Interest in medical cannabis is rapidly growing. As more states move to legalize cannabis for both medical and recreational purposes, more patients are seeking out information on services that enable them to get their medical cannabis card online. Does that search traffic correlate to actual increases in patient registrations? Search traffic can indicate growth and slowdowns in a market in a way that annual registration reports lack the ability to.
NuggMD has served over 1.5 million medical cannabis patients across 23 states, and having done so, we wanted to uncover how search behavior in a state with a medical cannabis program translated to new patient registrations, spending, and tax revenue generated.
More accurate forecasts can allow states to better serve their patients, giving them time to put enough physicians and dispensaries in place to satisfy demand. At the same time, more accurate data will enable states to better budget around revenue generated by their medical cannabis programs.
Acknowledgments
| Nick Congleton | Tyler Elson | Deb Tharp |
| Report Author | Report Analyst & Editor | Report Analyst & Fact Checker |
| Managing Editor at NuggMD | Content Marketing Manager at NuggMD | Lead Legal Researcher at NuggMD |
Methodology
In order to get a clear picture of current search trends in the State of Ohio, we employed a combination of tools to analyze search data from leading sources. Among the tools used to generate the data in the report were: Google Search Console, Google Analytics, Backlinko conversion data, ahrefs, and Ohio’s first-hand program data found at medicalmarijuana.ohio.gov.
In order to see if any trends emerged, we considered the search volume for the top 25 medical cannabis-related terms in the state over the course of 12 months. We specifically identified search terms with commercial intent, to target searches that may correspond to interest in purchasing medical cannabis.
As a medical cannabis telemedicine service, we were able to analyze impressions, clicks, and conversions to our own service, while also looking at the available data from competing services to put together a picture of how online traffic translates into the registration of new medical cannabis patients.
Since not all medical cannabis patients receive their evaluation through an online service, we also factored direct referrals into the forecast.
In order to get an understanding of patient purchasing habits, we looked at the average cart size of e-commerce checkouts and the average monthly spending habits of patients in the state. This data was obtained via Ohio’s medical cannabis program records and corroborated via third-party data from SpringBig.
In order to validate our approach we applied the same methodology to the actual 2022 data available from the State of Ohio. By following the same process, we were able to accurately predict new patient registrations with 7.6% of their actual reported value from the state and new patient spending with 3.4% of the historical figures.
After verifying the approach, we took the data available for the first three months of 2023 to forecast the program’s growth for the rest of the year. In doing so, we generated projections for new patient registrations, sales, and tax revenue.
There are hundreds of factors that can potentially impact the growth of a medical cannabis program, with economic uncertainty and continually rising inflation taking center stage. Our hypothesis is, however, that these factors will be reflected in online search behavior. Forecasts, using this methodology, can provide valuable insight for cannabis businesses, consumers, and state governments to prepare for each upcoming year.
Tools constantly change, and customer purchasing habits are notoriously difficult to predict. There’s no way to be absolutely certain what the future holds, and customer purchasing habits can fluctuate in one direction or another in response to any number of factors. One such factor is the discussion over the legalization of recreational adult-use cannabis currently taking place in Ohio. There is a very real and present chance that legalization could find its way onto the November ballot, and if it does, that will likely influence customer purchasing habits and rates of medical cannabis registrations.
While we’re certainly excited by our findings and as confident as we reasonably can be in their accuracy, this data is meant to serve as a snapshot of how online search behavior translates to action within a state’s medical cannabis program. These findings should be combined with other analyses that include other factors that we did not. Our projections are not intended as financial advice.
How Has Ohio’s Medical Cannabis Program Grown Since It Started in 2019?
Medical cannabis wasn’t legalized in Ohio until 2016, and it took until 2019 for the doors to officially open on the state’s program. However, since medical cannabis sales began in 2019, Ohio’s program has taken off with surprising speed and become one of the strongest in the nation. The state also keeps exemplary records of their medical cannabis program–better than most other states–making it the ideal state to study for the purposes of forecasting program growth.
Even in 2019, Ohio’s medical cannabis program got off to a strong start, with $56 million in total sales, an average of $1.07 million each week. That also works out to an average of 8,346 separate transactions per week with an average sale of $129.90. There was a clear trend of program growth in 2019, with sales increasing over the course of the year and reaching their highest near year’s end, as was expected with the new program becoming operational.
In 2020, the program saw explosive growth, with sales totaling $221.2 million, up a staggering 295% from 2019. In fact, by all metrics, the program exploded in 2020, with higher average purchases–now up to $133.70 per visit–and more frequent purchases–an average of 30,942 each week, an increase of 271% from 2019. 2020’s average weekly sales hit $4.25 million, up 297% over 2019’s numbers. Sales at the end of 2020 were nearly double those at the beginning of the year, continuing the trend from 2019.
The growth continued in 2021. Both the average weekly purchases and total sales went up by 70% over 2020, landing at $7.32 million and $380.8 million respectively. Average weekly sales climbed 77% to 54,846; however, the average spend remained flat at $133.90 per receipt. Sales at the end of 2021 were 1.33x higher than the start of the year, continuing the pattern but demonstrating a significant slowdown in expansion from previous years.
