Another year has come and gone, and the cannabis industry continues to develop new trends and expand into new states like Missouri, Maryland, and Rhode Island. Pre-rolls remained the fastest growing product segment in the cannabis industry but, despite the emergence of new markets, US cannabis sales were down 1% through November of 2022. Canadian sales, on the other hand, were up 7% over the same period.
To help us get a better picture of what is going on in the pre-roll market, we partnered with Headset to bring together their retail point-of-sale data with our B2B sales data. We also included primary data we received from a poll we conducted with over 300 companies from every corner of the pre-roll industry. This included getting feedback from recreational cannabis producers, medical cannabis producers, hemp producers, plant processors, vertically integrated brands, cannabis brand agencies, dispensaries, and multi-state operators. After reviewing the information, themes quickly emerged that speak to the nature of the cannabis industry as well as the growth of the pre-roll market. Here’s what we found!
Cannabis Product Segment Sales
As you can clearly see from the graph below, pre-rolls, edibles, drinks, vapes, and oil saw an increase in market share, and tinctures, capsules, and topicals saw their market share shrink. The big takeaway from this data is that “recreational” categories (flower, pre-rolls, and vapes) are driving the market, while “wellness” categories (tinctures, capsules, and topicals) are shrinking.
The average cannabis customer is consuming for a more recreational purpose and looking for fast-acting and high potency products. While the wellness category has the potential to bring cannabis to every corner and demographic in the country, the fact is that these categories are not a major percentage of the total cannabis industry, nor are they growing at the moment.
Pre-rolls are the fastest category in the US and in Canada Growing at 12% YoY in the US and an eye-popping 38% YoY in Canada. Over the past few years, the wholesale price of flower has dropped dramatically, making pre-rolls more affordable. With cheaper cannabis costs, it also allowed producers to use higher quality flower. Additionally, advancements in both table-top and automated pre-roll machines have allowed manufactures to produce more pre-rolls with lower labor costs. All these factors combined led to higher quality pre-rolls at lower retail price points, which has driven strong growth for the category.
Segments within Pre-Rolls
Taking an even deeper dive into the data, we can dig into the sub-category segments driving the overall category growth. You can see in the US, the top three highest growing segments were mixed strain pre-rolls, disposable vape pens, and infused/connoisseur pre-rolls. In Canada, infused pre-rolls grew at a blistering 1,426%, with mixed strain pre-rolls growing at 440%, and disposable vapes at 160%.
For context, infused pre-rolls were not allowed in Canada until more recently, which is why you see this type of hyper-growth in infused pre-roll sales. Additionally, pre-roll blunts were hard to get approved by Health Canada, but we are now seeing more pre-rolled blunts, helping drive this growth as well.
Year Over Year Segment Growth by Country
|Segment||YOY Growth Canada||YOY Growth US|
|Pre-Roll - Connoisseur||1426%||22%|
|Pre-Roll - Mixed Strain||440%||63%|
|Vapor Pens - All-in-One Disposable||160%||60%|
|Edible - Gummies||24%||18%|
|Beverage - Iced Tea, Lemonade, and Fruit||16%||17%|
|Beverage - Carbonated||14%||15%|
There are a few other variables driving the strong growth of pre-roll sales. Firstly, potency has always been an important factor for consumers. With infused pre-rolls being two to three times more potent than a standard pre-roll, we can see why customers would be drawn to them.
Secondly, pre-roll making machinery has advanced a lot in the past few years. Producers no longer have to infuse each pre-roll by hand, as they now have access to automated machinery that can efficiently produce infused pre-rolls at scale. This allows producers to make them more enticing to consumers by keeping the price down and potency high. When combined with the declining cost of cannabis flower and oil, infused pre-rolls become too affordable to pass up.
