What Your Deep Discounts Are Saying About Your Cannabis Business

Key Insights

• Marketing is rooted in psychology - every cannabis brand interaction triggers an unconscious consumer evaluation on two dimensions: warmth (will this brand help or hurt me?) and competence (is this brand capable of delivering?). Brands that signal both warmth and competence clearly through their messaging and positioning build the foundational trust that drives purchase decisions and long-term loyalty.
• Discounts create a short-term dopamine response that can spike volume and look positive on a margin-adjusted basis - but psychologically, repeated discounting categorizes a brand as a "discount brand" in the consumer's mind, a label that persists even after pricing returns to normal and makes it progressively harder for the brand to command full price.
• Deep discounting as a competitive response to lower-priced competitors is a losing strategy for cannabis brands with brand-building ambitions: once a cannabis brand trains its customers to expect discounts, the full-price offer loses credibility and consumers begin to delay purchases until the next deal - creating a discount dependency that erodes both margin and brand positioning simultaneously.
• The warmth-competence framework applies directly to cannabis brand storytelling: a brand that demonstrates genuine consumer understanding (warmth) alongside real product and industry knowledge (competence) creates a psychological relationship that makes price a secondary decision factor for its core customers, reducing the pressure to compete on discounts at all.
• Sustainable cannabis pricing strategy requires separating short-term promotional tactics from long-term brand positioning: selective, purposeful promotions that serve a specific business objective differ fundamentally from chronic discounting that trains consumers to devalue the brand - and cannabis operators who make this distinction will protect their brand equity through competitive pressure.

Webinar Highlights

00:00 – Why Marketing and Psychology Are Inseparable

Jake Litkey opens the episode by introducing Chelsea Burns, a marketing and psychology specialist who brings an academic and strategic lens to consumer behavior. The conversation is framed around a foundational premise: marketing is psychology, and understanding how consumers process brand signals at a cognitive and emotional level is what separates effective cannabis marketing from spending that produces weak results. Chelsea explains that modern consumers, like their ancestors, are hardwired to evaluate every brand interaction through a survival lens - even if that lens is now applied to purchasing decisions rather than physical threat.

06:00 – Warmth and Competence: The Two Signals Every Brand Must Send

Chelsea introduces the warmth-competence framework as the most important psychological lens for cannabis brand positioning. Every brand encounter triggers an immediate, unconscious consumer evaluation on two dimensions: warmth - will this brand help me, or will it be detrimental? - and competence - is this brand capable of actually delivering on that promise? These two signals have to be clearly communicated from the first touchpoint. Brands that signal warmth without competence seem well-meaning but unreliable. Brands that signal competence without warmth seem capable but cold. Cannabis brands that communicate both build the kind of trust that reduces friction at every stage of the purchase journey.

12:00 – How Paid Cannabis Marketing Amplifies These Signals

The conversation moves into how the warmth-competence framework applies to paid cannabis advertising specifically. When a cannabis brand is running paid traffic to a landing page or dispensary listing, the entire experience - ad creative, landing page design, product descriptions, pricing, and copy - communicates warmth and competence signals simultaneously. Jake notes that for brands relying primarily on paid marketing as their acquisition channel, the psychological impression created in the first few seconds of that experience determines whether a consumer converts or bounces, which makes the warmth-competence framework a practical optimization tool, not just a theoretical concept.

18:00 – The Psychology of Discounting in Cannabis Markets

Chelsea and Jake turn to the central topic: what deep discounting actually signals to consumers. Chelsea explains that discounts work psychologically by triggering dopamine - they create instant gratification, which feels rewarding to the consumer and produces a short-term volume spike that can appear to justify the margin reduction. The problem is that this same psychological mechanism tags the brand in the consumer's mental model as a "discount brand." That tag does not disappear when pricing goes back to normal - it persists and shapes future purchase expectations, making it structurally harder to charge full price without the consumer feeling overcharged.

24:00 – The Discount Brand Label: How Perception Sticks

The discussion gets specific about what happens to a cannabis brand's long-term equity when discounting becomes a consistent strategy. Chelsea explains that once a consumer's brain has categorized a brand as a discount brand - through repeated exposure to sales, deals, and low-price signals - that categorization becomes the reference point against which all future pricing is evaluated. A brand that regularly offers 30% off trains its customers to believe that the full price is inflated. Over time, customers begin to delay purchases in anticipation of the next deal, reducing transaction frequency and compressing the margin window further with each cycle.

30:00 – Brand Equity as the Alternative to Price Competition

The episode closes on the strategic alternative to discounting: building brand equity strong enough that price becomes a secondary decision factor for the core customer base. Chelsea and Jake discuss what this looks like in practice for cannabis operators - investing in brand storytelling, consumer education, authentic community engagement, and consistent quality that gives customers a reason to pay full price and return without needing to be incentivized by a deal. Cannabis brands that compete on brand relationship rather than price position themselves to survive competitive price pressure without eroding the margins that fund continued growth.

Frequently Asked Questions

[ {How does marketing psychology apply to cannabis brands?}

Marketing psychology applies to cannabis brands the same way it applies in any consumer category: every brand interaction triggers unconscious consumer evaluation that determines whether a person trusts and purchases from the brand. The warmth-competence framework is particularly useful - cannabis consumers immediately and unconsciously assess whether a brand will help them (warmth) and whether the brand is capable of delivering on that promise (competence). Cannabis brands that communicate both signals clearly through their advertising, packaging, store experience, and digital presence build the foundational trust that drives first purchase and repeat business.

{What does deep discounting do to a cannabis brand's long-term position?}

Deep discounting creates short-term volume spikes by triggering dopamine responses in consumers, but it carries significant long-term brand costs. Psychologically, repeated discounting trains consumers to categorize the brand as a "discount brand" - a mental label that persists even after pricing normalizes. Once a brand has this label, consumers begin to see full-price offerings as overpriced and delay purchases in anticipation of the next deal. This creates a discount dependency cycle that compresses margins and progressively weakens the brand's ability to command its intended price point.

{How should cannabis operators think about discounting strategically?}

Cannabis operators should distinguish between purposeful promotional tactics and chronic discounting that erodes brand equity. Selective promotions tied to specific business objectives - clearing inventory, driving trial of a new product, rewarding loyalty program members - serve a defined function and can be executed without permanently damaging brand perception. Chronic discounting, by contrast, trains customers to devalue the brand across all interactions. The strategic question is whether a discount is building the brand toward a goal or simply competing on price because the brand has not built enough equity to compete on other dimensions.

{What is the warmth-competence framework in marketing?}

The warmth-competence framework is a psychological model for understanding how consumers evaluate brands. Every brand encounter triggers an immediate assessment on two dimensions: warmth, which asks whether the brand is oriented toward helping the consumer and can be trusted to have their interest at heart, and competence, which asks whether the brand is actually capable of delivering on its promise. Research shows that consumers who perceive high warmth and high competence from a brand develop stronger trust, higher purchase intent, and greater loyalty than those who see only one of the two signals. Cannabis brands can apply this framework to audit their messaging, creative, and overall brand positioning for balance and clarity.

{How can cannabis brands compete without discounting?}

Cannabis brands can compete without discounting by building brand equity strong enough that price becomes a secondary purchase factor for their core customers. This involves investing in authentic consumer storytelling that communicates brand values and product expertise, building genuine community relationships through content and engagement, maintaining consistent product quality that justifies the price point, and creating memorable brand experiences across every touchpoint. Brands that consumers genuinely trust and feel connected to are more resilient to competitor price pressure because their customers are not primarily making decisions based on price - they are choosing the brand. ]