Cannabis Brands Can Finish a Difficult Year on a High Note

In the space of three days in late 2021, the cannabis industry in the U.S. brought in north of $290 million, setting records for Thanksgiving Eve—better known in weed circles as Green Wednesday—Black Friday and the Thursday before Christmas, per researcher Akerna. Last year was not an anomaly. Fourth quarter has traditionally been a boon to the legal cannabis market, mirroring mainstream American retail and boosting the bottom line of a yearslong national rush. With history as a guide, it would seem that there’s every reason to be optimistic about the upcoming season. But there’s also cause for concern, with legacy states struggling, inflation raging, wholesale prices dropping and federal legalization lagging. Add to that heap of systemic problems a dearth of venture capital, a glut of flower, sky-high taxes and a fierce illicit economy. “We’re finding ourselves at the nexus of unfortunate events,” Emily Paxhia, managing partner of cannabis investment fund Poseidon, told Adweek. In other words, there could be a proverbial lump of coal ready to drop into the industry’s stocking. New heights Yet as sobering as the issues are, cannabis sales are expected to reach anywhere from $27 billion to $30 billion by year’s end, per BDSA and Brightfield Group, which would represent yet another high-water mark, compared to $25 billion in 2021. And the summer held at least a few good omens, according to Karan Wadhera, managing partner at venture capital firm Casa Verde Capital, given that consumers bought $255.5 million worth of flower, vapes, infused drinks and other products, per Akerna, during the long July Fourth weekend. “Through all the problems, this has been a resilient industry,” Wadhera told Adweek. “We’re still very bullish about its prospects, and we think we’ll see the uplifts start with Green Wednesday.”There are several areas of opportunity as the industry aims to finish the year on a high note; here are some trends to watch: Season's Green-ings Retailers in the weed space, like their mainstream mall brethren, count on a jolly holiday to buoy their annual bottom line. Here’s a look at past performance Green Wednesday brought in the second highest daily dollar sales of any canna-holiday in California and Massachusetts in 2021, per BDSA.Black Friday sales reached $99 million, per Akerna, the second-biggest day in 2021, behind only April 20. Green Wednesday and the Thursday before Christmas, the No. 3 and No. 4 sales days, topped $192 million combined, according to Akerna.Christmas week totals reached $267 million in six markets (California, Colorado, Michigan, Nevada, Oregon, Washington), according to Headset.New Year’s Eve 2021 saw consumers in six states spend $44.5 million, per Headset. Pinching pennies As consumers continue to get hammered with rising everyday expenses, many have trimmed their discretionary spending. Cannabis has shown itself to be “recession-resistant,” per BDSA’s CEO Roy Bingham, but not recession-proof. That means buying patterns these days have changed. Some cannafans are looking for the most potent product at the lowest price. Others, meanwhile, have traded from premium to value brands to save money. Against this backdrop, both new and established value brands—Old Pal, Baker’s, Dime Bag, Caliva’s Deli and Cresco Labs’ High Supply—can flourish. Alternatively, luxury brands like Jay-Z's Monogram and Bloom Farms might consider sample sizes or bundles to retain their consumer base. The shifting consumer behavior could lead to “a moment of experimentation,” Paxhia said, with more companies developing their own bargain products or creating special SKUs to appeal to budget-conscious shoppers and battle the illicit market. Another hot commodity? Gift cards, which will help cash-strapped consumers who aren't allowed to buy federally illegal weed with credit cards. Promopalooza Though Bingham pointed to the “crashing prices and razor-thin margins” in mature markets, discounts and promotions will be key business drivers this holiday, according to experts. “Companies will want to pull out all the stops this year to attract new customers and firm up loyalties that have been wavering,” Bethany Gomez, managing director of cannabis researcher Brightfield Group, told Adweek. When handled with care, promotions can enhance rather than diminish a brand, according to Gomez. “Strategic discounting for key holidays allows this to be a one-time occurrence without setting this as an expectation with the consumer,” Gomez said. Experiential marketing and collaborations will be front and center, with The Parent Company’s chairman and CEO Troy Datcher saying the circumstances call for “bringing in exciting new ideas,” such as a recent partnership between TPC and FaZe Clan co-founder FaZe Rain to spotlight its sneaker drop-style debut. Such projects can draw in new audiences, build loyalty and create a relationship with consumers, Datcher said, which can “help us face some of these macro challenges that will be with us into 2023.”

Cannabis

How Cannabis Brands Can Finish a Difficult Year on a High Note

Despite 'a nexus of unfortunate events,' weed is expected to break sales records this holiday

T.L. Stanley

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

T.L. Stanley