Mixed strain pre-rolls were not that popular over the past couple years, so our hypothesis here also pertains to automated pre-roll machines. Automated machines are very fine tuned and require consistency. Cannabis is anything but consistent, especially if you are constantly growing new strains. For a manufacturer using automated machines, blending your cannabis helps you create a consistent input material and mitigate supply chain issues. For example, Lowell launched a slim, cigarette style pre-roll, which is made on automated cigarette machinery, and none of their SKUs are single stain, they are all mixed strain blends.
In looking at these top 3 highest growing segments in the industry, it reiterates our finding that “recreational” consumers and products are what is moving the needle. Infused pre-rolls and disposable vapes are the perfect high-potency and convenient item your core cannabis consumer loves.
Cannabis Industry Price Compression
It’s not just flower prices that are falling, prices in all categories are down across the board in the US. Why has the price of pre-rolls jumped in Canada? The answer is infused pre-rolls. In other words, infused pre-rolls have become so popular that they are actually driving up the average cost of a pre-roll in Canada. This also means that customers are willing to pay more for potency, which is a common theme across the cannabis industry.
The most important takeaway from this graph is that, even though prices for all cannabis products declines over time, pre-rolls are showing the least amount of price compression. In other words, if you are in the business of selling cannabis, and you are worried about declining margins, pre-rolls are a category you should be expanding into to maintain and boost profitability.
The Lifecycle of Pre-Roll Sales
One of the first things we noticed when looking over the pre-roll sales data from the previous five years is that sales have gone up and prices have come down. This is not something unique to the pre-roll segment of the market and represents a common lifecycle for the cannabis industry. As time passes, new companies emerge, competition drives cannabis prices down, producers become more efficient, and sales grow.
It is also important to understand that the cannabis industry’s growth is not infinite, and prices and sales eventually stabilize. As you can also see from the graph, on average pre-roll sales across legal markets steadily increased until 2021 and have since hovered around the same sales numbers. Prices continued to fall after the market peaked, but the last year has seen the price begin to stabilize as well. Like any product, every market will hit a point of saturation, and it is the most successful brands that recognize this trend and place a high priority on segment growth from the beginning.
How Much Do Pre-Rolls Cost?
There is a wide range of prices for 1-gram pre-rolls. As we mentioned earlier, more established markets like Washington and Oregon have lower retail prices, and younger markets like Massachusetts and Nevada have higher prices. Regardless of which market you are in, this data provides a target price for your pre-roll project. It lets you know what customers are expecting to pay, so you can plan out your production process in a way that will make you competitive in your market.
An interesting thing about a pre-roll is that it is both a cannabis product as well as a consumption method. So, the price is going to be determined by two things. Most of the price is going to be determined by the cannabis material inside. Whether you are producing your own or sourcing, this price is going to be dictated by your specific market. Younger markets typically have higher prices when compared to mature markets, and we found that most companies can source bulk flower between $0.10 and $1.50 a gram.
Secondly, the materials you use to construct the body of the pre-roll make up a portion of the price. From the filter tips and paper material to the packaging and branding options, you will have a massive list of customizations to choose from. Despite having all these options, we found that the majority of pre-rolls are being sold for between $5 and $10 at retail. It’s even possible to find infused pre-rolls within this price point.
To add another layer of depth to this section, we asked producers if they raised their prices because of inflation, and 77.7% of companies said they did not raise prices. This further proves how competitive the market is, as producers are willing to wait as long as they possibly can before raising their prices in hopes of winning more market share.
Why Are Infused Pre-Rolls Growing in Sales?
As we just mentioned, infused pre-rolls are the largest growing segment in the pre-roll industry. So, when asked if they produce or sell infused pre-rolls, it shouldn’t be surprising that 58.4% of the companies in our survey said yes, and we expect the number of companies producing infused pre-rolls to keep increasing. It's becoming too easy to make them, and what company wouldn’t want to get involved in the fastest growing product segment in the market?
There are lots of different ways to infuse a joint, but automated infusion machines have taken production to the next level—allowing producers to infuse hundreds of pre-rolls in an hour. When the cannabis industry first opened, infused joints were a luxury option. Now that they are easier and less expensive to make, more are starting to incorporate them into their pre-roll lines.
