30 January 2022 |

The Future Of Cannabis Topicals



The Future Of Cannabis Topicals

Breaking down the full potential of cannabis topicals as an emerging category… 

The Past…

Whereas once the only way to consume cannabis was to smoke dried cannabis flower, times have changed and consumers now have the choice between dozens of different form factors of cannabis.

Although dried flower remains the most popular form factor of cannabis today, as new consumers begin to embrace cannabis — many in the cannabis industry feel the dominance of dried flower will inevitably dwindle in the coming years.

Personally, I subscribe to this viewpoint as it seems highly unlikely that smoking will remain the most popular method of consuming cannabis long term given the extent to which smoking has been demonized by society.

Still, the question remains: If such a change were to occur in consumers preferences, what form factors would become the largest benefactors of this new cohort of consumers embracing cannabis?

In previous editions of The Green Paper we have explored how cannabis beverages could become one of the biggest benefactors of this change, however, in today’s edition we will be turning our attention to topicals.

The Present…

Today, cannabis topicals come in many different shapes and sizes.

Enter a cannabis retail store and you will find topicals focused on pain relief, transdermal patches that release a small dosage of cannabinoids throughout the day, topicals that are targeted at athletes and many many more.

Courtesy of data from Headset, we can see the demand for cannabis topicals in Canada has been steadily increasing since March 2020 — going from 0.25% of market share in May 2020 to 0.6% market share in September 2021.

(Data from Headset)

In the United States, the demand for topicals has been rising and falling in recent years going from 1.3% of total sales in January 2018 to 0.6% of total sales as of the most recent data available in September 2021.

(Data from Headset)

Nonetheless, cannabis sales in the U.S totaled $25 billion in 2021, meaning total sales for cannabis topicals exceeded $200 million USD last year alone.

With U.S cannabis sales on track to exceed $45.8 billion USD in 2025, total sales for this “niche” category should exceed $366 million USD annually within 3 years.

Looking forward, the total sales in this niche category in cannabis are well on track to surpass half a billion dollars in annual sales within the next 10 years.

Uneven Demand…

The United States is home to over 329.5 million people, and the demand for cannabis topical products varies very significantly from state to state.

As we can see, the demand for cannabis topicals is more than 6x in Colorado vs the demand for topicals in Massachusetts.

(Data from Headset)

The Future… 

With cannabis topicals on track to surpass $500 million USD in annual sales within the next decade, where are the biggest opportunities within this niche?

1) Topicals Focused On Athletes:

Cannabis has seen an influx of interest from professional athletes in recent years.

Looking at the NBA alone, several extremely successful professional basketball players have joined the cannabis industry in recent times.

  • Basketball star Al Harrington founded the cannabis brand Viola.
  • Gary Paton created his own cannabis strain with Cookies Global which is available across California & now Canada.
  • Hall of Famer Isiah Thomas was appointed CEO of the Colombian hemp and cannabis producer One World Pharma.

With this influx of interest comes the opportunity for these influences to promote products which are beneficial to other aspiring athletes.

The perfect product? Cannabis topicals designed to help players reduce their aches and pains following a tough workout.

In my eyes, this is a match made in heaven, if ever there was one.

2) Topicals Focused On Sexual Health:

This niche within a niche is very interesting.

2020 study indicated that a large number of cannabis consumers are already using cannabis in this capacity with 73.8% of the surveys participants reporting that consuming cannabis increased sexual satisfaction.

In the U.S, the massage oils & lubes segment makes up 4.6% of all cannabis topical sales from January – September 2021, however, as new consumers continue to embrace cannabis I expect this number to increase.

(7) exciting companies to watch out for:

1) Foria.

2) Quim.

3) Playboy.

4) Apothecanna.

5) Cannariginals.

6) House Of Wise.

7) Papa & Barkley.

3) Topicals Focused On Pain Relief:

A large-scale study in 2019 found that cannabis is used as a replacement for analgesics (pain relief) and other drugs with 49% of cannabis consumers reducing their over-the-counter painkiller courtesy to cannabis.

A study conducted by NorCal cannabis in 2019 also found that 56% of cannabis consumers are consuming cannabis for pain relief.

Currently, many consumers are turning to dried cannabis flower to avail of the pain relief properties cannabis provides, however, long term I am willing to wager topicals will capitalize on this very popular use case.

Interestingly, people born between 1946 and 1964 account for 15.8% of all topical sales but only 4.8% of the cannabis market.

Closing Comments

The long term success of this category is inherently tied to the industry’s ability to continue to attract new consumers to cannabis, and with an estimated 7,000 Americans trying cannabis for the first time daily — all signs suggest this is working.

Will we see a billion dollar brand solely focused on cannabis topicals in the coming years? Probably not, however, will we see a brand valued in excess of $100 million USD solely focused on this niche category? I think so.


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