What's Hot And What's Not In Cannabis: Dutchie's Advice On How Dispensaries Can Thrive In 2024

With the U.S. being home to nearly 15,000 cannabis dispensaries, outnumbering McDonald’s in 2023 as Benzinga's Nicolás Jose Rodriguez noted in his summary of Pew Research Center’s recent analysis, one can’t help but wonder, what cannabis products are being sold the most.

Enter Dutchie. The cannabis tech platform that monitors and shares sales trends says three product categories experienced revenue growth year-over-year in 2023: pre-roll, cannabis flower and edibles. On the other hand, topicals and tincture sales dipped by nearly 13% and more than 25%, Dutchie's insights suggest.

To get more details on these trends, Benzinga asked Christine Shriver, senior vice president of AdTech and Marketing at Dutchie to shed some light on what's behind this activity.

"Price sensitivity," Shriver said, "top categories are also some of the least expensive."

Consumers frequently seek out products that offer a strong THC concentration at a budget-friendly price point, she explained.

However, choosing cheap is not always the best option.

"Some of the categories declining have enormous benefits and qualities outside of THC concentration alone," Shriver said, noting that the main culprits are "limited opportunities to educate consumers on them."

See also: Cannabis Giants Pivot Amid Falling Prices And Oversupply: Some Turn To Flowers And Veggies

In 2023, total item sales were up 9% year-over-year, Dutchie's analysis also showed.

That said, discount amounts spiked more than 16.4% overall, offsetting the increase for nearly flat revenue.

Discounting In Cannabis Is ‘Extremely Aggressive'

Compared to other sectors, discounting in the cannabis space is "extremely aggressive," Shriver said.

The average discount per order was about 28.5%, with 65% of the total orders processed including at least some type of discount.

But, there's a way to deal with the growing trend and come out on the other side.

"Brand loyalty and personalization are key to combat discounting," Shriver explained. "You see this in other retail sectors that sell on the value of the products they sell vs. the cheapest options, but that takes the power of marketing and education, and opportunities are very limited to do this in cannabis."

Mass discounting has also affected the average basket value which declined. Simultaneously, visits increased around 11% year-over-year, Dutchie's report showed.

Besides price sensitivity and mass discounting, Shriver called the illicit market one of many challenges cannabis dispensaries face in adapting to changing consumer habits, which have "created a real margin problem on top of an already highly taxed industry."

"It is hard to differentiate products outside of price, which is a cycle that needs to be broken," she told Benzinga.

What Cannabis Dispensaries Can Do About It?

Asked about ways to fight against it, Shriver said dispensaries should prioritize building brand loyalty by enhancing consumers’ understanding and shopping experience.

"Mass discounting can be combated if you’re able to personalize your e-commerce website to the shopper’s preferences and serve them products they prefer," she said, adding that dispensary operators "need to ensure they have low-friction payment options for consumers, and redundant options in the event one is shut down."

A testament to that is a 27% increase in basket sizes with digital ordering systems like Dutchie Pay, as per the company's analysis, Shriver concluded.

Now read: Exclusive: Cashless Cannabis Payments In Stores Now Available With The Expansion Of Dutchie Pay

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