Understanding seasonality in cannabis sales

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March 31, 2020
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Executive Summary

Now that the cannabis industry in some states has settled, we’re beginning to see consistent seasonal trends. This report examines trends that are based on time, looking at sales by month, growth by month, sales by day, and even preferred purchasing hours by generation. It will provide insight into the times that various customer groups come in, organized in terms of categories and demographics. It will be especially useful for retailers and producers, as well as anyone who is interested in not only who is buying cannabis or what they’re buying, but also when they’re buying it.

Introduction

Since cannabis was first legalized, markets in longstanding legal states have stabilized and matured in many ways, exhibiting consistent, recurring sales trends. This includes the times that people purchase cannabis, which we’ve seen exhibiting more and more clear patterns as markets settle. This report examines not only the month-to-month trends in cannabis sales, but sales by day of the week and even hour of the day. It also examines these data from the standpoint of consumer demographics and category sales, allowing us to look deeper into not just when people are buying cannabis, but who is buying it and what they’re buying.

Obviously, weekends are huge sales days. Friday and Saturday remain the most popular days for cannabis sales overall. However, as we demonstrated in our recent report on demographics, younger generations exhibit a stronger preference for products traditionally associated with partying — Gen Z and Millenials love Concentrates, for example — while older generations gravitate towards wellness-adjacent products. This theory is given further support by seasonality data, which show products more specific to regulation enjoying more sales on weekend nights, while wellness-adjacent products sell better during the week. We’re sure you can guess which generations are shopping on which days!

While we see consistency across states in some of the overarching narratives, like the generational divide in product preference, some trends vary geographically. Likely, this has to do with the age of a given market, as older markets have more measurable trends, having seen their way through more regulatory chaos, but can also be chalked up to differences in local culture. Which are, of course, harder to quantify. 

Overall, we see that the things that make cannabis a unique industry, like its ability to be used both medically and recreationally, drive sales trends in several ways. So too do simpler facts of the consumer packaged goods business, like holiday sales boosts and summer sales boosts. Our data show a number of trends related to time, and we examine them all. While our other reports have examined what products are sold, who they’re sold to, or where they’re sold, this one is all about when.

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 data analytics platform. The data included are from as far back as January 2017, and as recently as the previous month. Some slides include data for more specific date ranges, or certain legal states, which is noted therein. Sales data are cross-referenced with our catalog of over 400,000 cannabis 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. For this report, the data are also self-reported by loyalty program participants. Thus, there is a slight margin of error to consider. 

The Big Picture

The broadest way to understand seasonality in cannabis is, of course, to look at month over month sales figures. In terms of total sales, the trend is slow but steady growth, as would be expected for a new market. There are some spikes, like in June 2018 in California, when a regulatory change caused a mass sell-off of product, but otherwise it’s pretty smooth. California has begun to grow more rapidly lately, which could have to do with the fact that it has a huge potential market, and also is coming out of its initial period of regulatory chaos. Across the board, however, sales are growing.

TOTAL CANNABIS SALES BY MONTH

Peaks and valleys

A slightly more interesting picture of monthly sales emerges when you look at month over month sales growth. Here we see consistent sales spikes year over year, along with matchings lumps. Summer months — June, July, and August — are consistently strong performers, as would be expected. But March is also a dependably hot month for growth, apparently coming off a yearly slump in February. It’s worth noting, however, that because February has the fewest days, it will underperform in this chart, while its neighbor March has a full 31 days. To gets better read of true seasonality, we’ll next take a look at total monthly sales divided by the total number of days in that month.

MONTH OVER MONTH GROWTH OF TOTAL SALES

Average daily sales by month

Measuring month over month growth in average daily sales over the past three years, we still see some consistent trends, but the fluctuations are definitely tighter than with total monthly sales growth. Summer still does well, but we see that the most serious slump is in October, and the downward trend line from our most recent data — in September 2019 — indicates that this will be the case again. February, after we adjust for its disadvantage in total days, is actually a strong month for average daily sales growth over January.

MONTH OVER MONTH GROWTH OF AVERAGE DAILY SALES


Everybody’s working for the weekend

The takeaway from this chart is pretty clear: people are getting ready to party on Friday. Friday enjoys the highest unit sales across all five markets measured here, followed by its fellow consequence-free weekend day: Saturday. In Colorado, Saturday actually sees slightly higher sales than Friday, indicating perhaps a more carefree, cannabis-loving spirit there. They partake the whole weekend long! Given that Colorado has always had high sales per capita among legal states, this statistic makes sense. Besides that, we see that Sunday and Monday are pretty dismal for sales everywhere, and that Alberta actually has a decent showing on Thursday

2019 UNIT VOLUME BY DAY OF WEEK

The busiest business hours

Looking at sales across all possible opening hours for cannabis shops, which are regulated differently state to state, we still see some clear trends. There aren’t many people buying pot at7am, and 2-7pm is the sweet spot for sales. Colorado, of the three states/provinces shown here, has the highest proportion of morning sales, suggesting that consumers are perhaps morecomfortable with buying cannabis at hours of the day when they don’t plan to immediately consume it. This could be representative of a shift in thinking away from a more novelty item to something more like a staple. Something like, “Better grab an eighth for later!” Nevada, which sees a lot of its sales happen in Las Vegas, has the highest percentage of evening sales(9pm-12am), which should surprise exactly no one. Alberta has no sales from 7-9am because retailers cannot legally open until 10am. Given the data from other markets, perhaps there’s reason to lobby for a change in this regulation.

