater to.

To craft a successful customer experience, consider the following:

1. Identify whether your target customers are medical or recreational users and determine their gender preferences.
2. Determine which products are in high demand within your target customer base.
3. Address concerns about cannabis culture by offering services and products that provide solutions.
4. Consider how your real estate location will be effected by the likely demographics of it’s customers.

International Market Considerations

Expanding into international markets complicates identifying your target customers and their preferences. You must consider diverse statistics illustrating behaviors and demands across various cultures, economies, and political structures.

As the cannabis industry becomes more global, accounting for international laws and import/export opportunities is needed. While analyzing international markets, consider the following factors:

1. Cultural Differences: Understand cultural attitudes, perceptions, and behaviors towards cannabis in the target country. Cultural norms and values can significantly impact consumer preferences and demand.
2. Economic Factors: Analyze the economic landscape of the target country, including factors such as disposable income, purchasing power, and market potential. Economic stability and growth prospects can influence the viability of your business.
3. Political and Legal Considerations: Familiarize yourself with the legal framework surrounding cannabis in the target country. Determine whether cannabis is legal for medical or recreational use, and be aware of any regulations, licensing requirements, or restrictions on product offerings.
4. Import/Export Opportunities: If you intend to engage in international trade, assess the import/export regulations and opportunities. Understand the target market’s logistical challenges, compliance requirements, and potential partnerships or distribution channels.

Good Practice Compliance Regulations

To advance internationally, cannabis businesses must adhere to international Good Practice compliance regulations. These regulations ensure quality, safety, and consistency in producing, distributing, and selling cannabis products. Depending on your operation and intended market, you may need to follow a combination of the following practices:

   1. Good Agricultural and Collection Practice (GACP)

This is a set of guidelines to ensure the sustainable and quality-oriented production of medicinal, aromatic, and other specialty crops. It emphasizes the systematic management of all stages of agricultural and wild plant collection, including site selection, soil management, plant propagation, harvest timing and procedures, post-harvest treatment, and record keeping. It stresses minimizing contamination from pesticides, heavy metals, and microbial contaminants while ensuring respect for the environment and biodiversity. Developed by the World Health Organization (WHO) and other organizations, GACP aims to produce crops that meet the desired quality specifications while adhering to safety, efficacy, and sustainability standards.

   2. Good Laboratory Practice (GLP)

Protocols for laboratory testing and analysis of cannabis products, ensuring accuracy, reliability, and consistency of results.

   3. Good Distribution Practices (GDP)

Guidelines for storing, transporting, and distributing cannabis products to maintain their integrity and prevent contamination or tampering.

   4. Good Manufacturing Practices (GMP)

Quality management systems and standards for the manufacturing of cannabis products, ensuring consistency, safety, and efficacy.

   5. Global Risk Assessment Platform (GRASP)

A framework for assessing and managing risks associated with cannabis operations, including security, compliance, and sustainability.

   6. International Inspection Documentation

Documentation and record-keeping practices to ensure transparency, traceability, and compliance with international standards.

Obtaining the necessary certifications and implementing these good practice compliance regulations will ensure your business meets international standards and enhance its credibility, reliability, and potential for growth in the global cannabis industry.

Due Diligence with 3C Consulting

Conducting a thorough market analysis is essential before deciding on a location for your cannabis business. Qualifying your target market, assessing competition, understanding product demand, and evaluating operational considerations are critical steps. 

Additionally, incorporating expert market analytics from companies like BDSA and considering international market dynamics and compliance regulations will provide valuable insights for your business's success. It’s due diligence that brings better reassurance to your cannabis company as it navigates the uncharted waters of the cannabis market. 

By conducting comprehensive market research and understanding your target demographic, you can craft a customer experience that caters to their needs and preferences, driving profitability and growth in the ever-expanding cannabis industry.

Contact 3C to speak with a cannabis industry consultant about conducting due diligence and market analysis for your cannabis company.