Analyzing US cannabis sales trends to understand holiday demand

Introduction

The holidays are a hectic time for all, and especially for cannabis operators. If you’ve read some of our recent reports, then you understand why cannabis sales in some US markets have been slowing down. Despite the fact that the market had already begun its post-COVID correction by Q4 2021, the holidays were some of the highest sales days of last year. We can expect some of the same trends and increases in customer engagement to occur again this year, and there’s a big opportunity to turn this year's downward trends into an end-of-year win with a well-planned holiday strategy. This report examines cannabis sales during Thanksgiving and Christmas, paying close attention to sales and discounts, category trends, hourly transaction volume, and more in order to help you better prepare for what is to come this season.

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Executive summary

When we look at all of the highest grossing sales days of 2021, five of the top 11 occurred during Q4. Green Wednesday was the second highest day of sales and Black Friday was the third, making Thanksgiving a critical holiday for cannabis retailers in the US. Looking at Thanksgiving week in more detail, we find that hourly transactions increased by nearly 50% on Green Wednesday and 13% on Black Friday. When we explore category growth on Green Wednesday, we see that Beverages (+111%) and Edibles (+87%) had the largest relative growth in sales compared to the previous four Wednesdays.

Christmas is also an important holiday for cannabis retailers in the US, with December 23rd the fifth highest day of cannabis sales in 2021. Compared to the previous four Thursdays, sales on December 23rd grew 74%. Sales on Christmas Eve were also significant, with customers enjoying the highest average discount of any day in December on Christmas Eve as well. When we look at category performance during Christmas week, we again find that Beverages (34%) and Edibles (32%) performed well during this time compared to the previous four weeks. However, Topical products saw the most relative increase at 42%.

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Methodology

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.

Unless otherwise noted, sales data is from the following US Headset Insights markets: AZ, CA, CO, IL, MA, MD, MI, NV, OR, and WA. In this report we compare sales on holidays to an average of the previous same weekdays (or combinations of weekdays). For example, sales on Black Friday (11/26/2021) are compared to the average daily sales on the previous four Fridays (11/19, 11/12, 11/5, and 10/29).

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Top cannabis sales by day

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Let’s begin our analysis by looking at the top days for total cannabis sales last year. This bar chart shows the single days in 2021 with the highest total retail cannabis sales. Most of these days were Fridays (coded in Blue). As any cannabis retailer knows, Fridays tend to be the highest grossing days of any week. However, three of the top five highest grossing days in 2021 were not on a Friday:

• 4/20, the biggest day in cannabis in any year, fell on a Tuesday.
• Green Wednesday, the day before Thanksgiving, was the second highest day of sales in 2021.
• December 23rd fell on a Thursday and was the fifth highest day of sales last year.

Of the top 11 days of sales listed above, five of them fell in Q4 last year. This means that it is critical for cannabis operators to be as prepared as possible for this upcoming holiday season.

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Cannabis sales and discount trends on Thanksgiving

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As we saw in the previous graph, Green Wednesday (11/24) and Black Friday (11/26) were the second and third highest grossing sales days of 2021. This means that Thanksgiving week this year will be a very important week for cannabis retailers in the US. In this graph, we can see that Green Wednesday saw a sales increase of 61%, a much higher relative change than Black Friday’s +14% growth. This means that Green Wednesday is much more different from a typical Wednesday than Black Friday is from a typical Friday.

Through the holiday weekend, customers were also enjoying increased discounts. Black Friday had the highest increase in average discounts compared to the previous four weeks, rising from 12.6% to 19.5%.

*Data from CA, CO, MI, MA, NV, OR, WA.

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Transaction volume on Thanksgiving week

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Now let’s look at what was driving the increase in sales on Thanksgiving so we can continue to understand how to better prepare. This chart shows the increases in total transaction volume and the median store’s average number of transactions per hour. Here we can see that for both Green Wednesday and Black Friday, the increase in total basket volume was less than the sales increase we saw in the previous graph. This means that the sales boost was influenced by both an increase in transaction volume and in average transaction size. This year, retailers should expect to have more customers in their stores, and those customers will be purchasing more than they usually do.

