Margins Under Pressure: Cannabis Executives Share Their Playbook

Cannabis operators spent years competing on price.

Now many are discovering that discounts alone are no longer enough to drive growth.

That was one of the central themes during a panel discussion titled Making the Math Work: How Cannabis Operators Manage Margin Across Markets at the IgniteIt Cannabis Capital Conference in Chicago.

Executives from retail, technology, cultivation, and brand backgrounds discussed how businesses are responding to tighter margins, higher taxes, growing competition, and increasingly price-sensitive consumers.

The consensus: operators can only cut prices so far before they begin damaging their own profitability.

Inventory Discipline And Smarter Forecasting

For Matthew Melander, President of Sun Theory, inventory management remains one of the most important levers available to operators.

“When we took over operations in Denver, inventory control was critical,” Melander explained.

The company operates with roughly two weeks of inventory, an approach borrowed from more mature consumer industries.

Technology plays an increasingly important role in that process. Melander said Sun Theory uses artificial intelligence and predictive analytics to anticipate demand, while relying on experienced store managers to provide the local knowledge algorithms cannot capture.

“We use AI for predictive analysis, but we also rely on managers who understand the culture of their markets,” he said.

Margin Improvement Starts With Operations

Lauren Carpenter, CEO of Embarc, pointed to operational efficiency as another important driver of profitability.

One strategy that has helped improve margins involved building stronger relationships with local governments, regulators, and educational institutions.

By working directly with municipalities and local stakeholders, Embarc was able to reduce certain compliance-related costs market by market.

That local approach has become increasingly important as operators navigate a patchwork of regulations that vary significantly across jurisdictions.

Loyalty; A Financial Strategy

While operational improvements remain important, much of the discussion focused on customer retention.

Rocco Del Priore, co-founder of Sweed, argued that loyalty programs are increasingly becoming a margin protection strategy.

“Customer loyalty and engagement are margin drivers,” he said.

According to Del Priore, many retailers have reached the practical limit of how much they can charge consumers. That leaves operators with fewer options: cut costs, discount products, or find ways to increase customer retention.

Too many companies, he argued, remain trapped in a race to the bottom.

Instead, retailers should invest in memberships, loyalty programs, exclusive experiences, and community-building initiatives that create value beyond price.

Examples can range from skip-the-line privileges and product launches to meet-and-greet events and other experiences that deepen customer relationships.

Stop Chasing Discount Shoppers

Carpenter agreed.

She warned operators against making what she described as “fear-based decisions” in response to aggressive promotions from competitors.

“There are 99% off offers out there,” Carpenter said. “We can’t keep fighting over the people who are waiting for discounts.”

Instead, she advocated for controlled experimentation and more sophisticated loyalty programs designed to reach different customer segments.

Experiences such as concert tickets, exclusive events, and community-focused programming help attract consumers who are looking for something beyond the lowest possible price.

That strategy has helped Embarc improve retention while protecting margins.

Data Is Becoming A Competitive Advantage

Underlying many of the panel’s recommendations was a common theme: data.

Whether forecasting inventory, identifying customer segments, measuring loyalty program performance, or evaluating pricing strategies, operators increasingly rely on data to make decisions.

The challenge is no longer collecting information. It is turning that information into actions that improve profitability.

For executives, the implications extend beyond retail. Better forecasting improves inventory efficiency. Better segmentation improves marketing performance. Better retention increases customer lifetime value.

In a market where pricing power continues to weaken, those advantages may become increasingly important.

The discussion also highlighted why events like IgniteIt matter for industry leaders. Operators are not only comparing notes on pricing and profitability. They are exchanging ideas about the technologies, loyalty strategies, financing solutions, and operational systems that can improve performance across the business.

Those conversations will continue at IgniteIt’s Colorado Market Spotlight in Denver on September 18, where operators, investors, and executives will gather to discuss the next generation of growth strategies shaping the cannabis industry.