420 in 2025: How California Cannabis Retailers Are Adapting to Market Realities

By Alex Freedman, President, California Cannabis Operators Association

As we approach cannabis retail's highest-volume sales day of the year, California operators are navigating 420 (April 20th) differently than in years past. Our market's stark economic realities demand a more strategic approach to marketing and operations.

The extravagant 420 celebrations of previous years (complete with celebrity appearances, lavish events, and deep across-the-board discounts) have primarily become unsustainable for California retailers. 

In a market where wholesale prices remain depressed and operating costs continue to rise, many businesses simply cannot afford the splashy promotions that once characterized the cannabis holiday. Instead, we're shifting toward more targeted, community-focused initiatives that deliver measurable ROI. 

The most successful retailers are:

• Building authentic community connections through smaller, more meaningful events throughout the year

• Focusing on conscious consumer education that protects health and safety and adds value beyond discounts

• Enhancing loyalty programs that reward existing customers while attracting new ones

• Forming strategic partnerships with complementary local businesses and mission-driven organizations

• Leveraging cost-effective digital marketing that carefully complies with regulations

This pivot toward relationship-building over pure promotion reflects a maturing industry learning to do more with less. California cannabis operators recognize that sustainable growth comes from cultivating loyal customers, not just chasing one-day sales records.

And while marketing approaches are evolving, operational preparedness remains critical. 

The industry-wide sales dip that typically follows 420 means retailers must be particularly strategic about inventory management—stocking up appropriately without overextending, especially on items with shorter shelf lives.

Forward-thinking operators conduct thorough technology stress tests well in advance, working with POS providers to ensure systems can handle the transaction surge. Plans should also include additional well-trained team members who can maintain service quality even during peak hours.

The most successful retailers view 420 not as an isolated high-volume day but as an opportunity to build customer relationships throughout the year through 1) thoughtfully collecting customer data (with permission), 2) gathering feedback on the shopping experience, and 3) creating follow-up opportunities that mitigate the typical post-holiday slump.

No discussion of California's cannabis market would be complete without acknowledging an uncomfortable truth: Michigan, a state with just one-quarter of our population, now outpaces California in legal cannabis sales. This stark comparison underscores the unique challenges facing our market.

While California retailers struggle under a 15% excise tax (scheduled to increase to 19% in July), plus state and local taxes that can push the total burden to 30%, Michigan operators enjoy a more reasonable tax structure and fewer barriers to retail access. The resulting price differences drive California consumers to unregulated markets, where products sell for roughly half the price of those in licensed dispensaries.

This inequity is reflected in our market contraction: since 2021, annual licensed cannabis sales in California have dropped by 19%, and state excise tax revenue has fallen by 13%. The number of inactive or surrendered cannabis licenses (10,828) now exceeds active ones (8,514)—a clear signal of an industry in distress.

Despite these challenges, California cannabis retailers demonstrate remarkable resilience and creativity. The focus on operational excellence, meaningful customer connections, and strategic marketing represents an industry maturing despite significant headwinds.

And yet, retailer ingenuity alone cannot overcome our market's structural challenges. 

Without immediate policy reforms to 1) halt the scheduled excise tax increase, 2) crack down on unlicensed operations, and 3) expand consumer access to legal retail, many more California cannabis businesses will not survive to see future 420 celebrations.

As we navigate this year's cannabis holiday, CaCOA remains committed to advocating these essential reforms and supporting our members' efforts to build sustainable businesses in an increasingly challenging environment.