I was born and raised in Massachusetts, which enacted a law in 1973 that lowered the drinking age to 18. In the early 1970s, 29 other states did the same. The rationale was that if you’re old enough to fight and die in Vietnam, you’re old enough to drink alcohol.

When I turned 18 and became of drinking age during that era, I entered a new and exciting world of alcohol socialization (to the consternation of my parents and the local police). But here’s the upshot, for the purposes of today’s topic: I suddenly had the ability to freely choose various types of alcoholic beverages, as well as the environment in which I enjoyed them.

The first few years of my freedom to drink brought experimentation and trial and error, encompassing beer, wine, and “hard stuff.” (On a retail basis in Massachusetts, we purchased our alcohol at state-regulated packaged liquor stores that we still call “packies”.) After a while, I adopted a pattern of drinking that would solidify for many years.

According to a Consumer Report released last month by New Frontier Data, U.S. consumers are following a similar trajectory with cannabis (see the following chart).

Those who didn’t consume marijuana in their state when it was illegal are becoming pot users as the laws in their jurisdictions change.

As they leave the black market and become legal marijuana imbibers, consumers who were eclectic in their experimentation due to the newness of pot legalization are transitioning into stable, routine patterns of product consumption.

Newbies enter the market…

Many people who currently consume marijuana in legal, regulated markets were obtaining their pot on the black market. But there’s a group of consumers with low to moderate consumption levels who chose not to participate in the illicit market but are open to legal access.

New Frontier Data puts these consumers in the archetypal categories of Modern Medicinals, Engaged Explorers, and Social Nibblers. They are entering the legal market to address a medical issue (Modern Medicinals), and to try various products as an infrequent consumer (Engaged Explorers and Social Nibblers).

In 2022, Modern Medicinals made up 9% of consumers. This rose to 12% in 2023. Engaged Explorers and Social Nibblers made up 7% of consumers in 2022 and saw a slight increase in 2023 to 9% and 8% respectively.

There’s an archetype of user who only had access to illegal markets but have transitioned into legal access. These Legacy Lifestylers live in illicit markets and they’re becoming a smaller group as legal access proliferates.

Newer state-legal markets such as Maryland, Minnesota, New Jersey, and New York are giving legal access to those who could previously only get marijuana from the illicit underground.

In 2022, Legacy Lifestylers made up 16% of consumers. That number declined to 13% in 2023 and it’s continuing to fall as more states legalize cannabis.

That said, many consumers continue to obtain pot from unregulated sources, because it’s untaxed and hence cheaper. California, for example, is the world’s largest marijuana market and a huge number of consumers obtain pot outside of legal strictures because it’s easier and cheaper to do so.

Savvy Connoisseurs, the archetype that spends the most money on cannabis, are the most frequent purchasers and they’re the most open to continued experimentation. They are eclectic in their tastes and move from classic “flower” products to, say, edibles and back again.

But even Savvy Connoisseurs are starting to settle into regular, more predictable use patterns. Importantly for marijuana investors, they’re developing brand loyalty.

Contemporary Lifestylers, also frequent consumers, increased from 14% of the consumer base in 2022 to 16% in 2023. Contemporary Lifestylers are like Savvy Connoisseurs but have more defined patterns of use and product preferences.

If a Savvy Connoisseur is an 18-year-old just obtaining legal access to alcohol who’s trying a range of spirits, a Contemporary Lifestyler is a 30-year-old who has become a confirmed drinker of, say, bourbon.

WATCH THIS VIDEO: What 1920s Prohibition Can Teach Today’s Pot Investors

What does all this mean for marijuana entrepreneurs and investors?

As of this writing, 38 states and the District of Columbia allow the medical use of cannabis products. Adult (i.e., recreational) use is allowed in 23 states and DC. That means 48% of the total U.S. population lives in a state where recreational marijuana is legal, and 26% in states where only medical marijuana is legal. If you combine the two categories, it translates into 74% of the population living in a state that has some sort of framework for legal pot.

That’s a huge consumer base. According to a separate report by New Frontier Data, an estimated 54 million U.S. adults will consume cannabis in some form at least once in 2023 throughout both legal and unregulated markets. That level of consumer activity is expected to grow by about 4% annually over the next eight years, reaching an estimated 69 million U.S. consumers by 2030.

The companies that survive the marijuana industry’s fierce competition will understand the nuances of cannabis consumption and developed “nichified” value-added products that foster brand loyalty.

The marijuana market isn’t a monolith. As the substance enters the mainstream, ganja-preneurs will need to be sophisticated marketers. Those that don’t will fall by the wayside. As a marijuana investor, you must be selective.

That’s why I’ve launched an investment service called Marijuana Profit Alert.

My publication provides specific, actionable advice on the best investments in the psychotropic revolution. In my portfolio of holdings, I strive to strike the right balance between risk and reward. Click here to learn more.

John Persinos is the editorial director of Investing Daily.

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