The High Cost of Discounts: How Over-Discounting Destroys Brand Reputation in Cannabis

The cannabis industry is at a crossroads. Across many markets, dispensaries rely heavily on discounts and promotions to drive traffic; BOGOs, 20% off days, endless flash sales.

It works in the moment, but there’s a hidden cost: over-discounting erodes brand value, conditions customers to expect deals, and weakens loyalty over time. The result? Declining margins, declining retention, and eventually, shuttered stores.

This isn’t just a cannabis problem. Retail giants have already shown us where this path leads.

Lessons from Mainstream Retail

Bed Bath & Beyond: The 20% Off Trap

For years, Bed Bath & Beyond relied on its famous 20% off coupons to drive sales. But the constant discounts trained customers to never buy full price. Brand differentiation disappeared, margins shrank, and loyalty eroded.

By the time leadership tried to pivot, it was too late. In 2023, the company filed for bankruptcy.

Macy’s: The Department Store Spiral

Macy’s was once synonymous with premium shopping. But endless discounting, one-day sales, clearance blowouts, and coupons stacked on coupons, blurred its identity.

Customers stopped seeing Macy’s as a brand they trusted and started treating it as a bargain bin. The result? Store closures, declining relevance, and a shrinking footprint.

How This Applies to Cannabis

Cannabis dispensaries that lean too heavily on discounts risk repeating these same mistakes. Over time:

• Price becomes the only differentiator. Customers no longer care where they shop.

• Margins collapse. Every promotion eats into profitability.

• Loyalty vanishes. Customers hop from shop to shop chasing deals.

• Brand equity is lost. Your dispensary becomes seen as generic; interchangeable with every other.

This is why we see dispensaries closing in saturated markets. The issue isn’t always lack of demand; it’s lack of differentiation.

The Retention Problem

Discount-driven customers are transactional. They’ll buy once, maybe twice, but they don’t stick around unless the next deal is bigger.

Customer-centric businesses, by contrast, focus on experience, personalization, and loyalty. They build relationships that protect margins and extend Customer Lifetime Value (CLV).

What Cannabis Can Learn

The lesson is clear: discounts should be a tactic, not a strategy.

Just like Bed Bath & Beyond and Macy’s, cannabis dispensaries that overuse discounts are burning long-term brand equity for short-term traffic.

But those that put the customer at the center, with loyalty programs, personalized marketing, and meaningful experiences, can escape the discount trap.

Final Thought

Discounts might fill the register today, but they hollow out your brand tomorrow. The cannabis retailers that survive won’t be the ones with the biggest promotions, they’ll be the ones with the strongest relationships.

Ready to move beyond discounts and build a brand that lasts? Contact Canna CRM today.