What will people buy on 4/20?: Predictions based on data from three years of the big day

Executive Summary

In the cannabis industry, no day holds quite as much significance as 4/20, both culturally and economically. This report offers a look at the 4/20 effect on cannabis sales for each of the past three years, as well as insights about what to expect this year, when 4/20 falls on a Friday  for the first time. Will it be one long weekend? Read it to find insights about the most popular products, pricing and discounts, the demographics of 4/20, and more.

Introduction

That 4/20, the cannabis world’s unofficial holiday, is also a major sales boost for the legal cannabis industry should surprise no one. Our data bears out that narrative, placing 4/20 above Weed Wednesday (the day before Thanksgiving) and other cannabis-themed holidays in terms of its effect on sales.

In this report, we’ve examined the last three years of 4/20 sales data, as well as three years of data for the same days one week prior and one week after 4/20. Of course, we’ve looked at who comes in on 4/20 and what they spend. It turns out that Millennials, who are typically frequent purchasers but not big spenders, open their pocketbooks a little wider for 4/20. We’ve also looked at what specific products do well on 4/20: It’s heavily weighted towards single-serving items, as you might expect, although not always in the size you’d think. We’ve also learned that loyalty programs play a role in 4/20 sales, which should be useful information for anyone who works in retail.

Most interestingly, we’ve looked at pricing and discounts for 4/20, and noticed that people still buy a lot of pot even if it isn’t deeply discounted. Our data shows that consumer participation in the holiday seems to be driven more by enthusiasm for cannabis and the legalization movement than bargain hunting, which speaks to the unique nature of the cannabis consumer base.

Also, this year’s 4/20 is on a Friday for the first time, which could change everything. While a sales boost is almost guaranteed, it could be softened by the already occurring Friday sales boost, when more casual consumers come in to fuel their weekend adventures. Or, given that cannabis lovers can let loose and not worry about working the next day, it could fuel sales even more.

Either way, 4/20 data is always a fun read. While plenty of other consumer industries try to foist made-up holidays (Negroni Week, anyone?) on their customers, 4/20 is the opposite of that. It grew organically out of the cannabis movement, and is an integral part of cannabis culture. Looking at the specific ways this enthusiasm plays out in sales has a lot to tell us!

Methodology

Data for this report comes from real-time sales reporting by participating Washington State cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. This report is based on data collected from retailers on and around 4/20 in 2015, 2016, and 2017. That data is cross-referenced with our catalog of over 250,000 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. Thus, there is a slight margin of error to consider.

Good Things Come in All Packages

Small packages make up the bulk of sales on most days, and that remains true on 4/20. On a typical day, packages smaller than an eighth make up 77% of total flower sales. On 4/20, small packages still make up the bulk of sales, but they don’t see the most dramatic sales gains. Two gram packages and eighths see over 100% and over 50% boosts in sales, respectively, but larger packages actually gain more. Ounce packages saw an increase of over 300%, while half-ounce packages were over 200%. The single-serving edible category (10mg) also shows notable sales growth, with a 350% increase over normal days.

Small edibles are often added to baskets as an impulse purchase, and the 4/20 festivities could be adding to that effect. The fact that large packages see significant 4/20 sales lifts suggests that die-hard cannabis enthusiasts are stocking up for the big day, probably to the celebrate with friends. This fits with the idea of 4/20 as a social celebration of cannabis.

Category Trends for 4/20

In 2015 and 2016, pre-rolls saw the biggest leap in sales on 4/20. However, that’s come down a bit, and Beverages, Concentrates, and Vapor Pens are all on the rise. Considering that consumers no longer automatically associate cannabis with smoking a joint, it makes sense that they might choose to celebrate with some more esoteric products. That narrative fits the Tinctures & Sublingual's and Topicals categories very well, as both actually saw a small dip in sales on 4/20 in 2015, only to post gains in both 2016 and 2017.

Nothing Says Celebration Like a Cannagar

While the overall most popular products on 4/20 are mostly flower, pre-rolls, and edibles, certain products enjoy a moment in the holiday limelight. In 2017, the Cannagar segment saw an 835% sales boost over a normal weekday. While cannagars probably weren’t the most commonly purchased pre-roll that day, it’s safe to say that the celebratory atmosphere convinced more than a few folks to shell out $420for one of Gold Leaf Gardens’ humongous, hand-rolled cannabis cigars. The next biggest boosts went to Lip Balm and THC-A concentrates, which fits with the categories numbers we reviewed above

Which Generation is Most Excited for 4/20?

