EXCLUSIVE: Forget Deep Discounts, Here’s What Drives Cannabis Retention

Cannabis retailers may be overestimating how much discounting is actually needed to keep customers coming back. That’s according to Cy Scott, co-founder and CEO of Headset, who shared his stance on one of cannabis retail’s most persistent challenges – discounting.

At the IgniteIt Cannabis Capital Conference, which is taking place June 14–16, 2026, in Chicago, Illinois, at the Marriott Downtown Magnificent Mile, Scott told IgniteIt’s Nicolás J. Rodriguez that deeper discounts do not necessarily create more valuable customers.

“Why would you give that customer 50% off versus 10% off?” Scott asked. “The customers that do come back and are repeat purchasers, if they’re at the 50% level, they’re going to be a worse-performing customer, spending less than the ones that come in at a lower discount.”

Discounts help attract and retain first-time shoppers, but excessive promotions can ultimately erode customer value, he said, recommending keeping first-time offers at 10% or less and focusing on other retention strategies.

These strategies include acknowledging new customers after their first purchase, understanding which products and categories are most closely tied to retention, and ensuring staff can guide shoppers toward those products.

“People come in with a 50% discount, and they’ll just jump to the next place that has a 50% discount,” Scott said.

Retailers should focus on creating a stronger customer experience instead, he explained. In markets where the same products are available across multiple stores, experience is one of the critical differentiators.

“If they have a better experience at your store, if you acknowledge them and you understand who that customer looks like, bringing them in with a low discount is a great starting point, and then you’re going to see a pretty good lift on retention,” Scott continued.

What’s The Formula For Success

Headset’s data shows the industry needs improvement.

According to Scott, the top-performing stores in a Headset study of more than one million customers across over 1,000 stores retained nearly 70% of their customers, suggesting that successful operators are combining thoughtful promotions with stronger customer engagement strategies.

“If you layer on some of those playbooks, it’s only going to improve from there,” he said.

The differences at the state level are another area for further analysis.

“The unique state level — every state is quite different,” Scott said. “What is driving that? What do those consumers look like?”

Making Data More Accessible

Scott also discussed how Headset is incorporating artificial intelligence into its analytics platform. The company is focusing on the development of tools that allow users to query business data directly and plans to integrate with platforms such as ChatGPT and Claude.

“We’re doing a lot right now… with artificial intelligence and making our data more accessible so you can just talk to the data now and get answers,” he said.

Looking ahead, Scott pointed to regulatory developments, including cannabis rescheduling efforts and expanding adult-use markets, as positive forces for the industry, which are the main topics at industry gatherings.

“The industry is always changing,” he said. “An event like this is a great place to talk, strategize, and connect with other organizations that can benefit from these changing times.”