HEADSET CANNABIS MARKET INSIGHTS

A Commercial History of 4/20:

Who’s Buying What on Cannabis’ Biggest Day
Cannabis Intelligence
April 2017
Executive Summary
This report examines the commercial side of every cannabis-lover’s favorite holiday: 4/20. Use it to craft your 4/20 specials, or merely to satisfy
your curiosity about how the holiday plays out on paper. If you’ve ever wanted to know what the number one holiday hot seller is or what the
day’s peak sales hours are, this is the report for you.

4/20 Lights Up the Industry

A sales bump on 4/20 is an incontrovertible fact. The day has become the world’s unofficial celebration of cannabis, and data shows that
consumers are buying plenty of cannabis with which to celebrate.

Interestingly enough, the selection of 4/20 as cannabis’ day is pretty arbitrary. It’s not, as some have theorized, the California penal code
section for the plant or the day it was legalized in Amsterdam. Rather, it began as a secret code word used to coordinate smoke sessions for a
group of San Rafael high schoolers in the 1970s. Somehow it caught on and never stopped catching, and is now the most anticipated day in the
cannabis industry.

Before there was a cannabis industry, however, all we knew about 4/20’s effect on sales was that the previous week was a busy one for dealers.
Now, with the ability to track cannabis sales in real-time, we can get a pretty precise idea of what people are smoking on the big day. And not
just what they’re smoking, but also who they are, when they’re buying it, and how much they’re paying.

As it turns out, the day does have a pretty significant effect on the popularity of certain products. Cannagars, unsurprisingly, see a big boost.
More traditionally medicinal products don’t get as much of a bump, which is to be expected, given the day’s festive atmosphere.

Perhaps most intriguing is the fact that the average basket amount isn’t too significantly higher than on other days in the spring season. This
suggests that the very real 4/20 sales bump is actually due to an influx of one-off or first-time buyers. The holiday might be arbitrary, but

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having it so well established seems to be opening the door to cannabis for a lot of new customers. If that isn’t cause for celebration, we don’t
know what is. Happy 4/20 everyone!

Methodology
Data for this report comes from real-time sales reporting by participating Washington state cannabis retailers via their point-of-sale systems,
which are linked up with Headset’s business analytics software. This report is based on data collected from Washington state retailers on
in 2015/2016. That data is cross-referenced with our catalog of over 100,000 products to provide detailed information on market trends.
Demographic data for this report excludes customers that had more than 500 transactions in the last 2 years, as well as anyone that had a
null for either age or gender depending on the analysis.

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the
instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at
the point of purchase. Thus, there is a slight margin of error to consider.

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The 4/20 Top Ten 2015
Flower and Pre-Roll dominated the top 10 list in 2015, which makes sense given the relative youth of the market at that point. In 2016, when
consumers were beginning to be more comfortable with other methods of consumption, three cookies made the list.

Most of the products that were in the top 10 on 4/20 were not part of the top 10 products sold in the first 19 days of the month, which suggests
that consumers are trying out specialty items and branching out from their usual purchases for the occasion. Indeed, in 2016 one of the top
10 products (Dirty Girl) doesn’t show any sales data in the beginning of the month, which might even mean it was a special product launch for
4/20.

Total Baskets with Product Rank Product Rank

Year Product Category Brand
Product on 4/20 on 4/14 - 4/19

2015 Juggernaut (Gram) Flower Northwest Recreational 519 1 12

2015 Golden Pineapple Preroll (Gram) Pre-Roll Phat Panda 358 2 33

2015 Snow Dawg (Gram) Flower Root Down 233 3 162

2015 Pink Preroll (Gram) Pre-Roll JV Ranch 177 4 59

2015 Blue Dream (Gram) Flower Liberty Reach 172 5 1

2015 Dirty Girl (Gram) Flower Tahoma Flavors 152 6 40

2015 Mystery Machine (Gram) Flower Top Cut Farms 149 7 669

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The 4/20 Top Ten 2015 Continued…

Total Baskets with Product Rank Product Rank

Year Product Category Brand
Product on 4/20 on 4/14 - 4/19

Pot of Gold Preroll

2015 Pre-Roll Top Cut Farms 142 8 869
(Half Gram)

2015 Purple Haze (Gram) Flower TumbleWeed Farm 142 9 1480

2015 Boggle Gum (Gram) Flower Top Cut Farms 132 10 2136

The table below compares 4/20 sales for the top products to their sales data from 4/1 to 4/19 for the same year. This helps control for the
typical fluctuations and trends of the market, which is still relatively new and tends to see products appear and disappear frequently. By
focusing in on just the period leading up to 4/20, we’re better able to examine the 4/20 sales spike.

