Cannabis retail has grown exponentially over the past few years, and over the past twenty, I’ve noticed trends come, go, and stay. As the plant becomes more mainstream, it’s becoming easier for those of us in the industry to notice and predict future trends.
Today, some trends we’re seeing include price compression impacting both wholesale and retail. Retailers are developing more aggressive marketing tactics. And lastly, and arguably most importantly, there’s a significant shift happening in customer preferences and behavior. So, what will the future hold?
Dispensaries always have struggled with marketing and advertising restrictions that hinder their ability to reach their intended target markets. Tax burdens and banking issues prevent them from operating like traditional retailers. Making matters worse, the cannabis market grows more saturated by the day and price compression is reducing profit margins.
However, it seems positive change is on the horizon with new trends and innovations enabling retailers to overcome these issues.
Price compression is a significant factor affecting both wholesale and retail pricing in the industry. This trend has contributed to an overall decrease in top-line revenue for many retailers across the nation. Despite these challenges, there’s still optimism about retail prospects, especially when dispensaries are in prime locations such as a main street or busy area.
Marketing is getting creative. Lately, retailers have become more aggressive in their marketing strategies, despite digital advertising restrictions. Today’s retailers are finding ways to work around restrictions and placing a larger focus on pricing, bundling, and developing creative promotions.
Additionally, we’re seeing more cross-promotion strategies in which dispensaries partner with other local businesses, even non-cannabis brands, to introduce customers to new products and ideas.
Traditional marketing channels are friendlier to the industry. Drawing from my experience with a direct-to-consumer sock company that utilized platforms like Instagram, Facebook, and Google for marketing, I’ve observed a similar trend in the cannabis sector. Email marketing providers such as Klaviyo and MailChimp now accommodate businesses in our industry. And we’re also seeing more retailers try new marketing methods like short-messaging service (SMS).
Point-of-sale (POS) providers are driving necessary change. There’s been a noticeable evolution in traditional POS providers that allow retailers to use their systems. Having larger POS providers accept payment on behalf of businesses is a huge step forward in driving scalability and making the plant more accessible to consumers.
Sustainability and ethical practices are shaping retail. Today’s retailers are exploring biodegradable materials for internal and external shipping needs. Some retailers prioritize sustainability by using 100-percent-recycled paper for every carryout bag. Others offer digital menus on tablets while accommodating customers who prefer paper by printing product menus only as needed. Meanwhile, some cultivation facilities recycle rainwater and rely on solar energy.
Consumer behavior and preferences also have influenced the evolution of retail, with a shift away from alcohol and toward more flavorful products like infused beverages and edibles. This trend reflects a broader movement toward healthier and more mindful choices.
Within product categories, there’s a noticeable shift toward gummies and beverage enhancers, possibly at the expense of other edibles like chocolates, which seem to be experiencing a decline. Traditional items like flower, pre-rolls, and vapes remain essential, with a significant portion of sales still coming from these categories.
The customer base also is evolving, with older demographics showing interest in plant medicine through products like edibles and topicals. However, there’s still a loyal base of flower smokers. In New England, in particular, where seasonal patterns influence consumption, there’s a significant increase in infused beverages during certain times of the year—summer, for instance—alongside steady year-over-year growth in the category.
Our industry will continue to evovle as we move into a future where the plant increasingly is accepted as a normal part of everyday life. Gone are the days when cannabis retailers were forced to open a store in some random industrial park solely for zoning convenience. Today, retail businesses should focus on strategic locations with high visibility, ample parking, and heavy foot traffic. As the plant becomes more conventional in society, I believe we’ll see more retailers in high-profile locations such as across from popular fast-food outlets like McDonald’s and Dunkin’ Donuts.
The one thing retailers must do is develop a clear brand identity and mission statement. Without this, they will fall by the wayside. Additional key components of a successful retail strategy include building loyalty through digital and physical channels, engaging with customers, and emphasizing brand differentiation.
I’m excited about the future of cannabis retail. The industry is still very much in its infancy, and it’s been inspiring to see how far we’ve all come. As we head into the next era, I’m sure we’ll witness even more innovation, from product diversity to personalized shopping experiences. Are you ready?
Brendan McKee is co-founder, CFO, and COO of Silver Therapeutics, which operates dispensaries in Maine, Massachusetts, and Vermont. An avid consumer and advocate of cannabis for more than twenty years, he entered the legal market with a vertical medical license in 2017 and transitioned to adult-use sales in 2019.