2019 UNIT VOLUME BY HOUR OF THE DAY

Business on Monday, party on Friday

As we mentioned above, looking at category sales by day of week really drives home the wellness versus recreational narrative of the cannabis industry. We took two categories most closely associated with each, and compared their day of week sales. Pre-Rolls, unsurprisingly, perform very well on Friday and Saturday, which makes a lot of sense given that they are almost exclusively used for recreational purposes. Tinctures & Sublingual's, a category that is much more closely associated with wellness cannabis, beats out Pre-Rolls on boring old Monday, Tuesday, and Wednesday, and sees even sales on Sunday. Pairing the data here with our upcoming slide on who shops when will make the generational divide in wellness and recreational use even more clear.

Hourly category sales

When we break down the sales of those two categories by the hour, it only confirms our conclusions from the previous slide. Pre-Rolls enjoy more sales in the evening, suggesting that they’re used for relaxing, partying, or immediate consumption whereas Tinctures & Sublingual's see more sales earlier in the day, tapering off to almost nothing after 9pm. It makes sense that people who might be using tinctures to mitigate chronic pain would pick up what they need before noon, and that people who just want to unwind after work would buy a single joint ,well, after work.

2019 CATEGORY SALES BY DAY OF WEEK (CA,CO,NV,WA)

Who’s shopping when

Okay, here’s where the wellness vs. recreational narrative gets particularly clear. Knowing what we know from our previous reports, we know that Millennials and Generation Z strongly prefer traditionally recreational products, which include Pre-Rolls. We also know that Baby Boomers and the Silent Generation prefer traditionally wellness or ‘wellness-adjacent’ products, which includes Tinctures & Sublingual's. As we saw above, these two categories sell at quite different times of day. And, lo and behold, the different generations shop at different times of day. Baby Boomers and the Silent Generation have higher proportions of their sales in the morning, while Millennials and Gen Z show up at significantly higher rates starting around 4pm.In fact, in 2019, over 30% of Gen Z’s sales have taken place later than 7pm. Gen X is, as ever, right in the middle.'

2019 CATEGORY SALES BY HOUR OF DAY (CA,CO,NV,WA)

OK Zoomers

Looking at weekly sales for the opposite ends of the age spectrum, Gen Z and the Silent Generation, we see more corroboration for the wellness vs. recreational theory. Gen Z consumers are doing a significantly higher proportion of their shopping on Fridays and Saturdays, while their elders spending rate is drastically higher on Mondays, Tuesdays, and Wednesdays. Friday in particular is a hot day for Gen Z, which pretty clearly indicates a generation wide party mindset when it comes to cannabis. Again, the highest day of the week for Pre-Roll sales, which, we might add, includes things like blunts and cannabis cigars, is Friday

2019 DAY OF WEEK SALES BY AGE GROUP

Key takeaways

• The cannabis market is definitely seasonal when it comes to sales, although this is not necessarily holiday driven. As we’ve seen in our reports on holiday trends, they do have a profound effect on sales, but this tends to be absorbed by the other days in a month.

• That said, certain categories do better based on seasonal trends. Pre-Rolls perform well in summer, when they’re popular for hikes and beach days, while Edibles do well in December. If everyone’s already eating sweets all season long, they might as well be special ones!

• Summer is great for sales growth, so efforts to bring in new customers or run big specials will be best spent there.

• October is not an ideal month to court new customers.

• Friday and Saturday are the biggest days for sales overall, but those sales are definitely driven by specific products.

• Customers shop the most during the peak hours of the day, from about 10am-7pm, but especially between 4pm-7pm. Happy hour is real

• The dominance of weekend sales is driven by recreational products, while medical products do better on the early weekdays.

• Medical products also do better earlier in the day on any day, with higher sales from 10am-2pm than their recreational counterparts, and the reverse being true from about 4pm on.

• These preferences match what we know about generational preferences for medical or recreational products, as younger generations shop later in the day, while older ones are there bright and early

• The same is true of day of week sales demographics, which have young people spending a lot on Friday and Saturday, while older generations spend twice as much on Monday and Tuesday.

Predictions

Patterns in sales growth across the states included in this report have been consistent for two and a half years, and should continue to be so. There is enough data here to suggest that, even as new states join the pool of legal markets, these trends will reproduce themselves after new markets settle in.

Generational preferences for products are not speculation at this point. It’s not exactly groundbreaking news, but our data strongly indicate that young people are much more inclined to party with cannabis. While people of all ages use it for wellness purposes, older people seem to be much more eager to purchase products with more ‘wellness-adjacent’ applications. This is borne out by their shopping hours, and the data on what consumers are purchasing at what hours of the day. While the generations occupying each age band might change — Gen X will have creaky joints soon enough — the age-based preferences should remain arranged as they are now.

Cannabis happy hours could very well become a big thing. While savvy stores have already capitalized on a successful idea from their counterparts in the alcohol industry, expect to see more product specific promotions. Think, “10% off 1gr joints from 2-6pm,” or “buy one, get one lozenges from 10am-2pm.” Retailers that apply data-driven insights will be able to tailor their promotions with increasing specificity, right down to the hour of the day.

Barring any big regulatory changes, like cannabis production being handed over the pharmaceutical companies and its sale to pharmacies, we expect that these time-pegged sales trends will stay in place. The wellness/recreational divide in the cannabis industry explains a lot of why certain things sell on certain days, or to certain generations and genders, and while medical and recreational cannabis products continue to be sold under the same roof, expect most of these trends to continue.

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,dispenaries, brands, product manufacturers, distributors, and investors move ahead in the industry.

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