Cannabis culture, though scaling quickly, is still an exclusive club. Only nine states in the U.S. allow its sale and use as a general consumer product.
Although there are passionate communities of active cannabis users virtually everywhere, the majority have yet to be introduced to today’s sophisticated branded products.
I have now personally seen more than half a dozen new cannabis markets legalize, and it takes much more than general business savvy to compete.
Here are three ways brands are making their mark.
1. Be Bold and Different
The cannabis industry is much more than just marijuana. To bridge the cultural gap to consumers who were previously unfamiliar with cannabis, products need to be more impressive and more accessible to the masses — think baked goods, candies, drinks, and even branded joints. The best of these brands invest in traditional marketing techniques to maintain a consistent and professional presentation: from packaging to high quality polished websites.
Flower — the dried cannabis buds — will always exist as a product choice in retail stores and dispensaries, but it’s quickly losing market share to branded products. We see this in virtually every market that our clients operate in. Items like cannabis-infused jerky, cotton candy, transdermal patches, and even suppositories are piquing curiosity among new customer demographics. Right now, whatever catches the consumer’s eye has a distinct advantage.
Being creative benefits the bottom line, too. The shift in consumer interests is compounded by the quickly falling price-per-pound on wholesale cannabis flower across all markets. There just isn’t a sufficient profit margin in growing and selling cannabis by itself.
With the price of flower gradually dropping, the need to adapt and diversify has never been greater. Branding, packaging and infusing flower into other high-quality products allows companies to build their margins, while satisfying changing customer desires.
2. Unite and Conquer a New Territory
Though distributing cannabis across state lines is a violation of federal drug laws, the top companies are still finding ways to expand legally.
We have seen over 50 of our partner brands, almost 8 percent of our user base, expand to new states on the platform, licensing out their brand tech, strategy, and ops to limited partners in new territories.
A major challenge that comes with this new territory is finding the right partners. Many states have residency regulations around who can open cannabis businesses there. This forces most brands to partner up, using licensing agreements, with local operators that may already have licenses in that state.
We’ve heard a number of stories from clients around finding joint venture partners that are a good fit but it’s challenging. Owners should be investigating if potential partners have strong leadership, rockstar sales reps, and strategically-aligned distribution teams. Can they execute and stay on top of their goals? Are they a good cultural fit, and do they truly understand the mission of the mothership brand?
Your team in a new market should be a mix of people with cannabis experience and conventional marketing experience. Brands are all competing against one another, but also collectively against the negative stigma that cannabis still faces in society.
Bringing great talent into the space, both from the cannabis world and from other industries helps create a new standard that is professional, polished, and carries a powerful message about the future we are creating.
3. Impress the Right People
History’s iconic cannabis brands are being created now. Aside from customers, there are others that you will need to influence as you dive headfirst into a new market.
Once a product is in the retail environment, you need budtenders on your side in order to promote the brand. Sales associates are the final frontier of communication and product education for modern cannabis consumers. When developing a new product, be sure to create learning materials for budtenders and develop those relationships early. Hopefully, this will help your product be recognized and fly off the shelves.
Capital providers and VC’s will also be important on your expansion journey. Many are still wary of the cannabis industry, and looking for brands that can scale and become the next Pepsi or Coke. With more money comes more growth, the ability to hire more competitive team members and it can begin to feed on itself as you penetrate a market.
By creating thoughtful, forward-thinking products and store environments that can be replicated in new markets, while investing in outstanding professional talent, the industry will be revealed.