Cannabis Retailers Face Engagement Gap in Loyalty Programs

LOS ANGELES – A new report published by Sweed, a tech company that provides an all-in-one software ecosystem for Cannabis dispensaries, draws on Q1 2026 data from 2.1 million shoppers and $452.5 million in retail transactions to produce what may be the most detailed picture yet of how dispensary loyalty programs actually perform vs. how operators believe they do.

Loyalty members account for 89% of dispensary revenue across the programs measured, even though they represent 81.7% of active customers. They purchase at more than double the rate of non-members. By that measure, the programs appear to be working. The Q1 2026 Customer Loyalty Benchmark Report suggests the real problem runs deeper.

Despite year-over-year enrollment growth of roughly 35%, fewer than one in four new loyalty members ever earns a single point. Only 6.6% reach their first redemption – the threshold behavioral research consistently links to long-term retention. Dispensaries are building up their member rosters. However, they are not converting members into engaged customers.

“Many operators are spending margin to solve the wrong problem,” said Rocco Del Priore, Co-Founder and President of Sweed. “Discounts can drive transactions, but they don’t necessarily create loyalty. The biggest opportunity isn’t getting more people to join a program—it’s getting more members to engage with it.”

The finding reframes a strategic debate that has dominated Cannabis retail for the better part of three years. Price compression accelerated across most legal markets [driven by oversupply, competition from unregulated sources, and tax structures that inflate shelf prices] and discounting became the default retention lever. The Sweed data complicates that logic. If nearly nine in ten revenue dollars already come from enrolled members, and those members still fail to activate at scale, aggressive discounting may be protecting a narrow margin at the cost of broader engagement.

The implications for program design are significant. Flat point-accumulation models, which have dominated Cannabis retail, offer limited behavioral triggers for first-time earners. Tiered structures, automated milestone rewards, and time-sensitive challenges – the mechanics that general merchandise retailers have deployed for years – remain underused across dispensary programs.

The Sweed’s report put a data floor under what has been, until now, a largely qualitative argument. Dispensary operators who default to pricing over engagement are likely leaving compounding revenue on the table. The next competitive edge in Cannabis retail won’t come from the menu. It will come from what happens after a customer signs up.