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By pancakenap —

Quick Sales Estimate

Quick Sales Estimate

Hey pancakenap here with a fun little exercise using some of the data I've collected over the years. The methodology is basic, imprecise and problematic. The findings can't be very accurate but I figured it's still worth getting into a spreadsheet and taking a look.

Dates and order numbers for mail order cannabis, legal medical and legacy, were tracked and plotted. This information was used to estimate the number of orders per day and an average order value was applied to estimate monthly revenue (30 day period).

Stores where orders were placed are white-labeled. Instead of the store's name, we're showing them according to store type (legal medical and legacy MOM). We name a few at the end but not any active MOMs or those who have converted to new names.

Assumptions & Sources of Error

The sales estimations are store-wide but the basis of the estimation is one person's purchases.

Order numbers are possibly arbitrary but if they look good on a linear plot we assume they are not. The order sequence for each order was analyzed for repeating patterns or consistently missing numbers (ie. vendor only using odd or even order numbers).

Orders that were received and later canceled are unaccounted for and present a source of error.

Average order size is set at $200. The true value likely varies by store and store type.

Abstract

This post explores the landscape of mail-order cannabis purchases in Canada, focusing on both Legal Medical and Legacy MOM (Mail Order Marijuana) stores. By tracking order numbers and the dates of orders placed over specific periods, we estimated the number of orders per day and extrapolated monthly sales figures based on an average order value of $200. On average, we estmate revenue at a Legacy MOM at $505,000 monthly and a Legal Medical store at $1.1M. Estimated revenue at Legacy MOM stores ranged from $76k to $1.9M depending on the store and time period. Estimated revenue at Legall Medical stores ranged from $230k to $3.3M. This analysis aims to provide rough insights into the performance of different store types and their contribution to the cannabis market in Canada.

Methodology

To estimate the number of daily orders and monthly sales, we tracked order numbers and the dates orders were placed at various mail-order cannabis stores. The stores were categorized into two types: Legal Medical and Legacy MOM. We included data from 7 Legal Medical stores and 8 Legacy MOM stores.

  1. Data Collection: Orders were tracked by their unique order numbers and the dates they were placed. The difference in order numbers and the corresponding number of days between each order allowed us to estimate the number of orders occurring per day for each store.

  2. Plotting for Linearity: The order numbers were plotted on a Cartesian plane against the order dates to determine their linearity. Stores where only one purchase was made, those that did not show a linear progression in order numbers, or those where order numbers ran in reverse order were eliminated from the analysis. Three stores were excluded based on these criteria.

  3. Estimating Orders per Day: For each store, we calculated the change in order number over the tracking period and divided it by the number of days in that period. This gave us an estimate of the average number of orders per day.

  4. Estimating Monthly Sales: Using an average order value of $200, we multiplied the estimated daily orders by 30 (days in a month) to estimate monthly sales for each store.

Observations

Monthly Sales Estimates

  • Legal Medical Stores:

    • Legal Medical 1: $3,398,364.74
    • Legal Medical 2: $548,681.66
    • Legal Medical 3: $590,400.00
    • Legal Medical 4: $647,875.00
    • Legal Medical 5: $1,429,777.78
    • Legal Medical 7: $230,509.09

  • Legacy MOM Stores:

    • MOM 1: $538,024.10
    • MOM 3: $1,941,555.94
    • MOM 4: $219,420.00
    • MOM 5: $76,872.06
    • MOM 6: $87,059.73
    • MOM 8: $170,554.46

Tracking Periods and Date Ranges

The tracking periods varied significantly between stores, with the shortest being 15 days (Legal Medical 3) and the longest being 1,734 days (Legal Medical 2). This variation affects the reliability of our estimates, particularly for stores with shorter tracking periods.

