Will Surge Pricing Hit The Cannabis Industry

By Amy Hansen, The Fresh Toast on

Published in Cannabis Daily

Surge pricing is flirting with another industry – to the fear of consumers….will marijuana be next?

Surge or dynamic pricing is already a part of business and consumer behavior. Uber, airlines, and hotels have been leaders in charging more for something when you need it the most.  Uber has constantly faced harsh backlash for charging for up to 4X the regular cost. Wendy’s is now causing a ruckus as they are looking at experimenting with surge pricing and people are concerned. In theory, burger prices could increase during “lunch hours”. But will surge pricing hit the cannabis industry?  In a way, it has.

Related: California or New York, Which Has The Biggest Marijuana Mess Today surge/dynamic pricing is seen as a negative. For good reason. Federal regulators took a hard look at car services after several big surges occurred during extreme weather. This forced Uber to agree to put a cap on surge during declared emergencies so as not to be accused of price gouging (which is clearly illegal). But just as people got used to calling a cab from their phone, they also adjusted to surge pricing as the new normal. Bur dynamic pricing as been used for decades to benefit customers – Taco Tuesday to get people to eat out earlier in the week. Half price bottles of wine to fill restaurants on a Monday. Even Black Friday is a way to encourage people to get in the holiday spending spirit early – like 5 am early.

It has had a huge impact on the alcohol industry – in the form of Happy Hour.   Happy Hour become a buzz word in the late 50s with the Navy and moved into the mainstream. The 70s is when the idea of discount drinks and happy hour really took hold.  For patrons, they had the benefit of a nip after work at a discount (or just more for the money with 2 for 1). For restaurants and bars,,s it brought in customers at a slower times (4-6 or 7 pm) and they can pick the specials, allowing to offer value and still make a profit.

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Marijuana dispensaries have also embraced Happy Hour pricing with stores offering time sensitive deals. In an efforts to attract customers and fill slow hours you can see things like “buy one, get one 20 percent off 9 am–noon and 4–6 pm every day”. Or “8–10 am weekdays; 20 percent off top-shelf eights and up”.   Dynamic pricing is used to adjust consumer behavior…and a good discount is a strong incentive, and the marijuana industry as taken note.

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