On the right-hand side of the graph, we can see that the average rate of transactions per hour was much higher than the previous four Wednesdays for Green Wednesday. When we look at Black Friday, average rate of transactions per hour was slightly higher than the previous four Fridays. This tells us that retailers might need to increase staffing quite a bit for Green Wednesday, but not as much for Black Friday.

We can also see that total basket volume was about half of normal on Thanksgiving day, but average hourly transaction volume was slightly increased. This can be explained by stores staying open for fewer total hours than normal, and  sending their budtenders home early for Thanksgiving dinner!

*Data from CA, CO, MI, MA, NV, OR, WA.

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Cannabis transactions by hour

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These two charts show the proportion of US cannabis transactions by hour on Thanksgiving and on the previous four Thursdays (top chart), as well as on Black Friday and the previous four Fridays (bottom chart).

We can see that proportional transaction volume shifted to much earlier hours in the day on Thanksgiving. That’s not very surprising, since the few customers that were shopping on that day were likely headed to a dinner gathering.

While the shift is less dramatic, the same trend can be seen on Black Friday as well. This may be due to the fact that many consumers in the US don’t work on Black Friday, so their cannabis shopping may be less limited by the routine 9-to-5 schedule.

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Category growth on Green Wednesday

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Now let’s see which categories customers are choosing ahead of Thanksgiving. This chart shows the total sales of each product category on Green Wednesday in comparison to an average of the four Wednesdays. Beverages (111%) and Edibles (87%) had the largest relative sales growth on Green Wednesday last year. This could be because these formats are great for indoor gatherings, ease of sharing, and are often seen as approachable products for inexperienced cannabis users. Tinctures (55%) and Concentrates (56%) fell on the low end of category response last year, but still saw significant growth over the previous four Wednesdays.

*Data from CA, CO, MI, MA, NV, OR, WA.

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Cannabis sales and discounts during Christmas week

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Next, let’s focus on the week leading up to Christmas. As we saw in the first graph, December 23rd was the fifth largest day of sales in 2021. In this chart, the 23rd stands out as a massive day of sales, indicating that customers may have been doing some last minute gift shopping or stocking up before holiday gatherings. December 23rd saw 74% higher total sales than an average of the previous four Thursdays, which includes Thanksgiving day.

Christmas Eve was also a fairly large day of sales, totaling more than $63M. It also had the highest average discount of any day in December, indicating that last minute gift shoppers may have been enjoying some holiday clearance promotions.

Unsurprisingly, very few customers were shopping for cannabis on Christmas day, which was the smallest single day of sales in 2021.

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Category growth during Christmas

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Here we see another category growth analysis, but this time for the week leading up to Christmas (12/18 - 12/24) in comparison to the average daily sales during the previous four weeks, including Thanksgiving week.

Similarly to Green Wednesday, Beverages and Edibles had some of the highest relative sales growth during the lead up to Christmas. One notable difference however is the high sales growth of Topical products, which means that Topicals might be a preferred gift idea for cannabis shoppers during the Christmas season. Concentrates and Flower both grew less than the market overall (+18%), which indicates that dabs and eighths may not be what customers turn to when shopping for the holiday or gifts.

*Data from CA, CO, MI, MA, NV, OR, and WA.

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Conclusion

The upcoming holidays are the perfect opportunity to identify strategies to engage with your customers and find different ways to get them to return to your store. Want a more granular look at your store’s data? Headset can help! Reach out for a demo and learn how you can get prepared for the holidays before your competition.

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Key takeaways

• Of the 11 highest grossing days of cannabis sales in 2021, five of them fell in Q4. Green Wednesday (11/24), Black Friday (11/26), and December 23rd all fell in the top five.
• Green Wednesday saw a larger relative increase in sales than Black Friday, while Black Friday had a larger increase in discounts.
• Green Wednesday saw an increase of nearly 50% in average transactions per hour, indicating that this cannabis shopping holiday will require retailers to staff up.
• Transaction volume shifted earlier in the day on both Thanksgiving and Black Friday last year.
• Beverages and Edibles are the perennial winning categories on Q4 holidays, while Topicals joined them during the lead up to Christmas.
• Christmas week saw strong sales growth throughout, but especially in the final lead up to Christmas Eve and Christmas day.

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