States’ legalization of recreational marijuana — and increased use of CBD — can boost business for accessory products like lighters, pipes and rolling papers.
An increasing number of states have voted to legalize the recreational use of marijuana. In November 2018, Michigan joined the ranks, and as of January 2019, Vermont residents can legally use the substance, but it cannot be sold on the retail level.
That brings the total number of states to have fully legalized cannabis to 10 plus the District of Columbia, with four more evaluating the possibility. That all means a growing population of customers, in addition to consumers of cigarettes, cigars, roll-your-own tobacco and other combustible products.
When a high-end department store starts selling cannabis accessories at price tags that rival those of Louis Vuitton merchandise, you know there’s a serious trend underway.
Barneys New York Inc. announced in February it was opening a “luxury cannabis and wellness concept shop” in its Beverly Hills, Calif. store. In addition to showcasing various pipes, it will stock traditional tobacco accessories, including ashtrays and rolling papers.
“As CBD/hemp products are being introduced to the industry, it reminds me greatly of the past when ‘everyone was bringing an electronic cigarette to market.’ This will be interesting to watch as it unfolds,” said Lou Maiellano, president of TAZ Marketing & Consulting Group, which specializes in the tobacco industry. “I see an increase in the market of accessories, particularly in the independent retailer space.”
MARKET POTENTIAL
A recent Marist College-generated study estimated 55 million adults regularly use marijuana, not including the emerging field of cannabidiol, or CBD. Bloomberg predicts cannabis sales could reach $50 billion by 2026, and Forbes reported that 2018 spending on cannabis concentrates, which can be used in vaping devices, reached approximately $3 billion.
That demand can boost business for associated paraphernalia, such as lighters, pipes, rolling papers and other products.
While c-stores have yet to become cannabis outlets to any degree, they can cater to this customer base, which could help revitalize the tobacco accessories segment. For years, disposable lighters have carried the category, but as the number of smokers continues to decline, sales have softened. According to IRI, a Chicago-based research firm, total unit sales of lighters in U.S. convenience stores for the 52 weeks ending Dec. 30, 2018, fell by 2.2%; dollar sales dropped by 0.4%.
Lighters have added fuel to the bottom line for the Cigarette Store Corp. Tim Greene, category director of general merchandise and tobacco, attributes the increased income to expanding inventory. The Boulder, Colo.-based company operates more than 100 Smoker Friendly, Tobacco Depot locations and Gasamat c-stores in five states.
“Sold units actually have declined year after year from 2016 through 2018, approximately 3%, Green said. “However, we are selling a wider variety of lighter styles, which has led to a more profitable category even though unit sales are down.”
On the other hand, he’s cultivated a greater cannabis accessories profile.
“We have dedicated more space to the accessory category to accommodate the new offerings and a wider variety of offerings,” said Greene.
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