Chart: 4/20 holiday gives cannabis companies big bump

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By Eli McVey

April 20 – the marijuana holiday colloquially referred to as “4/20”– has traditionally marked the largest single day for retail cannabis sales all year, and 2017 looks to be no exception.

According to data provided by MJ Freeway, a Denver-based seed-to-sale software provider, average 4/20 retail sales on a per-store basis in 2016 were nearly twice that of a typical day – with the average store generating over $24,000 in revenue.

Similar sales increases were observed on 4/20 in 2015, so the trend is expected to continue in 2017.

However, the marijuana industry has grown substantially since last year, meaning actual dollar sales for April 20, 2017 will be much higher, projected to eclipse $45 million nationwide. Sales last year were estimated at approximately $38 million.

But 4/20 is more of a holiday season rather than a single-day celebration: Average daily per-store retail sales in the week leading up to April 20 are about 20% higher versus a typical shopping day.

This year, 4/20 falls on a Thursday. As a result, Friday, April 14 – the last Friday before the 4/20 holiday – is predicted to be the second-highest sales day of the week.

Consumers are spending an average of $70 on marijuana products the actual day of 4/20 – around 9% higher than the average purchase size throughout the year – suggesting that most of the holiday sales boost is driven by increased foot traffic at retail shops.

MJ Freeway anticipates the number of people visiting dispensaries and recreational shops will be even higher this year, rising by more than 10% on April 20, 2017, versus April 20 of last year.

Though purchase sizes on 4/20 are only slightly higher than normal, customers will be taking advantage of the traditional holiday deals, walking away with much more product for $70 than one would normally receive.

Successful retailers will have strategies to deal with the huge influx of customers, including adequate staffing of stores and sufficient inventories.

On the surface, 4/20 resembles traditional retail holidays like Black Friday, with consumers flocking to retail outlets to take advantage of special offers and purchasing products at deeply discounted prices.

But marijuana is a consumable good, more akin to beer or wine than a new widescreen TV. Also, consumers are not typically purchasing marijuana on 4/20 as a gift. Rather, they’re stocking up on personal supplies of cannabis at a significantly reduced rate.

Interestingly, while 4/20 may be a short-term boon for retailers, there is the potential for holiday sales to cut into sales later in the year.

In fact, some retailers – especially medical marijuana dispensaries – have chosen not to celebrate 4/20 at all, treating April 20 like any other day.

No matter how retailers choose to mark the occasion, it’s clear that 4/20 is ingrained in cannabis culture and will likely have a marked effect on marijuana businesses for years to come.

Eli McVey can be reached at elim@mjbizdaily.com