Americans purchased $17.9 billion in cannabis products over the past calendar year. That’s $7.2 billion more than the $10.7 billion in sales from 2019!
By Andrew Ward
The pandemic helped vice businesses surge, or at least stave off the catastrophic downturns that other markets experienced.
With so many consumers staying home in accordance with social-distancing measures, they turned to new and familiar vices to cope. As a result, 2020’s market projections were thrown for a loop — setting the stage for a prosperous 2021.
Cannabis, Alcohol And Sex
Cannabis sales soared in 2020. According to Leafly, nationwide sales of medical and adult-use marijuana increased by 67% over 2019. That means Americans purchased $17.9 billion in cannabis products over the past calendar year. That’s $7.2 billion more than the $10.7 billion in sales from 2019!
The alcoholic beverage space outperformed 2020 expectations, but still saw global figures decline. Analysis firm IWSR reported that the market declined by 8% in 2020, less than the previously projected double-digit drop.
Alcohol e-commerce surged in 2020 due to lockdown measures, increasing 40% across ten countries, including the U.S., U.K, Japan, Germany, Brazil and Australia.
The U.S. sexual wellness market also saw significant growth. Per Grand View Research, the sector hovered $9.1 billion in 2019. It’s projected to grow at a 5.2% compound annual growth rate between 2020 and 2027.
The report noted that the pandemic reduced stigmas around sex acts like masturbation, prompting consumers to purchase toys to enhance sexual experiences.
Sexual wellness operators expect the acceptance of sex and sexuality to continue to rise, but replicating the previous year’s performance may be difficult.
Joe Vela, co-founder and CEO of sex tech brand Emojibator, says company revenue increased 83% between 2019 and 2020. He said the company is developing new products, lines and securing partnerships in an attempt to outdo itself this year.
“In 2020, we saw the trends towards celebrity-endorsed sex toy brands and subscription-based social media like OnlyFans which point towards changing attitudes of sexuality,” Vela says.
Tobacco And Gambling
Tobacco figures varied. Sales have declined for years, and continue to decline, according to Reuters.
Some countries, including the U.K., saw a spike in people attempted to quit smoking, and sales in South Africa declined as the government banned sales for five months.
In the U.S., because people were staying home and typically spending less money on things like gasoline, they opted to buy more conventional cigarettes instead of e-cigarettes.
Gambling also saw varied numbers as one or more rounds of closures affected casinos across several markets, according to the American Gaming Association’s (AGA) Commercial Gaming Revenue Tracker.
After posting six months of gains, the U.S. market took a dip once again in November, with revenue declining 14.8%, or $2.92 billion, for the month. The decline attributed to a 1.1% deterioration in retail sales from the previous month and fewer weekends than in previous years.
Online gambling, however, could see a spike in 2021.
“With relaxed regulations in multiple states, there is potential for exponential growth across 2021 and 2022,” Lazhar Ichir, founder of gambling education platform BETANDBEAT, says.
Operators Project Positive Results
Operators and investors appear optimistic for another successful year due to a combination of the pandemic, shifting public sentiment and possible regulatory changes.
Brand investor firm Vice Ventures Founding Partner Catharine Dockery credits the shift in the market due to changing attitudes across the board, from a growing public acceptance of cannabis to increased body positivity.
“That’s a big trend that will continue in 2021,” Dockery says of the shifting public views.
David Farris, VP of sales and marketing for Las Vegas’ Planet 13 Holdings Inc. (OTCQX:PLNHF), said that cannabis has shown that industry growth is possible even during the pandemic.
Farris cited plans for a superstore expansion in Santa Ana, California. That growth comes despite COVID restrictions.
“As these restrictions lift, I believe tourism and traveling will restore, and we will come back stronger than ever,” he adds.
Psilocybin Will ‘Have A Moment’
Dockery is bullish, but warns that investing in any vice comes with regulatory risks.
“It is really important to work with people who are aware of that risk,” Dockery says of potential partners and investments.
In addition to the current slew of vices, Dockery is optimistic for therapeutic drugs.
“Psilocybin is going to have a moment,” she says, adding that she also has high hopes for additional treatments, such as ketamine.