6 Months In: How COVID Affects Cannabis Buying Patterns

Over six months into the COVID-19 era, some things are by now well-known while others lack a clear answer. We know what NOT to do in order to avoid infection, for instance, but other questions linger. Questions like: When will the pandemic be over? When can we stop social distancing? 

And most importantly for cannabis industry watchers: What does the pandemic mean for my business?
While we can’t pretend to know all the answers, we can talk a bit about the patterns and clues that are emerging in the cannabis retail industry. We’ve been reporting on the pandemic’s impact since the very beginning, and in today’s post, we’ll dive into some emerging sales trends.

And here’s a little spoiler alert: While there are no guarantees, dispensaries who have fully adapted to the realities of COVID stand to see very positive 3rd and 4th quarters.

The Pandemic at Six Months: COVID and Cannabis Buying Patterns

Like most of us, the rapid onset of the pandemic threw dispensary operators for a loop. For many, March was a time of grave uncertainty as to whether or not dispensaries would be designated essential businesses and get to keep their doors open. Of course, we know how that particular story ended: The beginning of the pandemic saw record-breaking cannabis sales in many major markets.

However, as lockdowns, social distancing protocols, and reduced service hours have made the cannabis business an unpredictable one, dispensary operators have had to make their best guesses as far as sales predictions go.

Now, over half a year later, some trends are starting to emerge:

  • Average amount of purchases per visit—defined here as “average basket size”—is up, but baskets (i.e. “shopping trips”) themselves are down
  • That said, overall numbers of baskets are gradually recovering to pre-pandemic levels
  • Developments on the national front—like government stimulus programs—can have a big effect on sales, positively and negatively

Let’s dive a little deeper into each point.

How Big Is Your Basket? Cannabis Sales Down, But Larger

Just as the pandemic has upended other shopping patterns, customers have altered how they shop for cannabis. As consumers try and limit their exposure, they’re making fewer shopping trips or having goods delivered. (In those municipalities that permit cannabis deliveries, that’s an obvious avenue for expansion for dispensary operators.)

As a result, the average value of purchases per visit—we’ll call these “baskets” here—has risen. A study of 2020 sales thus far by Seattle-based analytics firm Headset found that, across four Western cannabis markets—California, Colorado, Nevada, and Washington—the average basket amount increased, sometimes by as much as 40%. That was the case in Nevada, where the average purchase leapt from $55 at the start of the year to $77 today.

But the number of baskets declined, sometimes precipitously. In Colorado, for instance, the state was recording 613,000 baskets per week.

But during the week of March 23—when mandatory lockdowns first took effect—that number plunged to just 362,000. Since then, it’s rebounded to roughly 603,000 per week.

Needless to say, that’s a welcome trend for dispensary operators. But as we hinted earlier, this trend may not be distributed evenly across all dispensaries. As numerous surveys suggest, shoppers have embraced online purchasing and contactless delivery. And for those in-person shopping excursions, they’ve reduced the number of stores they visit.

This means that rather than simply waiting the pandemic out—a strategy with no clear end date, among numerous other flaws—those locations who have adopted COVID-informed best practices stand to become the ones who earn consumers’ trust (and those larger baskets).    

We recently published a post on one multi-state operator who acted quickly to meet the challenges of the COVID era; read their story here.

Developments on the National Front Have Local Impacts

One more hidden reminder of the study on cannabis sales was that national events have very local consequences. For instance, as we referenced earlier, state-mandated lockdowns had an immediate chilling effect on cannabis sales. But just three weeks later—not coincidentally about the time federal stimulus checks started arriving in mailboxes—sales jumped across all surveyed markets.

Conversely, August and September saw a generalized downturn in sales. Some industry watchers pin this on the expiration of the federal government’s $600 a week jobless benefits at the end of July.

The takeaway? Keep an eye on national developments, and use them to help forecast sales. In this unusual moment, we are truly all in it together. The highs, the lows, and the curveballs of the COVID-19 pandemic—let’s be honest, mostly the latter two these days—are affecting all of us in ways both great and small.

We’ll continue to bring you developments in the cannabis world through the pandemic and beyond. And if you’ve got questions about how to maximize your business in these uncertain times, we’re here to help. Reach out anytime.