If we take a close look at the product segments in our previous graph, we can see a correlation between the price of pre-rolls declining and the sales of infused pre-rolls increasing. In 2019, infused pre-rolls represented a small portion of overall pre-roll sales and averaged about 5 million dollars in sales per month. By 2023, prices had steadily fallen, and infused pre-rolls had grown to the largest pre-roll segment and jumped to about 70 million in sales per month. What this means is that we have gotten to the point where the price of cannabis material has been driven down so low that, in today’s market, you can get an infused pre-roll for the same price as you could’ve gotten a regular pre-roll a few years ago. In fact, you can even find infused pre-rolls that are cheaper than regular pre-rolls today!
Sure, there’s a big difference in terms of quality between high-end regular pre-rolls and the most economically priced infused pre-rolls, but very many consumers still do not understand how to distinguish that difference. For example, distillate is an extremely inexpensive oil to make, and, even though distillate is also the most potent concentrate when it comes to THC percentages, it lacks the chemical diversity that is a staple for high-quality concentrates. So, it is easy to see why the more economically priced infused pre-rolls on the market are infused with distillate, and, given that many people still associate higher THC percentages with quality, it is also easy to see why they are so popular.
Another interesting trend we see in the sales data is that multi-packs have become extremely popular. Since 2021, we have seen an almost 400% growth in multi-packs that have a volume of 2 or 5 grams as well as steady growth across most other sizes. It makes sense that multi-packs would grow with the pre-roll market. If consumers enjoy one pre-roll, they will enjoy many pre-rolls.
Buying multi-packs is not only more economical for the consumer, but they are also more convenient. It’s not like you can buy cannabis products from the corner store. Buying a multi-pack means you don’t have to go to the dispensary every time you want a pre-roll. This trend is also saving producers money, as the packaging and labor costs get spread out over multiple pre-rolls.
As you can see from the graphs we created from the Headset data on multi-pack sales, as markets mature the popularity of multi-packs rises. In 2018 multi-packs of regular and infused pre-rolls only made up 27.7% of the market. By 2023, multi-packs make up 47.62% of the market—representing a growth of about 20% over 5 years. Single pre-rolls are always going to have a place in the industry, so expect their decline to level out soon. Single pre-rolls are the perfect add-on item, and it is common for consumers to pick them up for a specific event or occasion.
Wallet Share by Age
Another interesting thing about pre-rolls is that, when it comes to wallet share, they are the most consistent product segment across all age groups. Whereas other products either show a significant increase or decrease in popularity with each new generation, pre-rolls steadily hover between 12.8% and 14.5% in each.
As you can see in the chart, the two most popular products for Boomers are flower and edibles, but both of those become noticeably less and less popular with each new generation. Younger generations prefer to spend their money on vape products, so much so that vape products have actually overtaken flower as the biggest category for the Gen Z demographic! You’ll also notice that wellness products like capsules and topicals are more popular with older generations.
These trends make perfect sense. Of course, older generations would be more interested in wellness products, as life tends to get more uncomfortable with age. It also makes sense that vaping would be more popular with the younger crowd and not as popular with the older crowd, as Generation Z highly values convenience and older generations are not as used to the vape format. Pre-rolls break the trend and continue to remain a consistent part of every generation’s purchasing habits, and that is yet another reason why the pre-roll category as a whole continues to grow.
Cannabis Industry Margins
As you can see from the graph below, margins have been steadily declining over the past 5 years, but it can hardly be described as a free fall and most brands remain above 0.50—a healthy zone for running a business. The drop can be dramatic in newer markets, like Michigan; however, if we are looking at mature markets like WA and OR, you can definitely see that margins have levelled off in the last 2 years and remained steady. This is similar to the cycle we see in retail prices for consumers.
