The latest hot customer loyalty space: Cannabis sales

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By: RickFerguson |

Posted on August 10, 2016

The advent of legal marijuana in US states such as Colorado and Oregon has had the interesting side effect of allowing retail analysts to observe, in real time, how a brand new retailer industry sets about identifying and marketing to its best customers. What was once an illegal underground industry has now gone mainstream - and with cannabis dispensaries in Colorado now outnumbering Starbucks and McDonald's outlets combined, legal marijuana has become big business. A recent Forbes article details the efforts of one cannabis loyalty startup to become the go-to loyalty platform for marijuana retailers.

According to Forbes, cannabis customer loyalty and analytics platform Baker now employs 13 people and has contracts with over 100 marijuana dispensaries in six states. While he began business a year ago with Twitter shutting down his account and dispensaries shutting the door in his face, CEO Joel Milton is now so legit that his company has attracted $1.6 million in venture capital from such tech luminaries as Michael Lazerow, founder of

Milton's task: to help cannabis retailers solve a classic conundrum in brick-and-mortar retail - how to identify, recognise, and reward their best customers. Money quote from Forbes:

"The influx [of venture capital] comes at a critical time in the industry's development. At most cannabis dispensaries and retail shops, 'customers come in and buy, but the sellers generally have no idea who they are, what products they may be interested in or what might make them return,' said Milton. 'The goal with Baker is to turn anonymous visitors into repeat customers,' he said."

And in case you were wondering, there's more than one company competing in the cannabis loyalty space; cannabis retail analytics firm Headset recently released the results of an analysis of its "massive database" of cannabis retailer transactional data to paint a demographic portrait of recreational marijuana users.

According to Headset, "smokers in [cannabis] customer loyalty programmes are overwhelmingly male, accounting for about 70% of all members. And, while customers range from ages 21 to 95, over 50% of loyalty members are under 40." Other key stats (All text courtesy of Headspace):

  • 25- to 29-year-olds account for the largest percentage of customer loyalty members (20%), followed by 21- to 24-year-olds (16%). Yet the average customer age is 37.6-years-old, which is a higher than one might expect given stereotypes about marijuana users.
  • Most people spend between $25 and $50 per trip to a marijuana store, with a $33 median spend per trip. 34.7% of customers spend less than $10 on average.
  • The median customer spends $645 on pot each year, and over 57% of customers spent more than $500. Very few customers - less than 10% - spent over $2,500.


Thare are many more stats, which interested parties can find on Headset's web site. More interesting still is Headset's fond anticipation of the day when cannabis sales are considered mainstream:

"In contrast to the stereotypical depictions of marijuana users in popular culture and the mainstream media, our customer loyalty data shows that there is a wide range of [marijuana] smokers. Each customer segment brings their own habits and product preferences with them into the marijuana store. As the industry develops, talking generically about "marijuana"... may become like referring to 'alcohol sales' rather than talking about beer, wine, and cocktails."

The relevant news for our purposes, of course, is how quickly loyalty marketing has become an essential - and potentially lucrative - component of cannabis retail marketing. The morale of this story: regardless of your feelings on marijuana legalisation, the industry has provided an object lesson on the importance of demonstrating loyalty to your best customers, regardless of your industry.

Read the Forbes article here, and read more of Headset's customer demographic study here.

-Rick Ferguson



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