The sales are also presented in terms of total baskets containing a product, which gives a clearer picture of that product’s popularity. On 4/20,
it’s safe to assume that one basket means one customer, so this method shows us the most common purchases while filtering out anomalies
from high-priced specialty products or bulk purchases of 4/20 promotions.

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The 4/20 Top Ten 2016

Total Baskets with Product Rank Product Rank

Year Product Category Brand
Product on 4/20 on 4/14 - 4/19

Triple Chocolate Cookie

2016 Edible Journeyman 850 1 9
(10mg)

Snickerdoodle Cookie
2016 Edible Journeyman 795 2 7
(10mg)

2016 Golden Pineapple Preroll (Gram) Pre-Roll Phat Panda 752 3 2

Peanut Butter Cookie

2016 Edible Journeyman 714 4 10
(10mg)

2016 Dirty Girl (Gram) Flower Top Cut Farms 588 5 N/A

2016 Platinum GSC Preroll (Gram) Pre-Roll Phat Panda 580 6 37

12th Man Down Preroll

2016 Pre-Roll Phat Panda 531 7 405
(Gram)

2016 Key Lime (Gram) Flower Top Cut Farms 504 8 13120

Bubba's Gift Preroll

2016 Pre-Roll Phat Panda 392 9 74
(Gram)

2016 AK-47 (Gram) Flower Top Cut Farms 321 10 14286

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4/20’s Top Categories
2015 saw a larger overall 4/20 sales spike than 2016, likely due to the rapid growth of a relatively new cannabis market at the time. However,
it’s interesting to note that Topicals and Tinctures/Sublinguals saw a slight decrease in 4/20 sales in 2015, which could be due to consumers’
relative unfamiliarity with those products at the time.

Delving further into categories, 2016 saw the largest increases in Pre-Rolls, Beverages, Concentrates, and Edibles, suggesting that consumers
adapted rapidly to the industry’s new offerings. The information for the chart below is based on a comparison of March/April sales for similar
days of the week to the 4/20 holiday (Monday in 2015 and Wednesday in 2016). Again, limiting it to just the months prior helps highlight the
effects of the holiday and protects against the fluctuations present in the full year’s data.

2941+ +4114+ +2635+ +4434+ +3723+ +6545+ +014+ +027+ +2223

INCREASE IN SALES ON 4/20 COMPARED TO SIMILAR WEEKDAYS

2015 % INCREASE IN SALES ON 4/20 2016 % INCREASE IN SALES ON 4/20

300%

250%

200%

150%

100%

50%

0%
BEVERAGE CAPSULES CONCENTRATES EDIBLE FLOWER PRE-ROLL TINCTURE & TOPICAL VAPOR PENS
SUBLINGUAL
-50%

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4/20’s Top Categories Continued…
These are the segments that saw the largest jump in 4/20 sales, based on the same calculation as above.

Leira Cannagars Oakor Prohibition Brands

Segment: Segment: Segment:

Cannagar Breathstrips Blunts

% Sales Increase on 4/20 % Sales Increase on 4/20 % Sales Increase on 4/20

4416% 575% 537%

OMG Sykes Journeyman Legal Beverages

Segment: Segment: Segment:

Mixed Strain Pre-Roll Cookie Carbonated

% Sales Increase on 4/20 % Sales Increase on 4/20 % Sales Increase on 4/20

531% 349% 266%

BOND Hempire / Kettle River

Segment: Segment:

Massage Oil / Lube Shatter

% Sales Increase on 4/20 % Sales Increase on 4/20

220% 208%

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4/20 By the Baskets
However, total baskets drastically increased each year—in 2016, stores had more than double the total number of basket transactions on 4/20
than on the Wednesday preceding the holiday. Given that each basket likely represents a different customer, that means there were a lot more
people shopping for cannabis on 4/20 than usual. Not exactly shocking, but it does suggest that the holiday has a broader appeal than just
your die-hard cannabis consumer.
It’s also important to note that the average item price fell considerably both years, meaning that customers are preferring holiday bargains,
which further suggests first-time or occasional buyers. The average items per basket increased from 1.7 each year to 2.6 on the holiday, which
could also indicates less seasoned consumers, as they might be interested in sampling more different products to find out what they like. All
told, almost twice as many people came in and they bought 50% more items than normal, though many of those items were at lower price
points.