Another important factor that can affect margins is if a company can produce a House Brand. House Brands only exist in markets that allow vertical integration. In other words, a House Brand is created when one company is allowed to grow, process, and sell their cannabis products to the public in their own dispensaries. States like Washington have laws that require each business to be separated, but, in states where this is legal, it allows producers to save money by increasing efficiency by not having to deal with other companies and cutting out the middleman, so to speak.
It is then up to that vertically integrated company on what they do with those savings. If they pass these savings on to their customers and sell their products at a lower price, their margins will look like non-vertically integrated companies. If they sell their products for a higher or market price, they can earn a little more profit and higher margins. Considering how competitive the cannabis market is, it makes sense that the margins between House Brands and other brands are close. For House Brands, it’s a balancing act of passing on as much of their savings onto the customer as they can, while still retaining a small edge in the margins. This can clearly be seen in Massachusetts” market in the graph below.
Speaking of being the perfect add-on item, as you can see from the graph, the sales data backs up that idea. It shows that, when a person walks into a dispensary to purchase flower, vape products, edibles, or a beverage, they will add-on a pre-roll 15.5% to 23.3% of the time. In fact, in every one of these product segments, pre-rolls either have the highest attachment rate or are within a single percentage point of the leader.
In other words, no matter what a customer is interested in purchasing, it doesn’t take a lot of convincing to get them to add on a pre-roll. Like those tasty impulse treats you find in the checkout line at the grocery store, pre-rolls are easy for customers to justify. Whether they want to consume it right away or just want to have one ready in case they feel like smoking one later, pre-rolls have become more than just a niche product. They’ve become something every flower lover can enjoy and wants to have around the house.
Context Behind the Sales Data
Sales numbers do not exist in a vacuum. So, when it comes to using the data to benefit your business, it is also important to consider the cultural forces that shape them. For example, when considering the last 5 years of sales data, it would be a mistake to disregard the impact of the pandemic. The pandemic saw a surge in sales, and one could argue that any decline in recent sales numbers is merely a return to normal.
Time will tell, but it is also possible that sales will never completely return to the previous levels. The pandemic could have expanded the market by increasing the amount of people consuming cannabis and/or increased the amount of cannabis consumers regularly ingest. We have noticed a small decrease in cannabis sales in older markets, but it is still nowhere near pre-pandemic levels. The coming year should give us important clues as to what we can expect from the market.
We also have to take into consideration the vitality of the grey market. Recreational cannabis was only legalized in 2012, and that was only in Washington and Colorado. Up until that time, the grey market was the only way a person could get cannabis for recreation. Places like California and New York developed vibrant cannabis cultures over the decades, and they are still able to compete with the recently legalized markets because of the lack of costs associated with running a very regulated and highly taxed business. All this to say, there are still a lot of people consuming cannabis from the grey market, and these numbers are not reflected in the sales data.
The Canadian Cannabis Market
You probably noticed, as we did, that pre-rolls are having a moment in the Canadian market. They are by far the fastest growing product category, and infused pre-rolls are doing so well that they are single-handedly increasing the average price of pre-rolls when every other category is seeing their price decrease.
It’s hard to say what is responsible for this growth. It could be a cultural thing, and Canadians just prefer to consume joints. Maybe Canada is just ahead of the curve because they legalized nationally quicker than the US, and the US will eventually reflect the pre-roll market in Canada. Whatever the reason, we believe that further research is needed to accurately evaluate the specifics of the Canadian cannabis market. So, be on the lookout for a White Paper specifically on the Canadian market soon!
Pre-rolls are being produced by companies of all shapes and sizes. They are the perfect add-on item for customers, but they are also the perfect add-on for companies looking to expand their product line. It does not take much to get pre-roll production going. You can source cannabis material, invest in a few table-top pre-roll making machines, and you’ll be making thousands of pre-rolls a day in not time. Also, when you consider the growth of the pre-roll market and the great price compression, it just makes sense to make pre-rolls. So, let’s take a closer look at how companies are incorporating pre-rolls into their business.
