11 Surprising Facts About Dispensary Discounts

Discounts are a critical strategic tactic for cannabis dispensaries.

You may refer to them as discounts, deals, specials, promotions, coupons, or the like, but what we’re really talking about here is offering price breaks to your customers.

We analyzed over 36 million transactions to find out how the cannabis industry is approaching deals, the most common types of discounts, and how much savings we’re talking about.

Read on for 11 surprising stats and tips for how to use deals effectively and strategically to attract and retain customers.

Fact #1: 18% of dispensary transactions include a deal

An interesting note is that the percentage is 18% for both medical-only and recreational-only marijuana sales. (Though med patients get higher discounts per transaction than recreational … see #3!)

So what does this tell us?

• You don’t have to heavily discount your products to compete or be successful.

• Discounts are best done strategically rather than as a blanket policy. In other words, offer deals to your customers who need them most, or on products about to expire.

• Not every customer expects to get a deal when they buy cannabis products.

Fact #2: The average discount per transaction is $14

This means within all the transactions that include at least one discount, the value of that deal averages to be $14.

‘Average’ means that some deals are less, and some more, so we’re talking potentially significant savings here.

One thing to note is that many cannabis retailers offer layering of discounts, or the ability to use more than one deal within a transaction. While many customers love a deal, your biggest challenge is finding that sweet spot where customers are happy, but you’re not losing money or cutting into your margins.

Fact #3: Medical use discounts are 37% higher than rec

Even though the percent of transactions with a discount are similar for medical and recreational cannabis customers, the size of their discounts are much different.

Medical deals, on average, are 37% higher than discounts for recreational marijuana customers.

Fact #4: Only 3% of Summer transactions include a discount

What this tells us is that during summer months (June - August), very few cannabis sales include a discount. This is significantly less than our overall average.

Why could that be? One hypothesis is because summer is more busy with travelers. These people may be visiting a new state or area and are going to purchase their products regardless of whether you have a deal.

Your tourist customers aren’t expecting a deal. Instead consider offering a deal to locals who will support you year-round.

Fact #5: 24% of transactions include a deal from Dec-May

Related to the above, nearly one-quarter of all transactions included a discount in the Winter and Spring months. Perhaps this is due to being the slower season for many cannabis businesses, where attracting new customers, and retaining the ones you already have, is the goal.

We also expect that holiday deals have an impact on this spike. 46% of the top 10 sales days over the past four years were in November and December (between Thanksgiving and New Years Day).

Plus, the deals were better in this timeframe, meaning you’re discounting more often, and with better promotions. Keep this in mind as you approach the last couple months of the year — deals may become a differentiator for your dispensary.

So what about Fall (Sept - Nov)? It landed right about on par with the overall average.

Fact #6: The average deal is 18% off of the pre-tax total

This is perhaps an easier way to think about deals … it’s as if 18% of your customers walked in with an 18% off coupon.

What this tells us is that many dispensaries are offering deals, and 18% off your pre-tax total is no small amount, but it’s also not significant enough to negatively impact your bottom line.

This could be a sign that the cannabis market is starting to stabilize. In the early years of legal cannabis, dispensaries offered deep discounts, especially to medical patients who signed over their plant counts. But with the rise of recreational use and a surge of new consumers who use marijuana, price slashing seems to be a thing of the past.

Fact #7: Cannabis consumers saved $90 million through discounts last year

Whoa. And the caveat here is this is just transactions processed through Flowhub’s point of sale system.

If we were to guess at all cannabis transactions, in all states, we’re talking probably a half a billion offered through discounts!

Fact #8: 29% of discounts are cart-level

Cart-level discounts apply to the entire pre-tax cart, regardless of the number or types of items. Related, cart-level discounts often provide less savings than item-level discounts.

Common cart-level discounts include:

• 10% off for Veterans

• 5% off on Wednesdays for senior citizens

• 5% off on your birthday

While cart-level discounts are often the deals that seem more enticing, they aren’t nearly as common. This could be because dispensaries offer fewer cart-level discounts, or because they are redeemed less frequently than the item-level discounts.

Fact #9: 71% of discounts are item-level

Item-level discounts apply to specific items in the cart, such as BOGO (buy one, get one) or category discounts, like 10% off gummies.

Common item-level discounts include:

• Thirsty Thursday (10% off one cannabis beverage)

• Buy an eighth, get a joint for a penny

• Nearly-expired deals (20% off Wana edibles that expire soon)

This tells us that customers appreciate and redeem these types of deals. Related, item-level discounts had a higher average savings amount.

Fact #10: CA, OR, and MT discount over 22% of transactions

Specifically:

• California = 22% of transactions include a discount

• Montana = 22% of transactions include a discount

• Oregon = 26% of transactions include a discount

Interestingly, the dollar amount saved per transaction is about on par with the overall average. Though Oregon shoppers see slightly less savings than California or Montana.

Fact #11: Massachusetts only discounts 4% of transactions

This is expected because Massachusetts regulations (as of Oct 2021) do not allow for advertising through promotional products, deals, discounts, giveaways, or loyalty programs for adult-use customers. However, medical marijuana patients with “Verified Financial Hardships” may receive discounts.

And get discounts they do … even though the percentage of transactions with a deal is very low, the patients are seeing savings of nearly twice the overall average on their medical cannabis.

Bonus: Other states’ discounts for comparison:

• Alaska = 14% of transactions include a discount

• Colorado = 17% of transactions include a discount

• Maine = 16% of transactions include a discount

• Michigan = 16% of transactions include a discount

• Oklahoma = 13% of transactions include a discount

Put it into action

Data is insightful, but it’s not always clear what to do with the learnings.

Here are a few tips for how to strategically offer deals in your dispensary:

Look at your local regulations around discounts or deals.

Every market has different rules. Some:

• Don’t allow discounting

• Don’t allow you to use giveaway coupons for marijuana products as promotional materials

• Don’t allow you to give cannabis away for free

• Don’t have any stated stance or regulation around deals (though may have rules around advertising of such promotions)

It’s your responsibility to know the laws and act in accordance. If you’re unsure of whether your deal or promotion idea fits within your state’s regulations, contact your lawyer or state representative.

Consider your audience.

If you know who they are and what marijuana products they buy, you can then come up with a list of discounts that would be valuable to them.

Hint: Make sure the discounts are also appropriate to your margins so you’re not losing money!

Need some inspiration on types of deals to offer? Read about 10 Creative Cannabis Specials.

Keep your deals manageable.

You don’t need to offer a deal for every scenario and shopper. Be strategic about how you offer deals.

For example, a happy hour or deal-of-the-day can drive traffic on slower days or time-of-day. Deals on expiring products can reduce your product waste. And discounts to key customer groups, like veterans or new customers, can create customer loyalty and return business.

Automate the process.

Relying on coupon codes or manual entry brings risk of overuse and abuse.

Flowhub has a built-in discount feature, called Deals, that allows you to create your discounts or specials to automatically apply within the cart. No codes, no memorizing, no human error. The tool offers “or” logic, can combine deals, if applicable, and will choose the best deal for every transaction.

Want to see Deals in action? Request a demo!

Methodology: This data factored in a representative sample size of transactions across all markets processed through Flowhub from September 21, 2020 - September 20, 2021. A “discounted transaction” is defined as any transaction with at least one discount, either auto-applied at checkout through the Flowhub Specials/Deal Engine, or manually entered as a coupon code.