  • Legal Medical Stores:

    • Legal Medical 1:
      • Date Range: 2016-02-23 to 2018-11-06
      • Days Tracked: 987 days
    • Legal Medical 2:
      • Date Range: 2016-08-26 to 2021-05-26
      • Days Tracked: 1,734 days
    • Legal Medical 3:
      • Date Range: 2016-12-08 to 2016-12-23
      • Days Tracked: 15 days
    • Legal Medical 4:
      • Date Range: 2023-11-05 to 2023-12-23
      • Days Tracked: 48 days
    • Legal Medical 5:
      • Date Range: 2016-02-24 to 2016-08-04
      • Days Tracked: 162 days
    • Legal Medical 7:
      • Date Range: 2020-04-24 to 2020-08-12
      • Days Tracked: 110 days

  • Legacy MOM Stores:

    • MOM 1:
      • Date Range: 2021-04-23 to 2021-12-28
      • Days Tracked: 249 days
    • MOM 3:
      • Date Range: 2016-02-27 to 2017-09-21
      • Days Tracked: 572 days
    • MOM 4:
      • Date Range: 2023-01-10 to 2024-05-24
      • Days Tracked: 500 days
    • MOM 5:
      • Date Range: 2021-10-19 to 2023-11-24
      • Days Tracked: 766 days
    • MOM 6:
      • Date Range: 2019-05-28 to 2021-11-17
      • Days Tracked: 904 days
    • MOM 8:
      • Date Range: 2016-08-19 to 2016-11-28
      • Days Tracked: 101 days

Key Insights

  1. Legal Medical 1 and Legal Medical 5 were the top-performing Legal Medical stores in terms of estimated monthly sales, while Legal Medical 3 and Legal Medical 7 had the lowest sales figures among Legal Medical stores.

  2. Among the Legacy MOM stores, MOM 3 and MOM 1 stood out with the highest estimated monthly sales, whereas MOM 5 and MOM 6 had the lowest sales figures.

  3. The length of the tracking period appears to influence the reliability of the sales estimates. Stores with longer tracking periods provided more stable and reliable data compared to those with shorter tracking periods.

  4. Estimated revenue at Legacy MOM stores ranged from $76k to $1.9M depending on the store and time period. Estimated revenue at Legal Medical stores ranged from $230k to $3.3M.

  5. Legal Medical average revenue is estimated at $1.1M per month, although that average is brought up by two data points. True average is likely closer to $500k as represented by the average of Legal Medical 2,3,4 and 7.

  6. Legacy MOM average revenue is estimated at $500k per month based on our small sample size, although that average is brought up by MOM 3 (Herbal Dispatch). The true average is likely closer to $140k per month as represented by MOMs 4,5,6 and 8.

Order Number Plots

Below we show all orders by store type. Trend lines are shown for both. The average number of orders per day by store type is also shown a the bottom.

  • Legal Medical: Orders show a strong increase from 2016 onwards. We're tracking 195.47 orders per day based on the order data.
  • Legacy MOM: Orders also increase initially but stabilize over time. Based on the order data, we calculate 119.36 orders per day.

Below we show plots for order numbers over time for a few of the stores used in this write-up.

Legacy MOM 3 - Herbal Dispatch

There are 14 order numbers for Herbal Dispatch placed over a 572-day period from 2016 to 2017, prior to the store reemerging as a legal medical store. Based on the change in order numbers and an average order value of $200, we estimate their revenues at nearly $2 million monthly—almost four times higher than the next store in the Legacy MOM category.

This data point is a significant outlier compared to other stores in this category. While there may be some margin of error, it is clear that Herbal Dispatch was a very large mail order operator at that time. I thought this would be an interesting data point to look at.

Forty-nine orders were placed at Aurora's medical store between 2016 and 2018 (987 day period). Based on our methodology Aurora has the highest monthly revenue at nearly $3.4M but the $200 average order estimate used is high with respect to the orders placed at this store. During this time, Aurora offered free or $5, same-day shipping with a 5 gram (later a 10 gram) minimum order. Most orders from the data used for this post were under $100.

Twenty orders were placed at Tilray over a 162 day period in 2016. Based not he change in order numbers, we're estimating revenues at just under $1.5M monthly over that time period.

Thirty-eight orders were placed at Broken Coast over a 1,734 day period spanning from 2016 to 2021. Using this methodology we estimate their revenue at $548,681.66 monthly.

Legacy MOM 8 - THC Delivery

We're using 3 order numbers from THC Delivery spanning August 2016 to November 2016. Using the change in order numbers we'd calculate their monthly revenue at around $170k

Legacy MOM 4 - Unnamed

We'll leave this store unnamed, but it serves as the best indicator of the current state of the legacy market based on this data. This MOM is currently operating and offers a wide distribution of products. They focus on the value side of the market, making them a good benchmark. We estimate they are processing an average of 37 orders per day, generating $220,000 in monthly revenue.

Thanks

Going to cut it there. Thanks for reading the post today.

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