
As 4/20 is right around the corner, it’s time to stock up on inventory and establish a plan to maximize sales on the big day.
Ben Burstein, corporate development associate for LeafLink, a wholesale cannabis platform, expects product sales and trends on 4/20 this year to align with years past and for there to be an increase in total 4/20 sales, with emerging markets being the main driver of that increase.
In 2022, flower was the top-performing category on 4/20 and the only product category compared to concentrates and vapes, edibles and ingestibles, and prerolls that saw an increase in product share on the holiday compared to the rest of the year, according to LeafLink data.
Flower captured seven additional percentage points of market share on 4/20 last year compared to the rest of the year, increasing from 34% to 41%. At the same time, all other product categories saw a slight decrease in category share.
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LeafLink found that brands and dispensaries offer the most flower promotions and discounts on 4/20, which factors into flower’s performance increase, Burstein says.
“The way I think about it is that 4/20 is really your flower holiday,” he says. “So, that’s what most stores promote and push. A lot of the flower that’s sold is packaged flower coming from the previous harvest. It’s like an inventory clearing event where dispensaries are trying to push as much volume as possible.”
He says LeafLink has also seen product categories’ performance become relatively segmented to specific holidays.
“Some other examples could be for OIL Day in July; concentrates and vapes are significantly more popular,” Burstein says. “For Thanksgiving, non-inhalables, so, edibles and tinctures, are significantly more popular. Then as you get into the holiday season, you typically get holiday-branded products.”
While LeafLink expects flower to be the top-performing product category on 4/20 this year, the company also anticipates preroll sales to increase 500%-1,000% this year compared to 2022.
According to LeafLink data, the preroll category share increased from 7% at the start of 2021 to 12% today, and total sales have more than doubled in two years on higher volumes overall.
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“Prerolls gained significant share last year versus the year prior, and that’s just a continuing trend overall,” Burstein says. “For example, infused prerolls [saw] the number one year-over-year increase on a percentage basis of any product across LeafLink’s entire SKU (stock keeping unit) distribution [last year].”
And Burstein says that overall, the company has seen a significant increase in the number of infused preroll SKUs on its website.
“I think it’s definitely part of the broader trend, but again, a lot of the activity on 4/20 and any holiday, in general, has to do with the promotional activity and discounts offered by dispensaries,” he says. “So, I just think you’re going to see a lot more discounts on infused [prerolls] and some other specific types of form factors.”
Lower Prices, Higher Volumes
LeafLink has found that many of its brands and retailers run promotions for the month or week leading up to 4/20.
In 2022, brands on LeafLink’s platform saw a 21% increase in sales from March 20 to April 20. And this year, LeafLink predicts a higher volume of sales but for prices to be much lower—aligning with the industry’s current price compression challenge.
Burstein says he looks at total cannabis sales as a combination of three factors.
“You have the price on your goods, so how much you can charge per unit. You have your volume, so how many units you’re selling, and then you have your mix. Are people buying premium products or value products? What is the segmentation of cross units?” he says. “Each one of those factors are going to play out differently in terms of price. The entire country has dealt with significant price compression over the last year, and I wouldn’t expect that not to continue. You’re probably going to have the lowest prices on 4/20 of any 4/20 in history.”
While LeafLink predicts an increase in overall net sales on 4/20, he says it’s important to note that the lower product prices might handicap total sales, but he expects volume to make up for it as new markets come online.
“On the mixed side, a lot of the inflationary and recessionary pressures that are impacting the greater economy and country in general have promoted a lot more like value-based buying instead of premium categorization,” he says. “So, because of that, it typically knocks down sales slightly. The way I look at it is total sales during 4/20 this year versus last year will probably still be higher just because you have a few new markets online.
“You’re going to get a full week of sales from New Jersey [and] from Missouri, [and] you’re going to get a lot of the benefit from some of the new medical markets and larger limited-license states that have continued to grow over the last year.”
Emerging Impact
New Jersey, Vermont, Rhode Island, New York, Connecticut and Missouri will be participating in their first 4/20 this year since transitioning their markets to adult use.
LeafLink anticipates emerging markets to perform well on 4/20 and to be the main driver in the expected increase in total 4/20 sales, especially as legacy markets, such as California, Michigan, Colorado and Massachusetts, continue to face price compression challenges.
LeafLink expects Missouri’s market, in particular, to perform very well on 4/20 this year, as the state’s adult-use market has already grown significantly faster than expected.
For example, Missouri doubled its sales in its first weekend of adult-use sales compared to Illinois and Michigan. It also brought in $103 million for combined total cannabis sales in February–with $72 million accounting for adult use and $31 million for medical, according to LeafLink data.
Burstein says a few factors drive the high demand, one being that Missouri is bordered by eight states–Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska–and Illinois is the only surrounding state with an adult-use program.
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“[There was] just such a buildup of demand from the states that surround Missouri, … [and] that demand is not going to slow anytime soon,” he says. “The [effects] are really interesting. Prices have skyrocketed, at least on the wholesale side. Wholesale prices are up 50 to 100 percent across the board. From a bulk product perspective, it’s up even more. It’s just the supply chain wasn’t anticipating as much demand as there ended up being, and that’s going to start to be resolved over the next couple of months.”
LeafLink also anticipates consumer demand to be high on 4/20 in New Jersey and Connecticut, but for wait times to increase, as the number of adult-use dispensaries in both states, including New York, is limited, he says.
“I think there’s just going to be a lot of promotional activity around the time, and I think that’s going to bring a lot of excess demand,” he says. “These emerging states are the ones that are going to bring total sales up because, ... the more challenged states are probably going to have more intense discounting. So, I think if you look at the states that were around last year, their total sales this year might be relatively down, but those emerging markets are the ones that are really going to bring the day over the top.”