An Exceptional Time

For the past two years, Cannabis Dispensary (CD) magazine has conducted a study of the retail cannabis market to get a sense of how companies are performing and how business leaders are navigating challenges both unique to cannabis and those all industries face.

It’s an interesting time to take the pulse of the industry, on the heels of a pandemic that brought record-breaking sales growth and now with historically high inflation looming. We need more information before we can point to any trends, as it remains to be seen if consumer buying habits have shifted permanently to preferring the convenience of online and delivery options or if limited human connection makes engaging retail experiences more important than ever. The pandemic required retailers to pivot many times to serve their customers and stay compliant, and the pressures from inflation will likely require that again. However, there are positive signs ahead.

Sixty percent of participants in the 2022 CD “State of the Cannabis Dispensary Industry Report” are planning to open new retail locations, either within the states/provinces they operate in (43%) or in new states (17%). That’s significant, considering 55% of participants currently operate one retail location. Average customer spend per transaction remained steady, with more than half of participants reporting average tickets of $41 to $80 in 2022, nearly the same as in the 2021 study.

Revenue and profits were more of a mixed bag. Nearly 60% of participants reported some profit this year, with more than a quarter (28%) of participants indicating their profits were up compared to 2021 figures. But nearly the same number of participants (29%) reported that profits decreased compared with one year prior. Annual revenue was also up for 40% of participants; however, in the 2021 study, 56% of participants had increased revenues. And 29% said revenues were down this year, which is up 20 percentage points compared to the 2021 research. Whether these decreases are adjustments from pandemic highs or signs of slowing sales is unknown.

It’s an exceptional time, but some of the perennial challenges remain, with the top three being financial issues (cited by 45% of participants), changing/unclear state and federal legal landscape (45%), and marketing restrictions (42%). Also high on the list was hiring, which 29% of respondents indicated was a top-three challenge. And 16% of companies reported turnover rates of more than 20%.

Despite these hurdles, companies are continuing to innovate to better serve their customers. More than half of participants reported selling 10% or more of their products online, and just over half offer delivery, with another 16% that plan to provide deliveries in the next year. Customer education is also top of mind for many participants, with nearly 30% hosting in-person workshops/seminars at their dispensary, and another 11% hosting online education/workshops. About 64% provide printed literature in addition to consultations on the sales floor and vendor days. Nearly one in five (19%) have in-store kiosks/video education.

Those are just a few of the highlights. This issue of Cannabis Dispensary is dedicated to insights from the 2022 “State of the Cannabis Dispensary Industry Report." We hope the data helps provide both benchmarks your company can use as a comparison and adds context to the unprecedented experiences you’ve had during the past two years.