80% of flower sales in Massachusetts are driven by the top 30 brands and companies in the market, per BDSA. Companies like Berkshire Roots, up significantly from Q1 to Q2, are well known in the region based on reviews like this one from Respect My Region.
Overall flower sales by dollars are essentially flat, month over month, throughout the year. The flower category is trending lower as a percentage of overall sales with pre-rolls and edibles gaining share, while concentrates and sublinguals fell.
Looking through the units lens provide more context with units increasing by 15% in H1 while ARP fell by over 10%. All this against the backdrop of inflation rising in other CPG sectors like food, which ended June up over 9% YoY.
These trends make sense as the Massachusetts market is evolving based on typical supply and demand stress. Cultivation, processing, manufacturing, distribution, and retail elements of the supply chain are all developing. This reduces costs on the supply side and we will continue to see wholesale price declines and associated retail price reductions.
Investors need to consider these market dynamics when evaluating a company’s financial forecast. A simple check is to see if the company is factoring in price compression as more supply comes online. Too many companies fail to build this into their financial forecast models and are then “surprised” when prices start to fall.