What’s the Deal With Deals? Why Less is More In Medical-Marijuana Retail

Dispensary ads shout out the deals in their emails and print ads: “Timeless Tuesdays.” “YILO Grab-bag giveaway!” “$99 ounces of top-shelf!” And, of course, the ever-popular “new patient discount.”

For those outside the cannabiz, it may seem counterintuitive for dispensaries to have weekly deals on the same products. After all, why would someone spend twice as much for a vape cartridge or an eighth when they can get a buy-one-get-one free deal every Wednesday?

The answer, though not immediately apparent, is that the strategy works to make dispensaries more money.

As Harvest of Arizona CEO Steve White explained, dispensaries often use deals to clear product that would otherwise sit in storage, or as an investment in long-term relationships with patients or suppliers.

“It’s like any other retail business, really,” he said. “And in Arizona, we’re starting to see that cannabis businesses are getting more and more like any retail business.”

In traditional economics, discounts like weekly deals, coupons, and first-time buyer discounts are all forms of what’s known in the marketing world as price discrimination.

By offering products at a lower price one day a week, dispensaries can reach more customers than if products were always full price.

Believe it or not, there are patients who will pay full price for a product that’s on sale once a week. The deals are for everyone else who wouldn’t buy the product normally.

The market is competitive in Arizona, White said, so offering weekly deals gives dispensaries a way to try and nudge ahead of each other. In other states, like Pennsylvania, medical marijuana is legal, but it can’t be promoted.

“Normally, with any store you open you’d have a grand opening,” White said. “Not permitted there. You can’t do anything.”

That’s not necessarily a bad thing, White explained. On one hand, dispensaries don’t have the same infrastructure to reach potential patients. On the other, they don’t have to pay for advertising.

Demitri Downing, founder of the Marijuana Industry Trade Association in Arizona, said buy-one-get-one free offers have probably been around for ages.

“Did that exist in the time of the Greek agora?” he said. “Was Aristotle walking around looking for buy-one-get-one-free on beaver skins? I don’t know, but somewhere in the history of marketing someone came up with the buy-one-get-one free concept, and now it’s being applied to cannabis.”

But marketing normalization in cannabis may have impacts beyond a more efficient market.

“We should be grateful we live in a world where we have responsible individuals marketing marijuana in a responsible way in conjunction with the government,” he said. “Where in the ’80s we had gang and cartel members cruising around the high school as a cool rebel drug.”