How cannabis companies are capitalizing on 4/20 amid easing COVID-19 restrictions

Chart showing 4/20 sales by product category

As the biggest shopping day of the year for the cannabis industry approaches, businesses are preparing for 4/20 with loosened COVID-19 pandemic restrictions and a focus on selling flower, mainly in the form of pre-rolls.

The unofficial April 20 marijuana holiday resembles mainstream retail’s Black Friday shopping day after Thanksgiving in that consumers flock to cannabis stores to stock up on heavily discounted products. Most companies spend months preparing for this period.

Cannabis businesses estimate that sales increase by about 30%-50% on 4/20 the days leading up to it.

Colorado-based marijuana technology company Akerna estimated that last year’s April 20 sales totaled a record $111.8 million.

This year, 4/20 is on a Wednesday, so companies are targeting their discounts and promotions to begin the Friday before, on April 15.

Also, many COVID-19 pandemic restrictions have been lifted across the United States, and people are generally more apt to gather to celebrate 4/20.

That, in turn, could generate additional sales.

According to data across the adult-use markets tracked by Seattle-based data-analytics firm Headset, the value of sales on 4/20 in the U.S. is typically double that of the four previous weeks. That’s based on data going back to 2018.

Headset expects total cannabis sales to increase by at least 100% in the U.S. on the days leading up to and including 4/20 compared to non-holiday sales days.

In California, Colorado, Michigan, Nevada, Oregon and Washington state, beverages, concentrates and flower lead the individual product categories in sales increases during the 4/20 event.

Companies interviewed for this story said their primary focus in preparing for 4/20 sales is on flower production, specifically pre-rolls.

“Flower – including pre-rolls – remains the most sought-after product category,” said David Spreckman, executive vice president of marketing for Verano Holdings, a multistate operator based in Chicago.

That’s despite the fact that Headset data shows flower’s share of the overall marijuana market has diminished from 46.3% in March 2021 to 41% in February 2022.

Pre-rolls, by contrast, went up by 25% during that same time period.

Oktoberfest of cannabis

Chicago-based MSO PharmaCann has been preparing for a party by building up its flower reserves.

“What beer is to Oktoberfest, flower is to 4/20,” said Mehul Patel, chief operating officer of the vertically integrated company.

Aside from the raw plant material, store shelves are stocked with rolling papers, grinders and other accessories.

PharmaCann starts planning months in advance for 4/20, with increased production capacity for both flower and pre-rolls.

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The company experiences about a 50% increase in sales of flower and flower products around 4/20.

PharmaCann expects this year to be the biggest celebration of the cannabis industry yet.

“This year’s 4/20 will be different across the industry than last year,” Patel said. “People are much more active and out and about and starting to resume normal activity and normal life.”

Samip Shah, chief operating officer of C3 Industries, a vertically integrated cannabis business based in Ann Arbor, Michigan, agreed, saying his company’s goal is to create a celebratory environment complete with promotions and even food trucks outside the stores.

“It’s an opportunity to bring in new consumers, those who are engaging in the industry for the first time,” Shah said.

User experience

To ensure consumers can easily get what they want, Jushi Holdings has improved its website and user experience, directing shoppers to go online and fill their carts with orders before coming to the store to pick up their merchandise.

During the pandemic, the Florida-based multistate operator overhauled its website so users can navigate it three times more quickly than before.

That increased speed improves conversion rates – the percentage of consumers who buy a product – and makes the sales process flow more smoothly, said Andreas Neumann, chief creative director for the vertically integrated company.

That’s important when sales volume increases so dramatically during 4/20.

“People want to have easy and frictionless access to their medicine,” Neumann said.

While 4/20 tends to be more of a smoker’s event, Neumann said new consumers interested in cannabis often are intimidated by raw flower and tend to lean toward products that are easier to use.

Jushi steers such newbies toward edibles.

Neumann recognizes 4/20 is a celebration of cannabis, but he also urges caution, especially in medical marijuana markets.

“The pandemic is not over yet, and we’re still careful,” he said.

While cannabis companies make hay in the runup to 4/20, there also is a corresponding drop in sales in the days after as consumers sit on their stockpiles of discounted marijuana.

Julie Suntrup, vice president of marketing and merchandising for Denver-based vertically integrated cannabis company Schwazze, runs deals and specials until the end of April.

Customers often have spent their discretionary income for the month on 4/20 sales, so it takes a good deal to get them to return to the store.

“People stock up,” she said. “We’re trying to get people to come back.”

Well-prepared

At vertically integrated, Denver-based cannabis company Native Roots, around 4/20 the company sees an average of 48% increase in sales from its daily average.

Buck Dutton, vice president of marketing for the company, said customers tend to buy a lot more of what they’re already consuming, and the largest category is always flower.

Native Roots has spent about six months preparing for the 4/20 shopping period.

“Our stores will be very well-stocked, as of (April 1),” Dutton said. The company tracks which strains sell well and shores up its reserves.

It’s a fine line when preparing so far in advance, especially with flower, because the flower needs to be fresh, Dutton said.

He pointed out that April 20 won’t be Native Roots’ busiest day. It’ll be the Friday before – as well as April 19, a Tuesday.

As part of the company’s sales promotions, customers who are registered in the company’s loyalty program could be selected to have their entire purchase refunded.

If the uptick in sales of 2-gram pre-rolls is any indicator, Dutton expects a general celebratory attitude this year.

“We’re in a much better spot with the pandemic than we’ve seen the past two years,” he said.

Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.