Head Shops Are Unlikely to Disappear as Demand for Cannabis Grows
In any American town, you could come across a barely marked, cramped, side-street store filled with “water-pipes” that are “for tobacco use only”, tie-dye wall hangings, and rolling papers. Head shops have been a hallmark of cannabis culture since their beginnings in the hippie culture of the 1960s.
Head shops still serve a vital function for cannabis users and patients. Some supporters believe that with the rise of legal cannabis industries around the world, head shops may become obsolete or start going out of business due to increased competition from small retailers and dispensaries selling bongs.
Fortunately, as the legal cannabis industry takes off in the US and elsewhere, it looks like this isn't going to be the case. As cannabis is legalized in more jurisdictions, overall demand for cannabis is growing, and therefore demand for related products will likely grow too.
One thing that is likely, however, is that head shops will have to change and adapt to an unfamiliar and rapidly growing new market. For businesses up to the challenge, it’s an opportunity to thrive in a multi-billion dollar industry. However, some long-established businesses are already struggling to stay competitive as the cannabis market changes.
The Growing Cannabis Paraphernalia Industry
A 2003 DEA operation known as Operation Pipe Dream was conducted to shut down all of the major online head shops in the US. Looking at the industry just a decade later reveals it did little in the long term. A report from 2013 estimated that the head shop industry in the US was already worth over $10 billion at the time. Forbes estimated in 2016 that the cannabis paraphernalia industry would be worth over $40 billion by 2020. Good luck finding another niche that will quadruple its worth in just seven years.
Brick-and-mortar head shops, especially those in the US, have seen effects of cannabis users transitioning to purchasing their accessories mostly online. Once people realized they could buy glass online, they did.
This drove swathes of business to international head shops such as Grasscity, based in Amsterdam and EveryoneDoesIt, originally based in the UK. Today American head shops host websites freely, and most are happy to ship between states, but this wasn’t always the case under previous government administrations.
Some online head shops have been able to take advantage of one perk of a legal market: publicly trading their business. Online shops DankStop and Smoke Cartel already trade their stock on the open market.
However, one thing head shops need to keep an eye on is their own success.
Cannabis growth companies have already bought out some of the biggest online headshops. Previously mentioned online retailers Grasscity and EveryoneDoesIt were bought out by High Tide Inc. and Namaste Technologies, respectively.
Head Shops are Likely to Change as Legalization Spreads
Anecdotal evidence has come out of Canada about the decline of interest in head shops since Canada legalized recreational cannabis in 2018. A franchiser of head shops in Canada noted a decline in interest surrounding the opening of head shops since the change. Post-legalization, business owners are thinking more about the potential of breaking into the dispensary market, while entrepreneurs may overlook head shops as a profitable option.
His story is supported by a 2018 article in the Calgary Herald. In the story, two head shop owners talked about customer pressure to start selling cannabis directly and the impact of online retailers. However, the article also noted that, despite their complaints about the pressures of the new industry, business for both shops has actually increased since legalization.
Despite business owners’ worries, stories like this only point to the changing face of an industry, not of an industry in decline. This does mean, however, that many old school head shops won’t be able to compete with the same business model they’ve always relied on. Cannabis users are changing and so are their buying habits.
Vaping, dabbing, and edibles are growing in popularity, while smoking is falling at an overall percentage of the market. In order to stay competitive, head shops will need to adjust to focus the majority of their sales online and ensure that their product stock reflects the demands of new market trends.
Head shop owners, especially retailers based in the US, may be wary of expanding their online presence. With each government comes a new stance on cannabis, and many fear that an initiative like Operation Pipe Dream may happen again. While understandable, these fears are not likely to materialize as legalization spreads and public opinion on cannabis continues to become more positive.
Large percentages of head shop customers, especially younger customers, spend their time on multimedia platforms like Instagram, Youtube, and Reddit. Cannabis businesses have many hurdles to jump to find a way to advertise on these platforms.
However, many have grown their potential customers by networking organically through the cannabis communities that exist online. Such networking is today’s equivalent of the word-of-mouth marketing head shops relied on in the past.
Are Brick-and-Mortar Head Shops Dying?
Your opinion on whether head shops are in decline depends on how strict your definition of a head shop is. Demand for cannabis paraphernalia is growing and is only likely to continue.
However, old-school stores that focus on smoking accessories over new tech, don’t have a strong online presence, and rely on outdated business models are suffering. These shops will struggle to compete in the new world of the cannabis industry.
Meanwhile, head shops that focus on online sales and stay on top of market trends can be very profitable if they attack the market appropriately and with precision.
Head shops (or what may come to be more commonly known as the ‘cannabis paraphernalia industry’) have a somewhat uncertain future. It is a creative challenge and huge opportunity for businesses ready to ride the waves of a changing industry.
However, this means navigating legal changes, adapting to new buying habits, and marketing organically online are just a few ways to stay ahead of the game. The sacrifice we may have to make, unfortunately, is the old and beloved businesses that aren’t ready for the change.