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Converting frequent gray-market consumers <br />Retail pricing must be competitive with <br />the gray market. <br />This is the most important factor in combatting <br />the gray market in adult-use states. Frequent <br />consumers who rely on dealers to source <br />cannabis in adult-use markets have significantly <br />lower incomes on average than consumers who <br />source from friends/family, and both groups <br />have lover household income on average than <br />cannabis retail shoppers. Retailers should aim <br />to have products at a variety of price points <br />and offer promotions or loyalty discounts <br />where possible. Regulatory and taxation <br />structure set a floor for pricing, so achieving <br />competitive prices in some states with <br />exceptionally high taxes on legal cannabis may <br />require regulatory revision. <br />Retailers must offer a variety of product <br />forms, and options within each product <br />category. <br />Fewer than half of all consumers report having <br />access to any forms of cannabis other than <br />flower, prerolls, and edibles, even in adult use <br />states. Between one fifth and one quarter of <br />frequent consumers in adult use markets who <br />source primarily from friends/family or dealers <br />do shop at regulated dispensaries occasionally; <br />these visits are most likely to acquire <br />manufactured (non-flower) products, which <br />the majority use in addition to flower. Retailers <br />should take advantage of these visits to <br />promote affordable flower products, for <br />example bundled with manufactured products <br />those consumers visit retail to purchase. <br />Product quality must be superior to— <br />or at least competitive with—the gray <br />market. <br />Much of the gray-market flower that is <br />available around the country is grown in <br />California and is of high quality. In addition <br />to competing on price, retail cannabis flower <br />quality must be comparable to that on the <br />gray market. This is particularly true for <br />frequent consumers who source from <br />dealers, as they consume more purposefully <br />and frequently than those who source from <br />friends/family. <br />Retail channels must be in accessible <br />locations/cover underserved areas. <br />Frequent consumers who primarily source <br />from dealers live disproportionately in urban <br />areas, where they may or may not have <br />convenient transportation to dispensaries. <br />They tend to have lower incomes and <br />purchase cannabis in smaller dollar amounts <br />than retail shoppers but consume very often <br />and so would need to be able to make <br />frequent trips to a dispensary. This all means <br />that unless the dispensary is in a very <br />convenient location, achieving loyalty from <br />such a customer would be difficult. Similarly, <br />frequent consumers who source primarily <br />from friends/family live in disproportionately <br />rural areas, where there may be no nearby <br />dispensaries, and where there may be no <br />delivery coverage. Both regulators and <br />businesses should take these factors into <br />account when determining zoning guidelines <br />or potential dispensary locations or delivery <br />coverage areas. <br />COMPARING ARCHETYPES 21© New Frontier Data, All Rights Reserved. <br />Page 272 of 322