Since its earliest days, the legal cannabis industry in the United States has created big opportunities for ancillary businesses – those that provide products and services to licensed plant-touching companies. Just like the California Gold Rush, when businesses that sold picks and shovels raked in the money, ancillary cannabis businesses have followed similar paths. Now, based on new research from New Frontier Data, LEAF, and Merida Capital Holdings, the next big opportunity for ancillary businesses in the cannabis industry could be targeting homegrowers.
The U.S. Cannabis Homegrow Market report shares information collected through a survey of cannabis consumers and non-consumers to gauge the potential growth opportunities for ancillary businesses in the coming years as homegrowing becomes more popular. According to the data, 5.77% of Americans grow their own cannabis today, and that number is not expected to decrease in the future. In fact, homegrowers’ spending on supplies is expected to increase by more than 37% between 2022 and 2030 (from $2.7 billion to $3.7 billion).
As more states legalize cannabis and homegrowing in the coming years, opportunities to provide supplies to homegrowers will continue to increase. This represents a market that ancillary businesses can start targeting today, so their brands are recognized and trusted when individuals are ready to start growing at home or to expand their current grow operations.
Who Should Ancillary Businesses Target to Sell Homegrowing Supplies?
Both medical and adult-use cannabis consumers are homegrowers, but their demographic profiles might surprise you. Unlike the stereotype of a homegrower as a young, single male, New Frontier Data found that more than half of homegrowers are married, and nearly two out of three have children.
Furthermore, they follow a similar age and income distribution to the general U.S. consumer population. However, it should be pointed out that 45% of homegrowers report incomes of less than $50,000 while 25% have incomes of more than $100,000.
And while you might think that homegrowers only use their own cannabis, that’s not the case. At least 40% of homegrowers do not grow all or most of the cannabis they consume, which means they also buy from dispensaries, retailers, and other sources.
Things get even more interesting when you dive deeper into the survey data. Here are some key points that ancillary businesses should consider when developing target audience buyer personas:
Homegrowers are more frequent cannabis users.
66% of homegrowers use cannabis for both recreational and medical reasons.
Homegrowers are more likely to use cannabis for wellness reasons. Non-growers are more likely to use it for relaxation.
The most common reasons homegrowers use cannabis is for pain management, anxiety/stress relief, and relaxation.
Homegrowers primarily consume flower.
Homegrowers are much more likely to be involved in gardening or other horticultural hobbies and activities outside of cannabis than non-growers.
The customer avatar of this audience has evolved, and ancillary businesses need to develop products and marketing strategies to address their current needs. As the legal marketplace grows, you can expect the homegrower profile to continue to evolve.
Understanding Homegrower Motivations to Inform Product Development and Marketing Strategies
Ancillary businesses will need to develop the right products and services to meet the needs of homegrowers, solve their problems, and make their lives easier. To do this effectively, businesses need to understand why people choose to grow their own cannabis.
While the first reason many people think of is cost, that’s not actually the reason why most homegrowers choose to grow their own cannabis. Based on the research data, 73% of people cultivate cannabis at home because they enjoy it as a hobby making this the top reason people choose to grow at home.
The second most popular reason is because it’s less expensive (53%) followed by it’s more convenient (48%). Other reasons cited by 25% or more respondents include less worry about contamination and pesticides, improved quality, and growing strains/varieties that are hard to find.
Which Products and Services Should Ancillary Businesses Promote to Homegrowers in the Future?
Based on the data from the report, homegrowers are looking for specific types of supplies. To start their grows, most use seeds rather than clones with 52% using seeds they got from flower they had purchased.
When it comes to buying supplies, more than half (53%) have gone to a local hardware or garden store while 35% have gone to a local cannabis cultivation/hydroponics store. About one in three homegrowers (32%) purchased supplies from a general retailer compared to 30% from an online cannabis cultivation/hydroponics store and 29% from an online hardware/garden store. Interestingly, most homegrowers use multiple suppliers to set up and run their operations.
Spending amounts vary by income. Overall, 50% of homegrowers report that they spent less than $500 on grow equipment compared to 27% who spent more than $1,000. However, 51% of growers earning more than $100,000 annually spent $1,000 or more compared to just 13% of growers who earn less than $50,000 annually.
Looking at individual harvests, 58% of homegrowers spend less than $200 per harvest while 5% spend $1,000 or more per harvest. Considering that most states limit home grows to three to 12 plants, it’s not surprising that these costs are low. However, as laws expand to allow more homegrowing, these investments will increase.
Today, 61% of homegrowers grow indoors compared to 22% in greenhouses and 45% outdoors. The most commonly used grow medium is soil (72%), and the most commonly used indoor lighting is LED (50%).
Clearly, there are many opportunities to get new products into homegrowers’ hands. Many are not using ideal supplies or equipment, and they’re facing a variety of challenges. The top five challenges cited by the survey respondents are pests, fungus or disease (37%), producing quality flower (29%), establishing a proper environment (26%), properly preparing plant post-harvest (25%), and properly maintaining plat pre-harvest (24%).
Ancillary businesses should analyze the products and services homegrowers are using today as well as the top problems they face, and develop offerings to solve those problems and improve grower operations. As the data shows, there are many opportunities available.
Key Takeaways about Cannabis Homegrow Market Opportunities to Ancillary Businesses
The homegrow market will continue to evolve and grow in the coming years, so now is the time for ancillary businesses to develop products and services to support this audience. A key part of the process will be educating consumers. The U.S. Homegrow Market report shows that 56% of homegrowers have less than three years of cannabis homegrowing experience.
Among non-growers, most don’t grow at home because they’re concerned about legality or aren’t sure where to start. Many people are also worried about growing low-quality cannabis, or they think it would be too expensive. Nearly one in five non-growers (18%) aren’t sure where to get growing and harvesting supplies. In addition, most non-growers think the time commitment for homegrowing is significantly more than what active homegrowers actually put into their operations.
Bottom-line, education will be a key part of expanding the homegrowing market, so ancillary businesses should start investing in content marketing, social media marketing, and email marketing as soon as possible to begin educating more people about the realities and benefits of homegrowing. By building a relationship with prospective homegrowers today, these businesses will sell far more picks and shovels in the future.
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