How Old Are Pre-Roll Companies?
In the poll we sent out two years ago, over 70% of companies said they were less than 3 years old. In our most recent poll, we found that only 50.9% of companies identified as being under 3 years old, while 18.9% said they were between 4 and 5 years old, and 20.5% said they were between 6 and 7 years old. As can be expected, pre-roll businesses are maturing. What will be interesting to watch is if established pre-roll companies will make a move into newly legalized states, or if new companies will dominate their local markets.
The cannabis industry is still a baby when compared with other industries, but we have arrived at a point where multi-state operators (MSO’s) are becoming more common. Experience means a lot in this young industry, so it will be interesting to see if new companies will be able to compete long-term with MSO’s in their local markets. As it stand now, none of the top pre-roll brands started out as MSOs, but they are quickly growing into other states and becoming MSOs.
It will also be interesting to see if pre-rolls are popular right away in newer markets even with the high price tag. Unlike states that have had legal markets for several years already, new markets will have access to pre-roll making machines from the start. This means there won’t be a huge difference in price between buying a gram of flower and a pre-roll, and, given that larger companies already have their SOP’s locked down for production, we might find that pre-rolls are popular right from the start.
What’s the Size of Your Business?
In our initial poll, 78.3% of respondents represented pre-roll businesses with fewer than 25 employees, and 47.5% of respondents worked in multi-purpose facilities under 5,000 square feet. Our most recent poll found that 47.7% of companies are below 5,000 square feet, 33.2% are between 5,000 and 50,000 square feet, and 84.9% of companies operate with 5 or fewer employees.
The biggest insight we can gain from this poll is that many successful pre-roll companies can operate in small footprint areas. If they are not growing flower, they can easily source the material and realistically produce tens of thousands of pre-rolls in a small space. Most pre-roll operators are small, or pre-rolls only take up a small portion of a business’ square footage and staffing.
Pre-roll production is also a great way to launch your cannabis brand. It takes a long time and a lot of resources to build something like an extraction lab or grow room. Why not produce pre-rolls in the meantime? It’s an excellent way to have money coming in while you build out the rest of your facility. All you need to do is source the flower, get a few tables for pre-roll machines, and start making pre-rolls.
How Much of Your Business is Pre-Rolls?
In our most recent poll, 57.9% said pre-rolls made up 25% of their business or lower, and 25.4% said pre-rolls made up 25-50% of their business. What this survey tells us is that there aren’t very many companies that exclusively rely on pre-rolls to generate revenue, but pre-rolls do make up a big section of the overall sales for companies that do produce them. After flower, the second biggest segment for growers are pre-rolls.
It is also interesting to note that the largest pre-roll companies in terms of sales also offer some of the largest varieties of products. With all the customizations you can do with a pre-roll, it is possible to have a product that is suited for every type of flower consumer, and it is clear from the chart that it pays to offer pre-roll consumers a variety of options.
|Brand Name||Sum of Product Count||Avg EQ Gross Margin||Sum of Total Sales|
|Lowell Herb Co / Lowell Smokes||1527||0.52||$38,040,046.50|
|Kingpen (formerly 710 Kingpen)||1733||0.51||$32,379,941.96|
|West Coast Cure||444||0.55||$18,705,829.62|
|Glorious Cannabis Co.||471||0.42||$15,781,269.85|
|Good Chemistry Nurseries||1317||0.67||$11,292,807.27|
*This combines all "house brand" data
At the top of the sales and product list is House Brands. Unlike the other options, House Brands refers to multiple companies—all of which create and sell their own pre-rolls. The sales numbers reflect the pre-roll sales in their own dispensaries. If these house brands choose to sell their pre-rolls in other dispensaries, the sales numbers can be found next to their company name (not included in the House Brand data). Not all states allow this type of vertical integration in cannabis businesses; therefore, House Brands remain an outlier in the sales data, and the numbers are so high because the category represents multiple businesses.
