A new report from Environics Analytics, a leading data, analytics, and market services company specializing in geo-demographic segmentation, has uncovered some very interesting key traits found most frequently among Canada’s most regular cannabis users.
And the results indicate that cannabis users may turn out to be a very lucrative industry — not just for Canada’s emergent pot producers, like Aurora Cannabis Inc. (TSX:ACB), Canopy Growth Corp. (TSX:WEED)(NYSE:CGC), Cronos Group Inc. (TSX:CRON)(NASDAQ:CRON), and Aphria Inc. (TSX:APH).
In addition, identifying and relating to Canada’s cannabis users could also end up providing a valuable marketing opportunity for organizations in other industries that jointly (no pun intended) share those users. And perhaps most intriguing of all is that the projected legal market for recreational pot has some very attractive characteristics.
One is that marijuana users are relatively young. The research compiled shows that marijuana is used by Canadians between the ages of 19 and 34. Among this age group, about 35% say that they have tried pot at least once in their lifetime.
When you move up the age bracket, those figures tend to be lower.
Now, some may suggest the figure is misleading because younger people may have relatively less responsibilities, allowing them more opportunity to indulge, but the research suggests that a more accurate explanation may simply be that the drug is generally seen as being more “socially acceptable” among younger users.
While tapping into a youthful market is any company’s dream, the research also suggests that cannabis users tend to be better educated and bring in higher incomes.
That could be partly explained by the fact that, in general, more and more young people are attending post-secondary institutions like colleges and universities. But even if that were true, the fact that cannabis users earn higher-than-average disposable incomes would make them particularly attractive to marketers.
Beyond applications that have the potential to extend outside the cannabis market itself — for example, food and entertainment providers — it also opens the door to what would be considered “premium” cannabis products.
That could include cannabis oils, which make up an increasing percentage of sales at companies like Aphria, and it could also lead to the development of yet-to-be-developed products, like the marijuana-infused beverages that both Constellation Brands, Inc. and Molson Coors Canada Inc. are rumoured to be interested in.
Perhaps the biggest implication of all to come out of the report is that it may suggest that experts are grossly underestimating the potential size of the recreational market.
If younger generations end up accepting cannabis as a regular part of their everyday lifestyles, this trend would more than not likely lead to broader acceptance of the drug among future generations.
Without question, there is still a tonne that is left to be determined in this industry. But despite the many unknowns that remain, this could turn out to be an opportunity that investors look back on in a few years as “the one they let get away.”
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Jason Phillips owns the January 2019 60-strike calls in MOLSON COORS CANADA INC., CL.B, NV. The Motley Fool owns shares of Molson Coors Brewing.