How do the holidays affect cannabis sales? A look at the data

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March 31, 2020
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Executive summary

This report looks at how holidays, both traditional and those specific to the cannabis industry, affect retail sales in the industry. Headset’s data has shown regular sales spikes during certain holidays, and this report focuses on ones with the most interesting alterations: 4/20 and the Christmas and holiday season. It looks not only at how much these holidays increase sales, but also which categories are most affected. It also dives deep into what discounts are offered around the holidays, and how those may tie into the sales bonanza effect. This information should be especially useful for retailers and product manufacturers, but will be interesting to anyone who is curious about what the actual effects of holidays like 4/20 and Christmas are.

Introduction

In our last report, we covered broader seasonal trends in the cannabis industry. This report uses our historical data to drill down into the biggest holiday in cannabis, 4/20, as well as the pre-Christmas holiday shopping season which is a critical time for most retail sectors.

Looking at the cannabis-specific holidays, we see category trends that are tied into the day’s cultural significance. For example, because 7/10 is a day created to celebrate Concentrates — 710 spells “OIL” upside down — so people gravitate towards those products specifically. Flower rules the day on 4/20, as befits tradition, but we see benefits across the board. This makes sense, as its popularity as a day to get high, however one does it, is decades old by now. Christmas and the winter holidays behave differently still, with a major boost for Edibles and relatively modest ones otherwise. Sales go up a bit, while price stays relatively stable. On 4/20, however, prices plunge and sales shoot up.

Indeed, pricing data is especially interesting around the holidays because it demonstrates how discounts do and don’t work when it comes to cannabis. For example, discounts in the week before 4/20 correspond with greatly increased sales. Around Christmas, it seems that shoppers are more interested in finding the perfect gift than the right deal, as relatively small discounts don’t seem to dampen the big seasonal sales boost.

Overall, this report has a lot to tell us about how consumers approach cannabis’ special occasions, and how cannabis is being incorporated into already existing ones. In the states where we track data, cannabis is becoming more and more mainstream, meaning traditional holidays like Christmas have a real impact on the sector. And similarly, holidays that were once countercultural, like 4/20, are becoming a relatively commonplace part of the cannabis retail experience.

Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. The data included is from the winter holiday season in 2018, as well as the 4/20 and 7/10 holidays in 2019, except where otherwise noted. For some analyses, the holiday is compared to the average of the previous four same day(s) of the week. Sales data is cross-referenced with our catalog of over 400,000  products to provide detailed information on market trends.

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

Do the holidays really help?

Yes, with some caveats. While 7/10 doesn’t make a noticeable impact on sales or growth, both the winter holiday season and the week around 4/20 see significant gains in both, which is good news for retailers. Christmastime saw a week-over-week growth boost of around 15%, while 4/20’s was close to 25%. Total sales for 4/20 were well over $100 million across Colorado, Washington, Nevada, and California. However, all that spending comes with a bit of a holiday hangover. While sales stayed relatively steady in the weeks following those two major holidays, growth tumbled. Sales shrunk by about 10% following the winter holidays, while the week after 4/20 saw an equal and opposite reaction to the day itself, with about 25% lower growth. While this doesn’t mean that luring in holiday shoppers and doing big 4/20 discounts is pointless — more cannabis was sold because of holidays overall, and they’re great opportunities to bring in first-time customers — it does suggest that the holidays aren’t always the mint some make them out to be.

TOTAL SALES AND WEEK OVER WEEK GROWTH (CA, CO, NV, WA)

Discounts do affect sales

Taking the same total sales data and cross-referencing them with average discounts gives us a pretty clear picture of when the deepest discounts come and how well they work. Unsurprisingly, retailers knock off the most on 4/20, cementing its status as the cannabis industry’s Black Friday. Products were an average of about 14% cheaper on 4/20 this year, and retailers were rewarded for their generosity with a little over $20 million more in sales than a typical day in the same season. Somewhat ironically, the real Black Friday sees even deeper discounts than 4/20, but this results in almost no significant sales bump. Sales that week were barely higher than the week before. In regards to Christmas and the winter holidays, discounts are higher than average, but not by much. However, the industry still enjoys a noticeable increase in total sales for the week just before Christmas. Cannabis consumers, perhaps living up to their stereotypes, appear to be last minute shoppers.

TOTAL SALES AND AVERAGE DISCOUNT BY WEEK (CA, CO, NV, WA)


For 4/20, more purchases, lower prices

To further illustrate how discounts work on different holidays, we’ve combined Average Item Price (AIP), basket total averages, and the average number of items per basket into one chart. At a glance, we can see that 4/20 has lower prices, higher totals, and more items per basket. The name of the game is volume. Retailers are likely depending on loss leaders and bulk discounts to drive sales, and maybe also hoping to entice customers into trying some new things. Christmas, conversely, is much closer to the year-to-date average, with only about $1 increase in basket totals and a little less than a dollar drop in AIP. Besides the aforementioned sales bump, Christmas week is like any other week, really. It may be that retailers don’t have to do much to get customers in the door, because last minute gift shopping does it for them.