How High is Turnover?
Another new question in this year’s poll, we wanted to know what the turnover numbers were like in pre-roll production, and the answers surprised us. Almost 90% of participating companies said that turnover was between low and medium. This is not the norm in the cannabis industry or any other industry that relies on minimum wage employees. This could indicate that companies are putting more experienced employees in charge of things like grinding flower and filling cones to avoid mishaps.
This is another reason why companies should consider incorporating pre-roll machinery into their production. Most pre-roll machines are designed to be easy to operate. So, you don’t have to worry about a new hire destroying your flower in a blender or making a bunch of unusable or low-quality pre-rolls. When you invest in pre-roll machinery, an entry-level associate can be responsible for making pre-rolls with minimal training. The only exception would be if you were interested in automated pre-roll machinery. These require trained individuals to operate, and it is not considered a job where you want high turnover.
Do You Plan on Expanding?
In our previous poll, 95.7% of pre-roll companies said they were looking to expand their business. In our most recent poll, 89.5% said the same thing. Knowing that these numbers were probably going to be similar, in this year’s poll we also asked companies in our new poll how they plan on expanding their pre-roll lines, as you can see from the graph, companies were open to trying a lot of different things.
The diversity in answers speaks to how versatile pre-rolls are and how big the market is. Each market is going to be different, so do your research before picking a new project. The last thing you want to do is create a new pre-roll that nobody is interested in purchasing in your area, but it is clear that there is a lot of room for creative expansion. This also highlights how important it is to consider the machinery you are using (or planning on using) to make pre-rolls. Many machines have the ability to make different types of pre-rolls, so find one that fits your plan for expansion.
Lastly, when asked about offering multiple brands under their company, about half of the companies in our poll reported that they do offer multiple brands. There’s pros and cons to having multiple brands instead of just one. If you are known for premium products and you want to create an economical line, you might want to use other branding to keep a distinction between the two, or you might want to pull from the reputation of your premium line and keep it under the same brand.
Advances in pre-roll machinery had a significant impact on the popularity of pre-rolls. When a recreational cannabis market first emerged, pre-rolls were time consuming to make for producers, expensive for consumers, and had a reputation for being of low quality. Machinery made it possible to produce quality pre-rolls efficiently and close the gap between a gram of flower and a gram pre-roll.
Making sure your pre-roll production line is running smoothly should be a high priority for anyone looking to start a new pre-roll project. In this section, you’ll get an idea of how efficient companies are at making pre-rolls and how you can use machinery to bring your pre-roll production to the next level.
How Many Pre-Rolls Can You Make?
There are a lot of similarities between the poll we took in 2021 and this year’s poll, but we did notice a spike in producers that make between 10-25 thousand pre-rolls a month and a decrease in producers that make 5-10 thousand a month. This could mean that smaller producers are increasing their output, but the biggest takeaway from this poll is that the vast majority of pre-roll producers are making 25,000 or fewer pre-rolls a month.
To get a better idea of how efficiently these producers were creating pre-rolls, we asked them how many they can make in an 8-hour shift with two employees and one machine, and it quickly became apparent that many companies are running inefficiently. Almost 65% of companies are only able to make 1,000 or less pre-rolls in a shift. Of course, these numbers take into account producers that specialize in handcrafted connoisseur pre-roll manufacturing, but that is only a small segment of the pre-roll manufacturing world.
In many ways, this shows how much producers can still learn about streamlining their pre-roll production. A lot has changed in the last couple years when it comes to pre-roll manufacturing. Lots of machines can produce hundreds, if not thousands, an hour. So, if you find that time is your biggest enemy when it comes to producing enough pre-rolls, be sure to check out the latest and greatest pre-roll machines that can help bring your production to the next level.
What Kind of Machinery Are You Using?
The narrative around pre-roll machinery is centered on filling machines. Yes, pre-roll filling machines will help you fill pre-rolls faster, but filling is only one part of the process when it comes to making pre-rolls. The other machines you can use will not only help you go faster, but they will also help you improve the quality of your products.
