Cannabis operators strive to get things right as 4/20 approaches

This post was originally published on this site

Sponsored cannabis industry news from MJbizdaily.com

As more retailers and brands zero in on a strong return on investment for April 20, Weed Week can quickly evolve into a make-or-break scenario for operators.

Perennial concerns over systemwide outages, inventory and workforce management as well as easing in-store and e-commerce traffic typically peak around this time of the year.

And for good reason.

The days leading up to and including 4/20 are the industry’s busiest sales window.

According to retail management platform Sweed, gross sales jumped 58% from April 15, 2024, to April 21, 2024, while product units sold increased 60% from the previous week.

And conversely, research reviewed by MJBizDaily indicates that, in the days and weeks following 4/20, sales fall dramatically across the board and in markets across the country as consumers stock up and deep discounts dissipate.

All of these variables and more make it incredibly important to get things right leading up to the big day.

“The weeks following 4/20 demonstrate a predictable and pronounced dip in consumer activity, underlining that there is no makeup day for poor execution on 4/20,” Sweed co-founder Rocco Del Priore emphasized.

‘What keeps me up at night’

While good times, deep discounts and strong business are to be expected on 4/20, so are e-commerce outages and other technology glitches that could wreck celebratory vibes and derail financial forecasts.

The Travel Agency (TTA), which operates three cannabis stores in New York City, was among a group of nationwide retailers last year whose Dutchie point-of-sale (POS) software crashed for hours during peak traffic.

On April 20, 2023, a cascade of failures between Dutchie’s systems and its retail customers’ e-commerce menus led to widespread outages that affected hundreds – if not thousands – of stores in the United States and Canada.

“This will be our third 4/20, and while it’s an exciting time for both our team and our customers, we also recognize the operational challenges that come with it,” said Mike Conway, TTA’s chief retail officer.

This year, the company has worked closely with Dutchie to ensure its tech stack can handle the increased volume.

“That includes migrating to our own dedicated server on the POS side and developing robust standard operating procedures to guide our teams in the event of any unexpected issues,” Conway added.

Oregon-based Dutchie told MJBizDaily last year that less than 20% of its 6,000 or so cannabis retail clients experienced issues, while its systems powered more than 2 million transactions, representing $165 million in retail commerce – a 50% increase from April 20, 2023.

Illinois cannabis retailer NuEra this year met with vendors and neighboring businesses to prepare a backup plan after its POS system crashed last year, which was a “nightmare” scenario, according to Chief Revenue Officer Divina Capellupo.

“After years of executing 4/20, I feel very confident about our staff and internal systems,” she said.

“What keeps me up at night are the things that are not under our control.”

Stress test for 4/20 first-timers

Several cannabis retailers across the country, including Sparkology in New Jersey and Hi! People Cannabis Market in Connecticut, spent months prepping for their first 4/20 surge.

Sparkology implemented a soft launch in March at its store in Franklin Park to slowly ramp up for its official grand opening Sunday.

The longer lead-in gave the retailer time to train staff, dial in operations, rightsize inventory and analyze the shopping experience – in-store and online, according to co-founder Neepa Marfatia.

Sparkology also hired an experienced store manager to train workers and stress tested its digital infrastructure, including POS systems, promotions and loyalty program, under pressure.

“For us, the goal was never just to get through the day,” Marfatia said.

“It was to turn that moment into something lasting: a smooth, seamless experience that earns trust and brings people back well after 4/20 ends.”

At its store in Derby, Hi! Cannabis increased inventory weeks ago to avoid stockouts on popular products, doubled cash reserves and installed an ATM to mitigate transaction bottlenecks or POS failures.

“Optimizing store operations is vital, especially for a new business,” CEO and co-founder David Salinas told MJBizDaily via email.

Months of prep for some cannabis operators

Sacramento, California-based Perfect Union, which operates nine stores primarily in Northern California, began prep work in October.

The long runway gave head buyer Heather Copeland time to forecast sales by brand, category and shop keeping units (SKUs) and place orders, while giving its participating brands time to ramp up manufacturing and production, according to Nicole Hanratty, vice president of marketing.

Cannabis & Glass, which operates three stores in eastern Washington and one in Oregon, started preparations months ago to forecast staffing needs, tighten logistics and ensure inventory and systems meet demand without disruptions.

“With 4/20 landing on Easter weekend, that flexibility matters even more,” according to CEO and co-founder Cristy Aranguiz.

“Strong retail operations are the foundation of our business, and 4/20 is when that preparation shows up.”

Staffing strategies are key on 4/20

To support the expected surge in traffic, Ivy Hall extended hours, significantly increased staffing and implemented detailed scheduling to handle more than 20,000 expected visitors across its 10 stores in Illinois.

Most of its staff will receive time-and-a-half overtime pay, as well as meals, refreshments and commemorative 4/20 T-shirts to keep morale and energy high, according to Omar Delgado, vice president of retail.

“At Ivy Hall, we’re not just prepared for 4/20 – we’re committed to making it an exceptional experience for both our guests and our team,” he said.

Behind the scenes, increased staffing and budgeting are among the top concerns facing operators nationwide in the lead-up to the high holiday.

And it appears the staffing ramp-up is outpacing last year.

In the first quarter, cannabis operators spent $5.3 million on overtime pay across retail, cultivation, extraction and manufacturing, a 67% increase year-over-year, according to data collected by Denver-based human resources company Würk.

“With 4/20 falling on Easter, managing payroll costs given holiday pay is more critical this year than ever,” said Lauren Carpenter, CEO of Northern California-based marijuana retailer and cannabis events operator Embarc.

A new wild card for marijuana operators

While retailers should expect a weekend boost with 4/20 falling on a Sunday, it’s also Easter, which adds a bit of unpredictability.

“Easter isn’t traditionally associated with cannabis celebrations like the Fourth of July or Thanksgiving,” said Mitchell Laferla, data analyst at Seattle-headquartered marijuana analytics firm Headset.

“Moreover, historical trends suggest a potential dip in sales on the actual holiday when stores typically close.”

Last year, Headset noted a significant boost of business on Friday, April 19, as consumers sought earlier discounts or opted to avoid shopping on April 20 when stores are busiest, often attracting thousands of shoppers.

“I anticipate a similar trend this year,” Laferla added.

‘Dip after 4/20 is real’

While Sweed identified significant sales spikes across several metrics during Weed Week last year, its data suggests retail transactions fall sharply in the seven days after 4/20.

Gross sales from April 22-28, 2024, dropped 46% while units sold dipped 45%.

Meanwhile, Headset confirmed a notable 26% decrease in total sales the week after April 20 compared to the average sales over the previous three weeks.

“The dip after 4/20 is real,” said Lilach Power, founder of the Giving Tree Dispensary in Phoenix.

The retailer is adjusting to big swings in purchasing behavior and the realities of running a week of promotions rather than single-day doorbusters.

“As a result, the full month doesn’t necessarily add up to being more lucrative, but it does require significantly more resources,” Power cautioned.

“It’s a high-output moment that demands precision, but not always a high-margin one.

“And then, just as quickly, the volume drops.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.

Sponsored cannabis industry news from MJbizdaily.com

Cannabis operators strive to get things right as 4/20 approaches