HOLIDAY BASKET ANALYSIS (CA, CO, NV, WA)

Discounts by day

Examining discounts by day of the week, we see that retailers knock the most off on the actual day of 4/20. Cannabis was 17.3% cheaper on average on the Saturday that 4/20 fell on this year, with no real variation in discounts in the days prior. There were slightly fewer discounts the day after — perhaps the retailers get a holiday hangover too — but most of the discounting and most of the sales fell on 4/20. The fact that it was a Saturday, which is an already great day of the week for cannabis sales, probably helped too. And it’s worth noting that the Friday before 4/20 enjoyed solid sales as well. Indeed, if we look at Christmas, almost all of the extra sales can be attributed to the normal weekend rush, rather than any special discounts. While discounts were up to 14.2% on Christmas Eve (truly last minute shopping!), it didn’t result in higher sales. The Friday and Saturday of that week, however, did see higher sales than other weekdays, as per usual. There is a possibility that, rather than gift giving being responsible for high winter holiday sales, people could be simply consuming more because they aren’t at work.

HOLIDAY WEEKS - SALES AND AVERAGE DISCOUNT BY DAY (CA, CO, NV, WA)

4/20’s bestsellers

We all know that people are buying more pot on the big day, but what’s really interesting is what they’re buying. Judging from the data, it’s exactly what you’d expect for a holiday so rooted in stoner tradition. Which is to say, things that were part of cannabis culture before legalization, like Edibles. Flower obviously enjoys a huge boost, more than doubling its sales. The fact that Vapor Pens and Concentrates also see doubled or nearly doubled sales doesn’t necessarily negate the “traditional methods” hypothesis here, as 4/20 is a holiday rooted in smoking with your friends. For many people, especially younger people, passing a vape is the same as passing a joint. Speaking of joints, Pre-Rolls are also part of the 4/20 phenomenon, enjoying an over 90% increase in sales. What’s somewhat surprising is that Beverages are apparently part of the festivities now. While the category is still very, very small overall, it actually enjoyed the largest increase in sales on 4/20.

4/20 CATEGORY SALES GROWTH (CA, CO, NV, WA)

Christmas categories

While the daily sales and discount numbers suggest that people are buying according to their normal patterns around Christmas, the Category data show some interesting aberrations. Mostly that, while Flower enjoys a slight increase in sales, it’s very, very slight. Typically, if people were partying more while they were off work, they’d gravitate towards Flower and other inhalable products. Instead, we see large sales bumps for Edibles and Topicals, suggesting that some people are having infused versions of their typical holiday sweets. And what’s a better stocking stuffer than some 1:1 CBD:THC lip balm, right? Interestingly enough, Beverages enjoy a sales boost of similar proportion to Edibles. This could be because people are also replacing their nog with 5mg sodas, or it could be evidence that, as many big brands are hoping, non-drinking cannabis consumers are gravitating towards Beverages in situations that involve a lot of social pressure to drink alcohol.

PRE-CHRISTMAS WEEK CATEGORY SALES GROWTH (CA, CO, NV, WA)

Tis the season…for Edibles

So, among all those Edibles, what are people buying? If we look at the category’s segments, we see a lot of the same sweet treats we’re used to during the holidays. Candy, Lozenge, & Gum; Chocolate; and Caramels, Chews, & Taffy all enjoy high sales, and definitely see an increase for the winter holidays, but it’s Mints, Cookies, and Brownie, Blondie & Cereal Bars that see the biggest increase in sales. Forgive the obvious joke, but Santa has probably gotten some very special cookies for his troubles these past few years. While some Categories are clearly more seasonally appropriate than others, it should be noted that every segment enjoys an over 30% increase in sales.

PRE-CHRISTMAS WEEK EDIBLE SEGMENT SALES GROWTH (WA)

Holiday shopping hours

Data on which hours enjoy the most sales tell a somewhat counterintuitive tale, which is that customers come in earlier on 4/20 than they do during the winter holiday season. Sales peak for 4/20 from 10am-1pm, while the busiest hours during the week before Christmas are 1-4pm. For both holidays, however, sales are generally higher earlier. By 5pm, average sales for 2019 YTD have overtaken sales on both 4/20 and during Christmas week. This would fit with a couple narratives. One being that people are coming in early on the day of 4/20, intending to consume their deeply discounted goods that same day. That makes lots of sense, given that most discounts are offered on the day of, and that consumption on 4/20 is a big part of the ritual of it. It was also on a Saturday this year, meaning that people were maybe grabbing a pre-roll before heading out for day hikes, picnics, or any of the other experiences that are so greatly enhanced by cannabis. This also fits with the second narrative, which is that people tend to buy earlier in the day when they’re not working. It makes sense that people would meander in around early afternoon during the winter holiday break, as laying around the house all morning eating pastries is a popular holiday activity for families of any religion.

HOLIDAY HOURLY SALES COMPARISON (CA, CO, NV, WA)

Is Dab Day really a thing?