For example, only about 40% of companies are using sifters and 23% are still using a blender to grind their cannabis. Grinding with a blender creates an inconsistent particle size and will damage the terpenes. An inconsistent particle size will slow down automated machinery and make it difficult to use metering trays, as metering trays rely on volumetric measuring. Blenders also use a high RPM motor that heats up when in use. That heat will degrade any cannabis material that it encounters, which is all of it.
Sifting keeps particulates out of a pre-roll that can cause damage. For example, if you do not sift your ground cannabis material, stems can find their way into a cone and puncture the side. This will cause the pre-roll to have a weak draw and lose more smoke to the wind. These particulates also add nothing in terms of cannabinoids and terpenes, so they lower the potency of your product by being in there.
What’s The Most Time Consuming Part of Your Pre-Roll Production?
This was a new question in our poll this year, and it revealed that delays can happen in a lot of different areas. Twisting and folding is the most time-consuming part for most brands, but every production line is unique. You are only going to be able to produce as quickly as your slowest station on your production line. This is why it is best to invest in machines and processes that can be scaled and improve overall efficiency, not just one section of the assembly line.
Let’s take pre-roll filling machines as an example. It doesn’t make sense to invest in a machine that can produce 10k pre-rolls a day if you can only finish 800 in that same time. It is often better to invest in multiple smaller machines instead of larger machines. This will ensure that you will have an extra if one needs to be cleaned or fixed, and it also lets you make multiple types of pre-rolls at the same time.
Are Companies Weighing Their Pre-Rolls
It was interesting to see that over 40% of companies in our poll said they were not weighing pre-rolls before they get packaged. If you aren’t weighing your products, and they are light, you are shorting your customers. This has the potential to harm your reputation and have a negative impact on sales. If your pre-rolls are heavy, you are giving away free product. People won’t complain, but you’re not making as much money as you could.
Also, if you go too far either way, it is going to put you out of compliance. Being out of compliance is an expensive experience. You could be fined or even shut down. Weighing is probably the easiest part of the entire pre-roll production process, but it’s clear it is also something producers like to skip to save time. Do so at your own risk!
Types of Pre-Rolls
One of the reasons pre-rolls are so popular is because they are the most customizable product in cannabis. This means more options for consumers as well as producers. As we showed in the previous section, the brands with the most sales are also the brands that offer the most options (SKUs) to their customers. Both Jeeter and Lowell Herb Company, the leaders in pre-roll sales in California, have created almost five thousand unique products! It’s clear that consumers love to have options, and those companies that have a high level of diversification with their products are the most successful.
What Size and Shape of Pre-Rolls Are You Making?
In our survey, we found that the majority of producers are making 1g pre-rolls. Of those companies, 77% of them said they strictly used cones in their pre-roll production, 8.2% said they used tubes, and 14.8% said they utilized both. I don’t think it is any surprise, as 1g pre-rolled cones are still the highest selling pre-roll SKU.
What was really interesting about this poll was to see how common it is for producers to make multiple types of pre-rolls in a variety of shapes and sizes. Companies are beginning to expand their lines. Considering the rise in popularity in pre-rolls and the fact that many people producing pre-rolls are using manual pre-roll filling machines that give you the option to make a lot of different sizes, this makes perfect sense.
What Paper Types Are You Using?
Like the polls concerning the size of pre-rolls, a few types of paper dominate the market. It’s clear from the graph that producers prefer refined white, organic hemp, and natural brown papers, but there is a variety of options that are being produced and becoming more popular for producers to incorporate into their pre-roll lines.
Refined white papers are often referred to as rice papers, but that is a bit of a misnomer. Rice is not used in the production of refined white rolling papers. The term has more to do with the translucent white color that the items share with each other rather than the material from which they are made. Also, it’s important to recognize the dangers of working with rolling papers made from palm leaves. These leaves are commonly grown using pesticides and in soil that contains heavy metals. So be careful!
