Doobie Tuesday and pizza deals: Marijuana biz turns to old-school promos
- Demand is growing in Michigan’s cannabis market, with sales setting records
- But prices are plummeting with too much product floods the market
- Cannabis businesses are turning to traditional marketing methods to boost brand loyalty — and, they hope, profitability
Retailers know promotions can drive sales. So consumers in slower winter months watch for industry staples like in-store swag giveaways — a free hat or hoodie, for instance — buy one/get one deals, or boosted customer loyalty program rewards.
In Michigan these days, it may mean getting an eighth-ounce of marijuana for a penny.
More than three years after the legal market opened to them, the state’s 600-plus recreational cannabis dispensaries and suppliers — faced with steep competition and price drops of 75 percent — are looking for a marketing edge beyond ubiquitous billboards.
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And they’re increasingly turning to age-old retail strategies to get and hold onto market share.
The move to go beyond price to differentiate is crucial in a rapidly changing cannabis landscape that Michigan industry insiders expect this year will lead to more business consolidations, potential closings and jostling for revenue.
“You're seeing a lot more retail marketing strategies being deployed,” Karl Riedel, chief marketing officer for 305 Brands, a wholesaler, told Bridge Michigan. “(There’s) your traditional things like buy one, get one free and stuff like that, but I think you're going to see a lot more.”
Examples are starting to accumulate around the state:
Skymint ran a “free weed for a year” raffle in January.
Lume Cannabis is offering a free night of skiing at Mount Bohemia in the Keweenaw Peninsula for customers who spend $50.
And until April 15, customers at Golden Greens in Lawrence, about 12 minutes west of Paw Paw, can buy 1/8th of an ounce of marijuana for one cent with any purchase as a result of a deal between the dispensary and nearby 305 Brands farm, which sells in 100 outlets in the state.
Munchie Monday, Doobie Tuesday and early bird specials now beg for attention amid specialty bundle pricing, even in stores that don’t try to appeal to bargain shoppers.
Recreational cannabis sales began in Michigan in December 2019 — five years after Colorado became the first U.S. state to legalize adult use — and have grown ever since. The state’s cannabis industry has generated $5.5 billion in sales since 2020, according to year-end reports from the state’s Cannabis Regulatory Agency. Adult use sales reached $3.94 billion, with about 25 percent of that — or $1 billion — coming from sales of the so-called flower, or smokable part of the plant.
Michigan is now considered “mature” in the evolving cannabis market, with established grow operations and distribution taking shape across the state.
Experts expect the growth to continue, but note that it’s taking place amid massive price drops and excess supplies of everything from field-grown that can be found in bulk deals to aging pre-rolls, which may be added to an order for free.
“In Michigan, more so than any market we’ve seen, the rapidity of price compression has been mind-boggling,” said Joe Hodas, chief marketing officer of Wana Brands, a leading U.S. supplier of premium and organic gummies that was acquired last year by Canopy Growth of Canada.
The competition is fierce. Hodas called the rock-bottom pricing strategy “a race to the bottom.”
And the market, as a result, is ready to splinter, he said. Hanging in the balance, Hodas said, is profitability for the providers.
Some consumers head to a dispensary and want the best bargain, which may be offered below cost.
Others, Hodas said, want to learn about the best products for the effects they’re seeking: Sleep aid, pain relief, relaxation, among them. There also is a high number of untapped customers, like the so-called “canna-curious” and residents who haven’t tried marijuana or cannabis products but who may be lured in.
Some manufacturers and brands see the massive price drops as an opportunity to grab greater market share not on price, but on quality. Wana, for example, is increasing its R&D; Lume and 305 Farms join it in investing in training so-called budtenders, their behind-the-counter retail experts, so that the sales experience focuses on educating consumers.
Today’s product saturation belies the potential for the market, Hodas said.
“While Michigan is a mature market … the consumer there is still beginning to understand things like terpene profiles,” Hodas said, referring to the chemical reactions among the cannabis combinations.
Zach Schreier, director of marketing for Lume — which just announced a 15-city advertising campaign with pizza stores that deliver, including Sick Pizza Co. in Oxford — said some of the recent promotions are necessary for brand awareness in a competitive market. Adding to the pressure is that the product isn’t legal under federal laws, which is not just an issue for banking and credit card use, but also marketing, since most digital marketers “are still hesitant to get into the cannabis space,” he said.
Some cannabis companies sponsor nonprofit missions to build community support. Nationally, Major League Baseball announced in the fall that it partnered with Charlotte’s Web CBD oil through 2025, and Circle K is sharing some of its convenience stores with medical marijuana dispensaries in Florida.
Closer to home, visitors to the ice skating rink in Detroit’s Campus Martius will see Wana’s sponsorship through the Downtown Detroit Partnership touted from the boards.
Today’s market pressure isn’t particular to cannabis. Over the next three months, nearly half of the state’s retailers expect sales to decline after generally disappointing sales in December, according to a member survey by the Michigan Retail Association.
Nationally, economists — consumed with inflation and whether it’s abating — are watching consumer spending for signs of a pullback that could indicate a recession.
Like mainstream retailers and service providers, Michigan’s cannabis dispensaries are keeping an eye on individual spending through customer loyalty programs, exchanging free products for the chance to market directly to an existing customer.
Scheier says Lume’s loyalty program is “one of the most generous programs” in the country, especially after it was redesigned January 1 with different tiers.
“The further you progress in the program, the better the benefits are to you,” he said.
Looking ahead in the year, cannabis customers in Michigan can expect to see more popup events with swag giveaways.
“There’s a strong connection between apparel with cannabis,” said Hodas of Wana Brands. “Having really great stuff that people want to wear is really important.”
Merchandising will leap ahead, said Riedel of 305 Farms. The company is designing specialty packaging and working with independent dispensaries to boost existing businesses and assist with marketing.
Shoppers also may be offered more deals to try new products in an effort to build affinity for more specialized — and higher priced — offerings.
Michigan remains an important market, Hodas said, though the company has to “do even more to differentiate ourselves to help the consumer understand why our product might cost more … and that it’s worth it for superior products.”
In today’s market, he added, “We have our work cut out for us.”
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