We all know 4/20 is a very important day in cannabis retail, but in what ways is this day important, and how can you identify specific opportunities in order to make the most of this holiday? April 20th has been the largest single day of retail cannabis sales each year since legalization (with one notable exception), so we understand that it’s a pretty darn significant day. We also know that there are some consistent patterns on 4/20 each year: sales surge, customers enjoy massive discounts, and certain categories are more popular than others. However, a full year is still quite a long time in this young industry, and it is critical to keep more recent trends in mind as you prepare your 4/20 strategy in the coming weeks. That is why in this report, we’ll provide some important context and analysis regarding shifts in category popularity over the past 12 months to help you be as informed and prepared as possible. Additionally, for the first time ever, we’ll analyze how different customer groups respond to the holiday. Spoiler alert - they’re not all the same!
Nearly a full year has gone by since the last 4/20, and there is a lot to consider for this year’s holiday in order to take advantage of the opportunities it brings. When we look at last year’s 4/20 sales, we can see an increase in total sales along with some fantastic discounts in both the US and Canada. When we explore this a little further, we find that the increase in total sales was largely driven by an increase in total transaction volume, as there were more people shopping during the 4/20 holiday. For example, when we compare 4/20/21 to the previous four weeks, we see that total basket volume in Canada increased by 52% on 4/20/21 and 86% in the US. There have been some significant shifts in cannabis category trends that can impact shopping habits on this year’s holiday. From March 2021 to February 2022 in the US, Flower market share has dropped from 46% to 41%, while Pre-Rolls (+25%), Vapor Pens (+14%), and Edibles (+11.9%) all had noteworthy increases in market share. When we explore the shoppers of 4/20 a little further, we find that younger customers tend to be more excited about the holiday than older age groups. For example, sales to Gen Z customers increased by 168% on 4/20/21 over the previous four weeks compared to 91% for the Baby Boomer age group. Continue reading to learn more about 4/20 customers and what to expect on this year’s greenest holiday.
Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked to Headset’s business intelligence software. 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.
In this report we examine sales from Headset Insights markets. Unless otherwise noted, this includes AZ, CA, CO, IL, MA, MD, MI, NV, OR, and WA in the US and AB, ON, BC, SK in Canada. We present all data in local currency and do not make adjustments for currency fluctuations.
Prices and basket metrics are calculated pre-tax, post discount. Growth metrics are calculated by comparing 4/20 of the given year, to an average of the previous four same days of the week. For example, sales volume on 4/20/21 is compared to an average of sales volume on 4/13/21, 4,6/21, 3/30/21, and 3/23/21.
Let’s begin our analysis by evaluating the historical sales and discounts during 4/20 across the most mature adult-use cannabis markets in the US: California, Colorado, Nevada, Oregon, and Washington. Each year, sales on 4/20 were at least double that of the four previous weeks. Discounts also spiked each year, but the relative increase was less than the growth in total sales. The year 2020 stands out as a slight exception to the pattern, with a lower sales lift than other years and a higher increase in average discounts. Additionally, 2020 was the only full year since cannabis legalization where 4/20 was not the largest single day of sales (New Year’s Eve took the crown that year). This was almost certainly caused by the early stay-at-home and social distancing precautions during the COVID-19 pandemic. Because of this, customers probably were less likely to go shop in physical stores during this time.
In Canada 4/20 also brings with it a surge in cannabis sales, albeit lesser than what we see in the US. In 2020, sales increased by 66% but by only 59% in 2021. Discounts, on the other hand, have risen more significantly in past years than in the US. It is important to note, however, that these large relative increases are due to the fact that average discounts in Canada are much lower than in US cannabis markets. For example, that 213% relative increase in 2021 was caused by a rise from 2.1% to 6.4%.
In the previous graphs, we saw that cannabis sales surge on 4/20. However, individual product categories experience different levels of sales growth. In this graph, we can see the relative sales increases in 2020 and 2021 across all cannabis product categories in the US. On the far left, we see that Beverages are the consistent winners on 4/20; we see this trend for Beverages on most holidays. Edibles, Flower, Concentrates, and Pre-Rolls also typically perform well while Tinctures, Topicals and Capsules do not see nearly the same level of sales growth. Interestingly, Vapor Pens are one of the lower growth categories on 4/20. This is surprising, as Vapor Pen products tend to be higher cost, so one might assume that customers would take advantage of 4/20 promotions to get a good deal.
