‘Dispensaries knew they had to change’: How the cannabis industry adapted in the pandemic

The stress levels experienced in the past year caused many consumers to turn to cannabis as a coping mechanism.

That increased interest led dispensaries to bump up their ad spend, adopt the buy online, pickup in-store (BOPIS) model, implement curbside pickup, and even offer virtual consultations. Some dispensaries started or increased local delivery.

But the changes in public life also brought about radical changes in consumer behavior. While 4/20 and the Friday before Memorial Day had been the top two sales days for dispensaries every year of the past five years, they each failed to crack the top five last year, according to Nina Simosko, chief commercial officer at Akerna, a cannabis software company.

The biggest sales day last year was New Year’s Eve 2020 at $89.4 million, according to data from Akerna subsidiary MJ Freeway, a platform that tracks cannabis sales in 23 U.S. states where it’s legal.

Consumer tastes changed too. Dispensaries also saw increased interest and sales of edibles. In September 2020, 54% of cannabis users reported using edibles in the last year, compared to 35% of users in 2018, according to a survey of 4,600 U.S. cannabis users by New Frontier Data, a data analytics firm focusing on the global cannabis industry.

The two combined to bring about a radical change in an already rapidly evolving industry. These variables could present a new starting ground for businesses where cannabis has recently become legal for recreational use, including Virginia and New York.

“Seeing those low sales, dispensaries knew they had to change the business model,” she said. This year, Akerna forecasts that the 5-day period ahead of the holiday (Friday, 4/16 to Tuesday, 4/20) will bring in a predicted $370 million in sales. Global cannabis sales were north of $21 billion in 2020, up 48% from 2019, according to Akerna data.

After cannabis was labeled as an essential service by California in late March 2020, thereby able to keep its doors open amid the pandemic, Jeff Ragovin, chief commercial officer at Fyllo, a cannabis software company, says clients — which include Apothecanna and Grassroots — upped their ad spend to let customers know they were still open for business.

After March 15, average weekly traffic to Fyllo client sites increased by 35%-50% for a few months, indicating a large spike in interest in CBD products. Over the same period, ad-attributed revenue also increased by 78% for these sites.

“We saw seismic increases in audience-based targeting during the latter half of 2020 and consistent growth throughout the first few months of this year,” said Jackie Berg co-founder and CMO of CBD Marketing Hub, a CBD and cannabis marketing agency.

This year, cannabis brands also pursued women and nearly 50% of 4/20 ad campaigns are targeting female consumers, Berg said.

According to a February report by Akerna, women across all age groups drove cannabis sales in the first quarter of 2020, and the average amount they spent increased 50% in March 2020. The survey did not provide exact figures.

Columbia Care, which owns and runs dispensaries in multiple …read more

Source:: Digiday