If you guessed Millennials, you’ve clearly been following along. Millennials are the most avid participants in the cannabis market overall, though they tend to spend less per transaction than other generations. Insert avocado toast joke here. However, on 4/20, their average transaction size sees the largest jump (27%), indicating that they’re most moved by the holiday. This makes sense—while the term was coined 1971, it hadn’t come into widespread use until right about when Millennials were coming of age.

Holiday Price Pressure Isn’t a Problem

We looked at Average Item Price (AIP) for the days exactly one week before and after 4/20 in 2015, 2016, and 2017 and saw an interesting trend emerge. In 2015, AIP on 4/20 was much lower than on 4/13 or 4/27, meaning that retailers were offering significant discounts especially for the holiday. The price gap between the days in question shrunk quite a bit in 2016, and shrunk even further in 2017. This means fewer items were discounted for 4/20. However, the overall sales still continued to rise on 4/20, with both 2016 and 2017 still seeing an over100% increase in sales. This would indicate that bargain hunting isn’t what brings consumers in for 4/20.

Loyalty Programs Pay Off

What might be especially interesting to our retailer readers is that customers who were participants in a loyalty program had a higher boost in average basket size—26%, as opposed to 21%—than non-loyalty customers. Participating in a loyalty program is obviously a marker for an engaged consumer, but it’s something of a chicken and egg scenario. It might be only consumers that are already engaged who are interested in joining a loyalty program, or it might be that consumers join one and become more engaged. Either way, it pays off for retailers!

A Big Boost All by Itself

Fewer discounts in 2016 and 2017 didn’t put a dent in the 4/20 effect. Indeed, it actually grew in 2017. In 2016, sales increased by 108%,while 2017 by 140%. However, when sales are charted across all weekdays preceding and following 4/20, it becomes very clear that this boost is limited to the day of. The days following 4/20 in both 2016 and 2017 actually saw small decreases in sales compared to the same day in previous week. Sales on 4/19 in both years were slightly higher—11% and 15%, respectively—but not enough to truly be considered part of the holiday boost.

The Details of Discounts

While the percentage of items sold at a significant discount—25% or more—has stayed steady since 2015, it’s interesting to note that itemssold with no discount have increased from 24% in 2015 to 34% in 2017. The 5-25% discount ranges have declined slightly. This meshes withthe trends in AIP, suggesting that, while discounts are still used to drive 4/20 sales, retailers have recognized that the appeal of 4/20 isn’ttied to those discounts. Most stores do some amount of discounting on 4/20(only 9% of stores had no special discounts, but the vast majorityof stores (62%) had only few products discounted. Of 186 stores, 55 had only 10-20% of products discounted, and another 61 had only 20-30% of products discounted. Only 14 stores had over half of their products offered at a discount.

Conclusion

This year, it’s important to remember that 4/20 falls on a weekend day for the first time. Friday isn’t a full day off for most people, so storescan still expect their largest influx of customers after 5pm, but it is a day where people are already cutting loose. Our current data doesn’thave much to say about how this change will affect sales, but we would not be surprised to see a “weekend warrior” effect. Consumers whomight not otherwise partake on a Tuesday, knowing they can indulge a bit, might be more inclined to come in for a half-gram pre-roll thisyear.While 4/20 being on a Friday might change the overall sales boost, we don’t think it will change many of the other 4/20 shopping trends.Discounts aren’t mandatory, but we suspect they’re best used to accomplish specific goals, like growing your social media following orencouraging consumers to spend more in one basket. Historically, our data show big boosts for single-serve (10mg) edibles and large flowerpackage sizes, so it might be wise to stock up on those. It’s also safe to stock up on some of those outliers and oddballs that see an extrasales boost on 4/20, like lip balm and cannagars, but they clearly need to be tied to 4/20 in your day’s marketing plan to succeed. As withany day, Millennials are an important demographic to reach, so it might be worth your time to craft some advertising and promotions thatspeak to them, especially ones that encourage a bit of splurging.Overall, we expect another excellent 4/20, for both the cannabis industry and its customers. As the legal cannabis movement grows, morepeople find themselves caught up in the spirit of the day, and cannabis businesses have more great products than ever to offer them. It isdefinitely going to be a happy 4/20.

About Headset

Headset is market data and business intelligence for the cannabis industry. Our extensive Industry Report deep-dives into specific brands to help businesses better monitor the competitive landscape 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, dispensaries, brands, product manufacturers, distributors, and investors move ahead in the industry.

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