August 23, 2023

Navigating the Colorado Cannabis Market: Takeaways from our Denver Data Night

Colorado's cannabis market continues to confront pressure resulting from heightened competition, declining prices, and a slight decrease in consumer engagement. During our Data Night presentation we gave tips for operators to avoid a race to bottom.
Written by
Team Headset
Published on
August 23, 2023
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Colorado holds the distinction of being the first state to legalize adult-use cannabis, and it stands as one of the most mature cannabis markets in the country. However, this well-established market has not been without its challenges, including heavy competition and pricing pressures. Earlier this month we hosted a Data Night in Denver in collaboration with Laurie Parfitt, CASA, Springbig, and Range Marketing to give local cannabis operators tips on standing out within this competitive market. Here’s a recap of the market overview and the key themes that emerged from the presentation.

Sales Growth

In a previous report, our team analyzed how US cannabis sales leveled out after experiencing a pandemic-induced sales boom. From March 2020 to March 2021, the average monthly year-over-year sales in Colorado saw an impressive growth of 25.8%. However, following this surge, sales retracted by 11.4% from June 2021 to June 2022.

YoY Cannabis Sales Growth by Market through July 2023

Through July of 2023, the Colorado market has continued to recede when compared to the previous year. When compared to other US markets, Colorado has witnessed the largest decline in year-over-year sales. Notably, Washington state, which legalized adult-use sales shortly after Colorado, experienced only a 6.1% decline as of July 2023.

Pricing Trends

CO Avg Item Price | July 2021 - July 2023

Over the past two years, the average item price has dropped by 15.4%, declining from $21.47 to $18.16.

CO Flower EQ Price | July 2021 - July 2023

As the largest category in any state, Flower can be used as a leading indicator of the status of a market. Here we see the average price per gram decreased by 35.1%, falling from $5.04 per gram in July '21 to $3.27 per gram in July '23.

Discounting Trends

CO Average Discount | July 2021 - July 2023

Concurrently, the prevalence of discounting has steadily increased, with the average discount offered rising from 7.5% to 12.6%. Seasonality has an impact on the average discount applied as well, typically spiking around holidays.

Basket Analysis

In the face of these challenges, what strategies do retailers have at their disposal to weather the storm? Broadly speaking, revenue can be deconstructed into two components: 1) Total Number of Baskets and 2) Average Basket Size.

CO Average Transaction Size | January 2023 - July 2023

For 2023, Colorado's average basket transaction stands at $47.11. This average basket size can be further broken down into an average item price of $18.11 and an average of 2.6 items per basket. Focusing on these basket metrics can provide tangible Key Performance Indicators (KPIs) to guide campaigns.

Key Takeaways

Colorado's cannabis market continues to confront pressure resulting from heightened competition, declining prices, and a slight decrease in consumer engagement. Amid these challenging conditions, it becomes increasingly crucial for market operators to fine-tune their operational strategies and adhere to best practices. Enhancing customer experiences can be a differentiator in Colorado's competitive market. Here are some key takeaways from the Data Night presentation:

  • Prioritize assortment: Ensure you carry the right brands and products.
  • Intentional discounting: Be deliberate with your promotions with clear KPIs to avoid a race to the bottom.
  • Increase basket size: Explore differentiated discounting, pricing tiers, add-ons, and bundling.


The current state of the industry sees many US cannabis markets contracting in size with Colorado being the hardest hit of all Headset tracked markets. Some new markets like Michigan, Massachusetts, and Illinois manage to grow to meet burgeoning demand. However, legacy markets such as Colorado face more challenging market conditions and struggle to grow. Industry-wide hurdles such as pricing compression and rampant discounting continue to erode margins for retailers. The focus for companies in Colorado should be on building a strong business by prioritizing assortment, discounting strategically, upselling relevant products to increase basket size, and understanding your customer base.

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