This week’s Marijuana Market Update is all about cannabis e-commerce.
I discuss how a tech giant’s new policy is transforming how cannabis companies do business.
In June, Apple updated its app store review guidelines.
Prior to this, it banned the sale of controlled substances. However, it changed that language to grant an exception for “licensed or otherwise legal cannabis dispensaries.”
The provision included that apps for dispensaries must be “geo-restricted.”
So, for example, a dispensary in Illinois can now create a cannabis e-commerce app and sell its products — but only in Illinois. You won’t be able to access the app in Florida.
U.S. E-Commerce Trends Up
This is a massive win for cannabis dispensaries around the country, which can now take advantage of the growing trend in e-commerce.
As you can see in the chart above, a study by eMarketer and Buildfire found that mobile commerce (m-commerce) — using apps to buy goods and services through your smartphone — was $95.8 billion in 2018.
The study forecasts that it will jump to $418.9 billion by 2024 — a 337% jump in revenue.
So, Americans will continue to spend more money buying things through apps on their smartphone.
And, as you can see in the chart below, e-commerce is taking a bite out of traditional retail.
In the first quarter of 2010, e-commerce sales were just 4% of total retail sales in the United States.
By the second quarter of 2021, e-commerce made up 13.3% of all retail sales in the U.S. — a massive jump.
This enforces the trend we’re seeing: More Americans are spending more money buying goods online.
Cannabis E-Commerce Trends
But what about the cannabis industry?
Take a look at the chart below:
Right now, cannabidiol (CBD) is the only cannabis-related product you can buy anywhere.
According to the Brightfield Group, e-commerce sales of CBD hit $1.3 billion in 2019.
Brightfield Group expects those sales to skyrocket to nearly $6.1 billion by 2026 — an increase of 361%.
Apple’s New Policy Boosts Cannabis Businesses
Even since June, traditional cannabis dispensaries are seeing the impact of Apple’s rule change.
In July, according to Marijuana Business Daily, California-based The Parent Company launched a cannabis pickup and delivery app for Apple’s iPhone.
Chief Marketing Officer Dennis O’Malley told MJBiz that nearly 9% of its online transactions come through the mobile app.
Fellow California cannabis company Eaze — which claimed it launched the first app under Apple’s new guidelines — said its app resulted in a 7% increase in total first deliveries, and app users are 50% more likely to buy on the app than before the app was re-released after the new Apple Guidelines.
Weedmaps is another company that relaunched its app due to the new guidelines.
Total orders in the app and on its website have increased more than 10% since the company released it in early August.
Now, while Apple is trailblazing in this avenue of cannabis e-commerce, Google is lagging behind.
The Google Play Store banned apps that sell cannabis in 2019.
That means cannabis companies have no access to 44% of the smartphone market.
We don’t have a timeline on when or if Google will lift the ban. But Apple’s move could mean it’s just a matter of time.
Takeaway: In the meantime, allowing cannabis dispensaries to sell legal cannabis through smartphone apps opens a whole new market to the industry.
Judging by trends, the market will help push cannabis sales higher, making more profits for cannabis companies … and for those who invest in them.
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Where to Find Us
Coming up this week, we’ll have more on The Bull & The Bear podcast and our Money & Markets Week Ahead, so stay tuned.
Don’t forget to check out our Ask Adam Anything video series, where we ask any question to chief investment strategist Adam O’Dell, and our Investing With Charles series, in which our expert Charles Sizemore and I discuss the trends you write in to ask about.
Also, you can follow me on Twitter (@InvestWithMattC), where I’ll give you even more insights, not just in the cannabis market.
Remember, you can email my team and me at feedback@dev.moneyandmarkets.com — or leave a comment on YouTube. We love to hear from you!
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.