In the bad old days before legalization, cannabis consumers would buy from dealers and there was no price bargaining. The dealer gave you the price and the amount and you took it, no questions asked. At the beginning of legalization, consumers were just so jazzed to be able to buy weed in a store that they didn’t care how much they paid for it. Fast forward to a maturing retail sector and discounts are the name of the game.
Bargains Are Rising
A new report from the cannabis analytics firm Headset found that stiff competition for purchases in dispensaries has led to lower prices. “The raw dollar amount of discounts has climbed very steadily since the legalization wave began, indicating that they’re an integral part of the industry,” read the report. The study found that each year, purchase discounts are growing.
In 2014, the data showed that the average discount at a dispensary was 4.6%. In 2019, that doubled to 9.3% and in 2020 it is at 9.7% and on track to reach 10% by year’s end. Headset believes that at some point a ceiling will be reached, but as more states legalize cannabis, more discounts are sure to follow driving down prices and driving up discounts.
The holidays are the biggest times for discounts. April 20 had the largest jump in discounts at approximately 30% and sales jumped 24%. This was the biggest response to holiday promotions. Green Wednesday, Thanksgiving and Black Friday all experienced big promotions which averaged around 28%, but the sales only rose 1.9%. Thanksgiving week shoppers mostly got a 20% discount. Liz Connors, Director of Analytics from Headset said that sales volumes didn’t increase during the Thanksgiving holiday as a result of the higher discounts. She did note that dispensaries offered much higher discounts this year for Black Friday sales than they did last year.
Hey Big Spender
Bigger spenders get bigger breaks. The review of data showed that people who spent more tended to buy more discounted products. Shoppers spending $20 or less, tended to buy items that had less of a discount. On average these small spenders paid full price for almost 70% of their purchases. The big spenders coughing up over $120 on their shopping trip only paid full price for about 17-27% of their items.
Products with a higher average price tended to have smaller discounts. Edibles tend to have an average price of $16.56 and the lowest discount at 7.9%. “Edible consumers don’t seem motivated by discounts,” suggested Connors. “Otherwise the dispensaries would offer more discounts.” Similarly, concentrates, which have an average price of near $19 had the highest discount at 12.8%. Connors thinks that these shoppers tend to consume more cannabis than others and so promotions appeal to this value shopper.
Overall, average item prices for cannabis have stayed fairly level. Connors pointed out that price patterns have emerged. “New states start high and then drop as the state matures,” she said. “We’re seeing it happen faster and faster as new markets open.” She also said that more value brands popping up in dispensaries. On the other hand, more premium brands coming to the market as well. So the overall effect has been that prices on average have stayed fairly even.
Written by Debra Borchardt