The program’s growth continued to slow in 2022, with an increase in overall sales of 25.7% to a total of $478.8 million in sales. Weekly sales increased at roughly the same rate to $9.21 million each week. Interestingly, the average number of weekly sales jumped to 73,592–an increase of 34.2%–while the average purchase fell to $125.30, down 6.4%. It would appear that lower prices driven by market maturity drove an increase in purchase frequency. While growth did continue over the course of 2022, it was significantly slower than previous years, with sales by year’s end coming in at just 1.25x the start of the year.
2023 began with a 9% increase in the number of sales over the weekly average of late 2022, with an 80,321 average. Weekly purchases only increased marginally, to $9.28 million. Average purchase continued to drop off, falling to $115.50. It appears that the pattern from 2022 is continuing, with falling prices but increased purchase frequency.
These figures are also likely not based on the entire population of medical cannabis cardholders in Ohio. The state reports that only 47.5% of individuals with a medical cannabis card have an active registration and physician’s recommendation, which allow them to purchase cannabis legally. So, it would stand to reason that this purchase data reflects just under 50% of the actual cardholders in Ohio, a factor we took into account when making our forecast.
What Will Ohio’s Medical Cannabis Program Look Like at the End of 2023?
While growth in Ohio’s medical cannabis market has slowed as its matured, there’s evidence to suggest that in 2023, it will once again begin to pick up steam, showing a noticeable increase in the growth rate by the end of the year.
At the time of this report, year-over-year sales are up by 7.5%. At that rate, Ohio stands to reach $515 million in total sales by the end of the year. According to our projections, though, Ohio is actually on pace to top out closer to $556 million in yearly sales by the end of 2023. That’s actually an increase of 16.2% year-over-year. The increase is thanks to a projected 97,000 new patients, generating an estimated $77.6 million in new sales. That translates to $5.6 million in new tax revenue for the state.
At first glance, these projections might seem inflated or unjustified. However, there are a number of factors to consider which suggest that the program is likely to see greater growth than what it’s currently on pace for.
Ohio’s medical cannabis program has seen 25% growth from the beginning of the year to year’s end each year since sales opened to patients. It stands to reason that 2023 will continue to follow the same pattern, resulting in a 9.4% increase year-over-year. That increase alone would bring the total yearly sales for 2023 to $523.8 million.
New patients don’t all register for the program at once. As of this report, only about one-third of the year’s patients have registered, and more will continue to register each month over the course of the year, making them eligible to legally purchase cannabis and contribute to overall spending. This, of course, also contributes to the consistent growth from the start of each year to the end. According to our projections, by December 2023, new patient spending will be 15x greater than new patient spending in January 2023.
These projections are based on the hypothesis that search volume and search behaviors are accurate predictors of patient registration and participation in a state’s medical cannabis program. The hypothesis also extends to the notion that the political and economic climate will be reflected in search behavior, so there’s no need to account for those factors independently.
Why Forecast Program Growth When Ohio Already Has Great Firsthand Data?
This forecast isn’t intended to replace existing forecasts. Many of the current forecasting methods take into account factors that we simply are not able to. Instead, this forecast is meant to provide additional insights.
Marketers have been using online search data to predict sales and market growth. Search data is nimble; it adapts quickly to trends, and with the legal cannabis market evolving as rapidly as it does–complete with regulatory changes and fluctuations in consumer behavior–having a forecast model capable of adapting as quickly will provide both states and cannabis businesses an option to provide insights on-the-fly.
If this current model proves accurate for 2023, we intend to roll it out to additional states with medical cannabis markets. Our goal is to provide state legislators, cannabis businesses, consumers, and medical cannabis doctors with live forecasts. These forecasts would be flexible enough to be adjusted each day with trends in current and prospective patient search behavior.
It’s also our hope that by extending our analysis to other states, we’ll be able to gain insights into how search behavior and its effect on sales trends changes over the course of a market’s lifespan. By studying data from different stages of a market’s development–from the vote to legalize to the earliest days of a market to well-established markets–we hope to gain insight into how medical cannabis patient behavior adapts to the various stages of a market’s growth.
For instance, are patients in more mature markets more or less likely to seek out brands like NuggMD, known to be established and experienced in the field? Are patients in new markets more likely to start off by searching for base-level information about medical cannabis first, before contacting either a local physician or a telehealth service for a recommendation? This data does exist, and by compiling it, we feel we can provide valuable insights.
It’s also possible that search behavior changes between states and regions of the country. Having this information can be invaluable to governments and businesses within the industry. Lowering communication barriers would increase the accuracy of information provided to patients and reduce overall patient confusion. With clear and accurate information in hand, patients could see more positive outcomes overall.
The information in this article and any included images or charts are for educational purposes only. This information is neither a substitute for, nor does it replace, professional legal advice or medical advice, diagnosis, or treatment. If you have any concerns or questions about laws, regulations, or your health, you should always consult with an attorney, physician or other licensed professional.
