Colorado marijuana sales registered a bump on April 20, the 4/20 cannabis holiday, but the annual boost wasn't enough to pull overall sales out of their recent slump.
After a nine-month decline in sales revenue, Colorado pot shops looked to April 20 as a day when they could bring in more customers through product sales and promotions. Their efforts were successful, attracting more foot traffic and leading to a sales increase compared to previous weeks, but the numbers still reflect Colorado's weakening grip on commercial marijuana.
Colorado dispensaries using Jane, a dispensary menu service and sales tracker, saw a 20 percent decrease in earnings on 4/20 this year compared to 2021 — and almost 40 percent less than in 2020. Headset, another dispensary sales tracker, tells Westword that although Colorado dispensaries experienced a 102 percent bump in earnings compared to previous Wednesdays, they had "a lower than average response to the 4/20 holiday" in comparison to other states.
"We've never had to work so hard for sales in the past. We've always been running weed to the store all day on 4/20 for the last ten years, because it was never enough. This year we felt the impact, though," says Chaz Kobayashi, operations manager for dispensary chain High Level Health.
Viewed as a day of advocacy and celebration for cannabis, 4/20 has become somewhat of a Black Friday for the commercial marijuana space, with customers often lining up outside of dispensaries for upwards of an hour to get their hands on discounted marijuana products. Colorado's marijuana prices were already dropping long before 4/20, though, so the day of discounts led to lower purchasing totals per customer than usual.
The price of wholesale marijuana flower fell over 46 percent on average from January 2021 to April of this year, according to the state Marijuana Enforcement Division. This led to lower prices at dispensaries and new expectations from customers, Kobayashi says.
"With the overproduction of cannabis, there's been a race to the bottom, and it affected the wholesale market first. In 2020, it was about $1,300 to $2,000 or more per pound. In 2022, prior to 4/20, pounds dropped down to $400 to $800," he explains. "It has affected the purchasing habits of customers, so we had to switch up what our goals were from previous years on 4/20."
High Level Health focused on getting as many customers in the door as possible this year, according to Kobayashi, promoting a $4.20 deal for an eighth of an ounce. The strategy was to attract people with a loss leader so that they'd make add-on purchases or think of High Level Health for future dispensary visits. It's still too early to see how that tactic works out, but Kobayashi says the promotion resulted in a 400 to 500 percent increase in customer traffic in comparison to April 20 of last year.
"If you look at profits as a whole, we made less than last year, but we made our goal of attracting a lot more customers," he notes.
High Level Health has four stores in Colorado and four more in Michigan, where it's found a similar sales situation, according to Kobayashi.
Marijuana business owners and state economic officials suggest that pot consumption may have peaked around the one-year anniversary of the COVID-19 pandemic, when dispensaries recorded record sales numbers. Colorado now has more competition for out-of-state buyers, too. New Mexico's recreational marijuana dispensaries opened for business on April 1, potentially ending a pipeline of dispensary shoppers from not only New Mexico, but Oklahoma and Texas, as well.
As more states enter the retail marijuana arena, the national industry strengthens, but individual states lose out on 4/20 tourist dollars. The return of Denver's Mile High 420 Festival at Civic Center Park and other 4/20 events in Colorado was a healthy sign as summer nears, Kobayashi says, but he still expects more tough times ahead for Colorado's marijuana industry.
"It's a puzzle everybody is trying to figure out, but I believe there is natural fluctuation of pricing in the wholesale market. That's a natural trend we've seen, but when you add in COVID, labor-cost issues, a market saturation and people having less money to spend, the demand has slightly shrunk," he says. "All while [suppliers] were still harvesting all of this outdoor cannabis at the same time."