New research from Sweed shows members Drive 89% of Revenue, But Most Never Redeem a Reward

For cannabis retailers, the marketing playbook that most consumer brands take for granted simply doesn’t exist. Google and Meta continue to bar cannabis advertising outright, leaving dispensaries with no paid search, no paid social, and none of the retargeting infrastructure that other retail categories lean on to acquire and re-engage customers.

What’s left is first-party data: email lists, loyalty programs, and whatever a retailer can build directly with the customers already walking through its doors. That constraint has turned loyalty programs into something closer to a dispensary’s entire marketing department than a side perk.

New research from Sweed, a dispensary operating system provider, puts a number on just how much weight those programs are carrying — and exposes a costly gap in how well most operators are using them.

Loyalty already drives the business

Sweed’s Q1 2026 benchmark, drawn from a dataset of 2.1 million active shoppers, 1.72 million loyalty members, and $452.5 million in revenue across participating dispensaries, found that loyalty members represented 81.7% of active customers but generated 89.4% of total revenue. Members spent 1.9 times more per customer, visited 1.7 times more often, and posted a repeat buyer rate of 59.7%, versus just 24.1% for non-members.

The gap widens further on the communication side, where owned channels matter most. Loyalty members had an 81.3% email reach, compared with 26.2% for non-members, and were roughly 28 times more likely to open a marketing email — a 28.2% open rate against non-members’ 1.0%.

Enrollment, in other words, is not the problem. More than four out of five active buyers are already loyalty members, and that penetration held steady even as the active customer base grew by more than 31% quarter over quarter.

Rocco Del Priore, Co-Founder and President of Sweed, explained, “Historically, many retailers treated loyalty as a simple sign-up program. Operators became very good at enrolling members because that part is easy, but the technology available was quite limiting and didn’t give them the tools needed to drive activation. Getting customers to come back, earn, redeem and stay engaged requires a customizable tool that lets operators easily set up tiers, define how customers move through those tiers and use built-in engagement mechanics to keep customers active after sign-up.”

Where the program breaks down

The trouble starts right after sign-up. New enrollments grew by approximately 34.7% in Q1, adding roughly 393,000 more members than the prior quarter. But the activation rate — the share of newly enrolled members who complete their first earn event — fell from 31.8% to 23.9%. First redemption rates were hit even harder, dropping from 13.2% to 6.6%, roughly cut in half quarter over quarter.

Put in absolute terms, Q1 added nearly 400,000 more enrollments than Q4, yet only about 4,600 additional members ever activated. Retailers are filling the top of the funnel faster than ever; they’re just not converting that volume into engaged members.

There is a silver lining buried in the data: members who did activate or redeem moved noticeably faster. Average time to first earn dropped from 24.3 days to 6.3 days, and time to first redemption fell from 55.1 days to 22.1 days. The engaged members are getting to value quicker than ever — it’s the shrinking share who ever get there at all that’s the concern.

A different problem than discounting

What does Sweed see that operators get wrong in program design? Del Priore says “Most loyalty programs are built around one mechanic of earning points with every purchase. Points are important, but by themselves, they are not enough to keep customers engaged over time. The most effective loyalty programs build on top of points with tiers, challenges, personalized rewards, referrals, exclusive offers and an option to offer cash back as a reward. Customers consistently respond better to guaranteed value they can see and use immediately than to the chance of winning something down the line. Operators tend to shy away from cash back rewards because they assume it erodes margin, but that’s a design problem, not a reason to avoid it.”

Many operators still treat retention as a discounting exercise, layering promotions on top of a loyalty tier structure to keep customers coming back. The Sweed data suggests that’s not where the leverage actually sits.

The findings point instead to onboarding and activation: getting a newly enrolled customer to their first meaningful interaction with the program — a first earn, a first reward redeemed — before they lose interest or forget the program exists.

What comes next

In response to its own findings, Sweed has rolled out a new loyalty framework aimed squarely at the post-enrollment gap: tier-based progression with automated movement between levels, gamified challenges designed to drive repeat visits, and more flexible reward mechanics — cashback, sign-up bonuses, birthday rewards — that give operators more levers than a flat points system typically allows.

The newly launched loyalty product was built to give operators the tools to convert enrollment into real engagement, a further investment in a program that was already leading the industry.

The broader signal for the category is one of maturity. Cannabis retailers already spent years figuring out how to build loyalty programs that people join. The next competitive edge will belong to those who figure out how to get members to actually use them — because in a channel where there’s no paid media fallback, an unredeemed loyalty account isn’t a neutral outcome. It’s a marketing dollar with nowhere left to go.

Official press release can be found here: https://www.globenewswire.com/news-release/2026/06/30/3319769/0/en/89-of-dispensary-revenue-comes-from-loyalty-members-yet-most-never-activate-the-rewards-that-drive-repeat-sales.html