Kantar Consulting Point of View

This emerging industry will without doubt impact shoppers’ share of wallet and discretionary spending. Here’s are four reasons you should take cannabis seriously:

Public support is growing. The percentage of Americans in favor of cannabis legalization stands at 61%, its highest point ever and double where it stood in 2000, according to a Pew Research Center survey conducted in October 2017. Support is widespread across generations as well, with 56% of Boomers, 66% of Gen Xers, and 70% of Millennials supporting legalization. If your organization cares about Millennials, which is likely, it is worth paying attention to cannabis.

Midterm elections will turn the tide. The November midterm elections are likely to cause a shift in Washington. The same Pew survey shows that 69% of Democrats support legalizing marijuana, including 79% of those under 40 and 70% of those between 40 and 64. Marijuana policy is likely to progress if more Democrats and younger candidates are voted into office. But lending to the legitimacy of cannabis, legalization is really a bipartisan issue. Politicians from both parties have been outspoken in their support of progressive cannabis reform following Sessions’ Cole decision, and members of both parties continue to co-sponsor cannabis bills in Washington. Cannabis legalization measures, which will be on the ballot in many states this fall, should fare well based on what we know of public opinion across generations.

Cannabis crosses categories and industries. This is what makes cannabis unique and disruptive. For retail, the mainstream introduction of cannabis has implications across channels: It can be a purely recreational product, a wellness vehicle, or a health solution, and many ancillary products and categories exist within each application. Major players in alcohol, tobacco, healthcare/pharmacy, food/grocery, and even home and garden (Scotts Miracle-Gro, for example) have begun to explore getting involved in cannabis to varying degrees. Products based on cannabidiol (or CBD, a major non-psychoactive compound found in cannabis and hemp plants) have recently become more mainstream in the form of HBC indulgence, vitamins/minerals/supplements ritual, sleep aid, or preventive and symptom-based healthcare products, to name a few.

It all comes down to share of wallet. Increased adult-use and medical marijuana legalization will directly result in both the reallocation of shopper dollars and a shift in shopping trips. In fact, that’s already happening in states where cannabis is legal in some form. Consider retail pharmacy, specifically the chain drug channel, where the pharmacy is the major trip driver. An Illinois-based study from Aclara Research shows that 62% of medical cannabis users in the state reduced the number of prescription drugs they take. What’s more, 30% stopped using prescription drugs entirely, eliminating a retail pharmacy trip driver. This finding, combined with shoppers’ demand for naturals, authenticity, and transparency — and their willingness to spend more for these types of products — demonstrates that introducing cannabis into conventional retail will steal share of wallet.

For more on cannabis as a retail and share-of-wallet disrupter and the implications for suppliers, see “Going green: How cannabis will steal share of wallet” (KRIQ subscribers only).