8652+ +8332+ +8552+ + 6135+ +6928+ +6134+ +

BASKET TRENDS 2015 BASKET TRENDS 2016

AVERAGE BASKET AVERAGE ITEM PRICE AVERAGE ITEMS/BASKET AVERAGE BASKET AVERAGE ITEM PRICE AVERAGE ITEMS/BASKET

$45.00 3.0 $45.00 3.0

$40.00 $40.00
2.5 2.5
$35.00 $35.00

$30.00 2.0 $30.00 2.0

BASKET/ITEM PRICE

BASKET/ITEM PRICE

ITEMS PER BASKET

AVERAGE ITEMS

$25.00 $25.00
1.5 1.5
$20.00 $20.00

$15.00 1.0 $15.00 1.0

$10.00 $10.00
0.5 0.5
$5.00 $5.00

$0.00 0.0 $0.00 0.0

4/13/2015 4/20/2015 4/27/2015 4/13/2016 4/20/2016 4/27/2016

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Do men or women shop more on 4/20? Who spends more and by how much?
Women are slightly freer with the funds than men on 4/20, but men tend to go for a bit more variety than they normally would. Baskets
attributed to women are 87% larger than a typical weekday in the period, while those attributed to men are only 71% larger. However, men up
their average items per basket from 1.8 to 2.4 (a 36% increase) compared to women, who already buy a wider variety of products than men but
only increase from 2.0 to 2.5 (a 27% increase) on 4/20.

The 4/20 fever is not ageist: All ages see a spike in sales and trips on the 4/20 holiday. However, it affects some more than others. Customers
between the ages of 30 and 34 and customers under 25 see about double the number of trips on 4/20 as a normal Wednesday. Customers
over 50 and customers between 25 and 29 see the lowest bump in number of trips at 40% and 58%, respectively.

CHANGE IN ITEMS PER BASKET 2016

NORMAL WEEKDAY 4/20

3.5

3.0
AVERAGE ITEMS PER BASKET

2.5 2.4
2.5

2.0
2.0 1.8

1.5

1.0

0.5

0.0
WOMEN MEN

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What is the most popular age for 4/20 shopping?
Regarding what they’re buying when they go, it appears that customers aged 30-34 have the highest increase in their average items per basket
and customers between 45 and 50 are the only ones whose average item price (AIP) goes up.

Customers aged 30-34, the most adventurous age group on 4/20, increased their shopping most in the Edible category, purchasing 6.5x as

41+ +14+ +35+ +34+ +23+ +45+ +14

many edibles on 4/20 as they did the preceding Wednesday. This was closely followed by Pre-Rolls with a 5.8x increase in units purchased.

CHANGE IN AVERAGE ITEMS PER BASKET AND AIP BY AGE

% INCREASE IN AVG ITEM/BASKET % CHANGE IN AIP

80%

60%

40%

20%

0%
20 TO 24 25 TO 29 30 TO 34 35 TO 39 40 TO 44 45 TO 50 >50

-20%

-40%

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It’s 5 O’Clock Somewhere: 4/20 Sales by Time of Day

PURCHASES BY HOUR IN THE DAY

WEDNESDAY BEFORE 4/20 4/20 WEDNESDAY

12.00%

10.00%
% OF TOTAL TRANSACTIONS

8.00%

6.00%

4.00%

2.00%

0.00%
BEFORE 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM+
10:00 AM

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It’s 5 O’Clock Somewhere: 4/20 Sales by Time of Day Continued…

PURCHASES BY HOUR IN THE DAY

WEDNESDAY BEFORE 4/20 4/20 WEDNESDAY

$40.00

$35.00

$30.00

$25.00
AVERAGE BASKET

$20.00

$15.00

$10.00

$5.00

$0.00
BEFORE 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM+
10:00 AM

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Are People Stocking in Advance up For 4/20?
Not really. There is a small pickup on 4/19 but the bulk of holiday-related sales are on the day itself. Even in 2015, when 4/20 fell on a Monday
and might theoretically have been celebrated the weekend prior, there was no significant bump leading up to the holiday.

In 2016 the sales on 4/20 were over double the sales of the Wednesday before (4/13), while 4/19 saw only a slight 11% increase over Tuesday
the 12th. To compare 4/20 to traditional retail holiday sales, it’s more like Mother’s Day, where procrastinating children flock to buy flowers the
day of, than Christmas, which yields a steady increase in sales during the weeks leading up to it.

SALES INCREASE AROUND 4/20

120%

100%

80%
% INCREASE IN SALES FROM PREVIOUS WEEK

60%

40%

20%

0%

4/12/2016 4/13/2016 4/14/2016 4/15/2016 4/16/2016 4/17/2016 4/18/2016 4/19/2016 4/20/2016 4/21/2016 4/22/2016 4/23/2016

-20%

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Money Does Matter on 4/20
Obviously, given the slightly lower average item prices on 4/20 and relatively stable overall basket totals, consumers are keen to get more bang
for their buck by buying discounted items. It is difficult to tell if something is on sale, but by focusing on item prices in the days immediately
preceding 4/20, it’s easier to spot price drops.