The idea of 7/10 as a special holiday is met by sneers with some, who see it as more of a marketing ploy than a real holiday, but the data seem to indicate that it does resonate with the dabbing community. Dabbing is a consumption method that involves heating Concentrate products until they vaporize, and inhaling a significant dose all at once. It also has its own subculture around it, complete with rituals, etiquette, and YouTube channels. And our data suggest that dabbers are, in fact, showing up for 7/10. As we mentioned in earlier slides, we don’t see a huge sales boost in early July. However, looking closer at category sales on the day itself, there is a noticeable uptick in Concentrate sales alone. Sales of Concentrates — Oil, Wax, Shatter, and so on — shot up over 40% that day, with Vapor Pens even enjoying a bit of coattail growth. With such a noticeable uptick in Concentrate sales specifically, but with no huge change in total sales for the day, it’s reasonable to assume that a small but enthusiastic group of dabbers is driving the phenomenon

7/10 CATEGORY SALES GROWTH (CA, CO, NV, WA)

Key takeaways

• 4/20 is far and away the biggest day for cannabis sales, but it is balanced out by a nearly equal slump shortly after

• The gains made on 4/20 are made almost exclusively via volume sales, as prices fall steeply while basket totals and the number of items per basket rises

• Discounts definitely drive sales on 4/20, but the same phenomenon doesn’t translate to Christmas (or, given the relatively unchanged overall sales for the day, 7/10)

• 4/20 is still very much a smoker’s holiday, although plenty of smokers are switching to Vapor Pens or adding Concentrates in to the mix

• Beverages are becoming part of the 4/20 phenomenon, with the largest single-day growth in sales of any of the categories

• For Christmas, the most popular categories are sweet treats, alcohol alternatives, and stocking stuffers; which is to say, Edibles, Beverages, and Topicals

• Within the Edibles category on Christmas, segments like Mints; Cookies; and Brownie, Blondie & Cereal Bars see the most growth

• Bigger Edibles segments like Candy, Lozenge & Gum; Chocolate; and Caramels, Chews, & Taffy see less explosive growth, but still add a significant chunk to their total sales that day

• Chocolate performed the best of all the top 3 segments, with a 41% increase in sales

• People bought very early on 4/20 this year, a Saturday, suggesting an eagerness to get discounted products before the day’s activities

• Winter holiday shoppers also bought earlier than normal, with peak hours being between 1-4pm

• Both holidays saw slower sales in the evening, with the YTD average overtaking them around 5pm, the after work hours being more popular when people are, well, working

• 7/10 isn’t affecting overall sales just yet, but there is a very significant spike in Concentrate sales on the day, suggesting that enthusiasts are showing up for it

Predictions

It’s safe to say the 4/20 phenomenon isn’t going away anytime soon. These data focus mostly on this year’s sales trends, as they’re more nuanced, but the sales boost has been going strong for at least four years now. Figuring out how to harness 4/20 will be key, as retailers run the risk of getting bogged down in a discount frenzy that doesn’t actually make them money. Which is fine, of course, but only if it nets new customers. Savvy cannabis companies, retailers and manufacturers alike, will use 4/20 as a time to grow their consumer base and introduce people to new products.

The Christmas season is still a bit of an enigma for the cannabis industry, it seems. While there is evidence that cannabis products are being given as gifts, there isn’t quite enough to say it’s a mainstream Christmas gift yet. The boost in Edibles sales is likely attributable to people who already enjoy cannabis replacing their holiday sweets with infused items. However, winter holiday marketing should not be overlooked, as cannabis is becoming more mainstream every year. It’s conceivable that a top shelf vape cartridge could become a gift item in the same way a bottle of scotch is. However, in the near term, it’s clear that there’s a special interest in Edibles around Christmas, and thus there could be a decent market for Christmas-themed products in that category.

As for 7/10, it’s not quite a “thing” yet, but it’s something worth paying attention to for anyone making Concentrates. Concentrate consumers tend to be Millennial and Gen Z men, but they do tend to be serious cannabis enthusiasts. These data confirm that they are showing up on “Dab Day.” Given how similar of a holiday 7/10 is to 4/20, cannabis companies will likely find some success offering targeted discounts on Concentrate products on that day, if only to introduce the die hard dabbers to something new.

Overall, we expect holidays to continue to be big days and big weeks for the cannabis industry, especially as cannabis consumption becomes more mainstream. The number of people who are “California sober” — they don’t drink but they do use cannabis — is growing, and they seem eager to replace holiday libations with pot. The growth in Beverage sales certainly speaks to that. But even among people who do drink and consume cannabis, mainstreaming will mean more sales on holidays. Besides the obvious factor of having lots of time off to spend being merry with your friends and family, people who are new to cannabis will eventually get caught up in the 4/20 hype. While they may not have been interested in cannabis in the days when 4/20 was a cool, subcultural code word, they won’t be able to ignore the discounts!

About Headset

Headset is a consumer data analytics platform that provides market intelligence for the cannabis industry. Our extensive Market Reports deep-dive into specific categories and aspects of the industry to help businesses better monitor the market and perform exhaustive category analysis. Reports are generated via aggregate, real-time transaction data to get a unique and thorough analysis of what’s happening in the cannabis industry as the data becomes available. Headset offers three distinct products that help retailers, dispensaries, brands, product manufacturers, distributors, and investors move ahead in the industry

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