At Headset when we track large changes in total cannabis sales volume, we always like to investigate the underlying data further to get a better understanding of what caused the change. This chart displays a myriad of basket metrics to help us paint a picture of what happened on 4/20 in 2021. Here we can see that total sales lift was caused mostly by an increase in total transaction volume, which means that there were simply far more people coming into cannabis retailers than during the previous four weeks. Average basket sizes also increased slightly, with a greater relative increase in the average number of items in each basket. This growth was somewhat mitigated by a reduction in the average price customers were paying for individual products, almost certainly influenced by the heavy discounts they were enjoying.
*Note: Total sales volume growth for the US is different from graph 1 because this graph also includes the following markets: Arizona, Illinois, Massachusetts, Maryland, and Michigan.
While data from previous 4/20 holidays can be helpful in planning, it is important to remember that our most recent example is from a full year ago. As most cannabis operators know, a year in the cannabis industry is a very long time, and a lot can change during twelve short months. Therefore, it’s critical to stay on top of recent trends when preparing for any event, especially one as significant as 4/20. Here we can see the category market share from March 2021 compared to those from February 2022, the most recent complete month at the time of this analysis. In just eleven months, there have been some significant shifts. Most notably, Flower market share dropped from 46% to 41%, a relative decrease of 11%, while Pre-Rolls (+25%), Vapor Pens (+14%), and Edibles (+11.9%) all had noteworthy increases in market share. To explore more recent product category trends, read our report on the topic.
To illustrate the rate of change categories can undergo, let’s take a closer look at both Flower and Pre-Roll market share in the US over the past thirteen months. Here we can see that Flower market share has decreased steadily since January 2021. Pre-Roll market share has been slightly more volatile, rising quickly through most of 2021, only to decrease during the end of the year and then increase again in the opening months of 2022. This is a great example of how much can change during a year of cannabis sales!
When planning for consumer demand, category sales share isn’t the only factor you should consider. Basket penetration, or the proportion of baskets a type of product occurs in, is also a key metric to utilize. Here we can see that while Pre-Roll market share was only 12.3% so far this month (March 2022), Pre-Rolls were present in nearly 1/3 of all transactions, and that is an increase from March last year. Vapor Pens saw a more dramatic increase in basket penetration, rising from 22% to appearing in more than a quarter of all baskets so far this month. This could indicate that Vapor Pen products will be more relevant on 4/20 this year than they have been in years past.
Next, let’s look at who is shopping on 4/20. This chart shows the relative sales growth of cannabis customers who shopped on 4/20/2021, grouped by gender and age group. Here we see that Female customers had a much stronger response to the holiday in 2021, with sales increasing by 140% over the previous four weeks. Male customers, on the other hand, had a slightly lower response. When we take a look at the age group data, a clear pattern emerges: younger customers are more excited about 4/20 than older customers. Sales to the Generation Z group came pretty close to tripling on 4/20 last year, while sales to the Gen X and Baby Boomer groups didn’t even double. It would make sense that the continued caution of COVID may have influenced this trend. Younger customers may have been more willing than older customers to risk exposure to the virus in order to celebrate 4/20 at a dispensary. However in our sales data we see a similar trend in 2019, which is before any of us had heard the word ‘coronavirus.’
Previously, we saw that the majority of sales growth on 4/20 was driven by an increase in transaction volume. Now let’s compare growth in this metric across demographic groups. Here we see that in 2021, there was a clear trend of younger age groups (Gen Z and Millennials), with greater increases in transaction volume on 4/20 than older age groups (Gen X and Baby Boomers). Within each age group, Female customers had significantly higher increases in transaction volume than their Male counterparts. Gen Z Female consumers led the way with a whopping 150% more transactions than the average of the previous four weeks.
Although a lot has changed in the cannabis industry since last the 4/20, we know one thing for sure: cannabis consumers will want to celebrate the occasion this year and they are expecting some deals. Make sure you understand what your customers want and keep your shelves stocked appropriately, or you could risk losing loyal customers to the competition. You also want to make sure your strategy considers the potential of turning new or infrequent shoppers into loyalists and more frequent customers since the day sees significant lift in transaction volume by various customer groups. If you need help getting prepared and identifying how to make the most out of the industry’s biggest holiday, sign up for a demo.
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