The data here compares item prices from 4/1 through 4/19 to the price on 4/20. Curiously, about 10% of the unit sales occurred for products
that were not sold at all in the days leading up to 4/20, like the aforementioned Dirty Girl. This definitely suggests that producers are timing
their product launches to coincide with the holiday, which could be a smart marketing strategy.

As for other promotions, products that were on sale were purchased more often on 4/20, with over 20% of unit sales going to products that
were discounted more than 25% from their previous prices. This statistic drops back to 10% on 4/21. This varied by segment. Beverages, for
example, saw about 40% of unit sales going to products with a 25% or greater discount.

TOTAL UNIT SALES BY “DISCOUNT” ON 4/20

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
NO PREVIOUS 25% OR MORE 25% TO 15% 15% TO 5% 5% TO .01% NO DISCOUNT .01% TO 10% 10%+
PRICE DISCOUNT DISCOUNT DISCOUNT DISCOUNT INCREASE INCREASE

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Money Does Matter on 4/20 Continued…

UNIT SALES BY DISCOUNT 4/20

25% OR MORE DISCOUNT 25% TO 15% DISCOUNT 15% TO 5% DISCOUNT 5% TO .01% DISCOUNT

NO DISCOUNT .01% TO 15% INCREASE 10%+ INCREASE NO PREVIOUS PRICE

100%

90%

80%

70%

60%
% UNIT SALES

50%

40%

30%

20%

10%

0%
BEVERAGE CAPSULES CONCENTRATES EDIBLE FLOWER PRE-ROLL TINCTURE & TOPICAL VAPOR PENS
SUBLINGUAL

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Consumers Mix it Up More For 4/20
As would be expected, given the overall increase in items per basket, baskets on 4/20 are more diverse than on other days. On an average day
in April over 50% of baskets contained only Flower, which dropped down to 40% on 4/20. More baskets contain multiple categories on 4/20
than other days.

Category Combinations % 4/20 Baskets % Pre Baskets

Flower 40.20% 54.70%

Pre-Roll 15.30% 15.00%

Flower | Pre-Roll 11.00% 6.10%

Concentrates 4.50% 5.00%

Edible 4.00% 3.80%

Concentrates | Flower 3.50% 2.30%

Edible | Flower 2.70% 1.60%

Vapor Pens 2.60% 3.50%

Edible | Pre-Roll 1.90% 0.80%

Edible | Flower | Pre-Roll 1.60% 0.30%

Concentrates | Flower | Pre-Roll 1.30% 0.30%

Other 11.40% 6.70%

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Conclusion and Predictions
Clearly, the 4/20 sales boost isn’t going anywhere soon. While the market is seeing more new cannabis consumers, who are probably less
familiar with the day’s connotations, it has already become well established as “the cannabis industry’s Black Friday.” Perhaps newer consumers
will lack the same sense of secrecy, ritual, and belonging around the day that pre-legalization smokers had, but the data suggests that they’ll
still show up for the discounts.

It’s also interesting to note that there hasn’t been a single 4/20 on a weekend since legalization. Thus, the popular times of day have been
somewhat stuck around a 5pm peak. Next year, 4/20 is a Friday, which probably means more of the same. In 2019, however, it’s a Saturday,
which is a long way off to think about, but could change the retail dynamic quite a bit. Instead of the typical after-work, pre-party bonanza,
retailers could be flooded with a morning rush of cannabis consumers eager to get out for day hikes and other adventures.

As for the sales breakdown, it’s fairly safe to say that there will likely be a sales bump that spans all categories going forward, as all categories
have had enough time on the market to have established a customer base. The top brands list gives some insight into the type of products that
do well on 4/20, with the Leira Cannagar—already a special occasion purchase—topping the list. You also see a smattering of more once-in-
awhile products like breathstrips, as well as Bond infused sensual massage oil.

Savvy retailers can use 4/20 to capitalize on this adventurous and occasionally lavish spirit, tailoring their promotions to promote trying
new products and splurging a little. Either way, the sales boost from 4/20 is significant across the board, giving everyone involved plenty to
celebrate!

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About Headset
Headset is market data and business intelligence for the cannabis industry. Our extensive Industry Report deep-dives into specific brands to
help businesses better monitor the competitive landscape and perform exhaustive category analysis. Reports are generated via aggregate,
real-time transaction data to get a unique and thorough analysis of what’s happening in the Washington market.

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