Brands are using multiple types of paper to reach a larger market and gain distinction amongst their competitors. As we mentioned in the previous section, offering multiple types of pre-rolls (SKUs) is a great way to expand your market share and keep your customers happy. Again, your choice in machinery goes a long way, as it will determine how many of these options you’ll have when it comes to size, shape, and materials.
The Cannabis Material
In this year’s poll, we wanted to put a focus on the starting material because we noticed some trends, and what we were seeing on our end came through in the polls. We found that only 21.6% of the companies that we polled were growing their own flower, which means most pre-roll producers are sourcing their cannabis material from other farms. This makes sense for producers, as it eliminates the risks associated with growing cannabis. All you need is a small space with a few tables and small pre-roll machines, and you can generate thousands of pre-rolls a day.
As for the quality of the flower, 79.9% of companies said they make full-flower pre-rolls, 30.5% said they use a blend of flower and trim, and only 5% said they make pre-rolls with pure sugar leaf and trim. Flower is clearly the preferred starting material for pre-roll producers and the preferred option for consumers, but it is also clear that there exists a market for economical pre-rolls of lower quality—many of which are made by companies that also make full-flower pre-rolls.
What Are The Most Popular Packaging Options
Packaging follows the same trend as cone sizes. We found one type, pop-top plastic tubes, dominating the market; however, we also noticed that many producers were using more than one type of packaging. This means that, instead of focusing on one type of pre-roll, producers are releasing multiple types to expand their line and help bring distinction to their brand.
When asked about label application, 66.2% of said that they were still labeling their pre-rolls by hand. This was surprising considering the repetitive nature of the job, but it makes sense if you have labels that do not need exact placement. In other words, if you are just trying to get a sticker on a package to be compliant, applying by hand can work. If you invested a lot in your branding and want your stickers to fit perfectly, it makes sense to get an automated machine or have them applied for you. It would take too much time for an employee to perfect apply hundreds of stickers.
Lastly, we added a question about recyclable packaging options. The cannabis industry uses a lot of plastic in their packaging, and a lot of it isn’t easily recyclable. We wanted to see how important it was for producers to incorporate recycled materials into their production line. Unfortunately, the answer was, “not very important.” 40.6% said they would not be willing to spend more for it, and 39.7% said they’d only be willing to pay 10% more. When you consider that compostable pre-roll tubes ($0.265 to $0.36 per tube) are more than twice the price of a regular plastic tube ($0.086 to $0.124 per tube), you can see why they are not a more popular option. It’s clear that as long as packaging regulations are tight and recyclable options are more expensive, there isn’t going to be a green movement in cannabis anytime soon.
It was clear from the data that pre-rolls are a massive driving force when it comes to sales in the cannabis markets. They are the fastest growing product segment, they retain their wallet share throughout the different demographics, they have the least amount of price compression, and they are the most customizable product segment—allowing you to create products for every smoking preference. As a brand, it’s hard to think of a reason not to make them!
After examining the data, we fully expect the pre-roll trends to continue, so much so that we believe pre-rolls will overtake flower as the largest selling product category by 2030. They are the most convenient way to consume flower—just add fire, and the rise of infused pre-rolls and multi-packs will continue to push the market forward. So, it’s not a stretch to think that, as the quality of pre-rolls continues to rise, pre-rolls will start to overtake the flower category.
We hope that this Pre-Roll White Paper was illuminating for you! If you have any questions or need help launching your pre-roll project, feel free to reach out and our Pre-Roll Experts will walk you through everything you need to know to get going in the right direction. We look forward to hearing from you!
To help us get a better picture of what is going on in the pre-roll market, we partnered with Headset to bring together their retail point-of-sale data with our B2B sales data. After reviewing the information, themes quickly emerged that speak to the nature of the cannabis industry as well as the growth of the pre-roll market. Here’s what we found!