To gain additional perspective on consumer trends, we analyzed AOV alongside product category market share and pricing to determine if the contents of a cart and/or price shifts impact cart size. Markets analyzed include California, Oregon, Colorado, Michigan, Nevada, Washington, Arizona, Oklahoma, and Alaska. To start, let’s look at the current state of AOV within LeafLink data and then identify any trends that exist across these markets.
Average Order Value in 2022
Between Jan. 1 and April 4 of this year, overall AOV in LeafLink was $3,750 across the nine markets—less than in 2021 ($4,107) and 2020 ($4,000). Combining this data with insights on order volume and frequency provides additional context to tell the full story.
Even while average order value decreased, the total number of orders increased. Total orders per month across these nine markets grew by 35.7% from 2020 to 2021 and 15.6% in 2022 due to a combination of additional buyers using LeafLink and increased purchase frequency.
When analyzing market-level data, there are clear distinctions between buyer behavior and a lot of variance across these markets.
2022 AOV and Most Popular Categories By Market
| Market | AOV | #1 Category | #2 Category | #3 Category |
| MI | $7,596 | Flower | Cartridges | Concentrates |
| NV | $7,007 | Cartridges | Flower | Edibles & Ingestibles |
| AZ | $6,154 | Cartridges | Edibles & Ingestibles | Flower |
| CA | $3,544 | Flower | Pre-Rolls | Cartridges |
| AK | $3,081 | Flower | Cartridges | Edibles & Ingestibles |
| WA | $1,987 | Flower | Edibles & Ingestibles | Concentrates |
| CO | $1,834 | Cartridges | Concentrates | Edibles & Ingestibles |
| OR | $1,531 | Flower | Cartridges | Edibles & Ingestibles |
| OK | $1,014 | Edibles & Ingestibles | Cartridges | Flower |
Categories are ranked by their percentage of transaction volume in LeafLink. MI, NV, and AZ see the largest average order values, while AOV drops off for CA and AK respectively, then even further in WA, CO, OR, and OK when measured from Jan. 1 to April 4, 2022.
When considering market maturity within the AOV hierarchy, we can see a trend: States that were first to legalize adult-use cannabis generally see AOVs decrease as more buyers and sellers open their doors and the markets mature and stabilize. Oklahoma is an exception as the state legalized cannabis solely for medical use in 2018. So, what other variables might impact AOV?
Price of Flower's Impact on AOV
Over the past several years, the per-pound price of flower has shifted significantly. From 2019 to 2021, flower became 40.5% more expensive per pound across these nine markets. In 2021, however, prices faced significant headwinds and decreased by 24.7%, then a further 21.8% in 2022 (through April 4).
By comparing flower price changes by year to the average order value, we can see the markets in which flower price fluctuations significantly impact AOV. Correlation ranges from -1 to 1, with a number closer to 1 indicating a strong positive relationship and -1 a strong negative relationship between the two variables. 
In California, Michigan, Nevada, Oklahoma, Oregon, and Washington, there is a positive relationship between the price of flower and average order volume for buyers, meaning that as price increases or decreases, so does AOV. Arizona, Alaska, and Colorado, in contrast, are negatively correlated, meaning that as prices go up or down, AOV shifts in the opposite direction.
Across all nine markets, there is a somewhat positive relationship (.45) between flower prices and AOV. So what does this mean? As flower prices have decreased over the past few years, so have AOVs on average. Overall, six out of the nine markets showed a positive correlation between AOV and the price of flower.
Each market has its own dynamics, and certain states such as California, Oregon, Washington, and Colorado have experienced above average flower price compression in recent years due to increased numbers of brands and producers. The first three fall into the positively-correlated group, with Colorado being the only exception. This makes sense because these markets have consistent demand for flower from retailers (the number one category in each of these states). As the price decreases AOV follows.
In other words, the substitution effect is likely not as strong in these markets. This assumption is an opportunity for further investigation. In a market such as Colorado where flower is not a top category, as flower prices decrease retailers likely see an opportunity to order more — leading to higher AOV.
Alex Feldman is the general manager of Insights & Marketing Services at LeafLink, where he develops products that empower cannabis businesses to make data-driven decisions and grow their reach.
