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The Future of Cannabis: Perspectives from Industry Leaders

By Aaron Green
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cannabis close up

With 2022 comes a new year for cannabis. Mid-term elections, political forces shifting and several cannabis-related bills in the legislature make federal legalization seem like a reality closer than ever before. On the cannabis market’s side of things, disruptions are always occurring. Consumer spending on different product categories, new technologies for extraction processes, new cannabinoid and medical research and entirely new types of products including things like nanoemulsion tech have all been playing a role in market trends.

As our readers have probably noticed, we’ve been publishing conversations with industry leaders from every corner of the market. For this piece, we wanted to do something different. Instead of showing you a conversation with one individual, we asked the same question to seven different leaders in the cannabis space during interviews. The idea here is to see what interests people most in the cannabis industry. Are they excited about new research? Or new product development trends? Or do they believe a certain market is headed in a new direction?

So, what trends are you following in the industry? Below you’ll find seven responses to that question from various leaders in the cannabis space. We also want to hear from you though. What trends are you following? Leave a comment at the bottom of the article and let us know!

What trends are you following in the cannabis industry?

Brooke Butler, VP of Partnerships at Simplifya

Butler: I am obsessed at this point with the new states that have legalized, especially on the East Coast, like New Jersey and New York. I’m interested in the local jurisdictions and what’s going on with people opting out or opting in and how that’s playing out. The interesting thing about the pandemic is we had so much more cannabis reform than anybody expected. We went fast because suddenly, jurisdictions now need more money. They have budget shortfalls that they’ve got to account for, and I think they’re starting to realize that cannabis is a great way to do that. If I’m in New York, and I don’t have an adult use store, but New Jersey is about to open all their adult use stores, everybody’s going to be driving across state lines and giving that tax revenue to New Jersey. So why not regulate it and make it safe for your constituents, and get tax revenue for your jurisdiction that you can then put to use for education, or community centers and things like that? So, we’re really seeing the evolution of that change and California is a great example of that. We’ve seen a lot of jurisdictions where when the state first legalized back in 2018, they were like, “there’s no way we’ll ever do it,” and they’ve started coming around. That for me is really exciting. I love watching people’s minds shift and trying to figure out what’s really driving that.

Arthur Jaffee, Founder & CEO of ECS Brands

Jaffee: I’m following the regulatory landscape closely. There’s a lot of confusion and complexity around that topic. There are different cannabinoid conversion procedures for delta eight now and all these other derivatives to THC have made things much more complicated from a regulatory standpoint. There’s also been an increase in production of cannabinoids from non-cannabis sources where there’s no evidence at all yet in terms of proving safety. At least with cannabis, we have decades of public use, safety and consumption data that really supports a generally safe product profile. With some of these synthetically derived cannabinoids, people just assume that “bio-identical” guarantees being safe, but there’s no evidence and therefore should absolutely not be assumed. Synthetic cannabinoids require extensive research because the slightest modification in molecular composition can be very dangerous. Evidence is key, and it just doesn’t exist yet. We know that cannabinoids that are naturally existing and derived from the plant are safe, and ultimately designed for the body. when you start manipulating the molecular composition it may be hurtful.

Ricardo Willis, CEO at Hanu Labs

Willis: Hotels and restaurants are a big thing for me. I talked to a few people last night who own a restaurant in Oklahoma, and they’ve gotten one of the first permits to be able to include cannabis offerings in their restaurant. Our products fit well in resort, hotel, or restaurant settings, especially when you want to offer customers a safer device to use. Having been a chef, I can just imagine all this food on the table and then having a vaporizer that is portable flip over on the table, ruining everything. So, I want something that’s stationary. It’s right there, as the centerpiece. Also, people are going to use cannabis in these places, like hotels no matter what. So, do I want somebody using a blowtorch to light their rig? Or do I want someone using a safe device that has automatic shut off and things of that nature. So that’s important.

Lastly, pricing is a trend that I’m following closely. We’ve seen a huge dip in the pricing in California flower. I want to see if that trend is going to matriculate over to the concentrates, which is one of my favorite spaces because I’m a dabber. I know that vape carts are losing some steam in the pricing categories. We saw one-gram carts that were $60, several months ago. Now companies are offering one-gram carts at $28. It’s going to affect the industry.

Marc Lakmaaker, SVP of Capital Markets at Audacious

Lakmaaker: I’m looking at how brands develop in markets and what kind of what products resonate. You’ve got the cannacurious coming in, you’ve got new demographics coming in. And then you’ve got the existing cannabis culture. For companies that are authentic, it’s very important to have that connection to the culture. It’s more than just about cannabis, it’s about lifestyle. But then on the other end, there’s a lot of people that are coming in for a variety of reasons, the medical, recreational, whatever. So, what I’m trying to look at is what is resonating with which target groups. What kind of products really hit this spot in terms of branding, but also the actual product offering and trying to see if we’re seeing a movement towards either form factors, or entourage effect kind of products, terpenes, etc. so you know, what do people want.

I’m seeing that increasingly, if they’re cannacurious that are coming in and get acquainted with cannabis over certain period of time, they’ll probably go for a lot of value options. But then same as with certain alcohol cool brands, or fashion or whatever, we are now seeing a movement where the people that have been in the market for six months to a year are I slowly move into the higher ends. I think that’s something that’s happening, where people who have been in cannabis for a while are now becoming more discerning in the products that they’re going for, and how do those mechanisms work.

Sam Andras, AIA, Principal of MJ12 Design Studio and Executive Vice President of Professional Services at urban-gro (Nasdaq: UGRO)

Andras: One of the most fascinating things to me about this industry is everyday there seem to be 10 new technologies.   Eventually, one of those technologies is likely to be successful. You’ve got things like grow pods, you got Agra fi, modular, rooms, modular driver, and semi. This industry is filled with trending technology. And I think one of the greatest challenges as an architect is to understand how to work with the client, to really understand their philosophy and what they’re trying to accomplish and working with their grower. It is important not to restrict a grower to one specific cultivation method, but to explore how you can design a facility that allows a client to modify a cultivation methodology down the road. Designing flexible facilities that can adapt and adopt the future technologies is critical.

Derek Smith, Executive Director of Resource Innovation Institute (RII)

Smith: So, I see the need for MSOs and certainly publicly listed companies, to report on ESG. We are essentially the “E” of the ESG. We have the environmental data on energy, emissions, water and waste, to support the MSOs with that data need. That to me is a perfect storm where there’s pressure to do the reporting and we have a tool and an infrastructure that’s broadly supported, recognized by governments, by utilities, by cultivation operations, supported by the supply chain. We’re here to help serve that need. We’re a non-profit. We’ll protect the data of the companies, and then they can get in the queue to be recognized as leaders for being part of this effort. That to me is an exciting trend right now. Everybody wants to make a commitment and show progress on sustainability and we’re going to help them be able to do that.

Tyler Williams, CTO and Founder at CSQ

Williams: I think the big one right now is the delta-8 THC, especially on the CSQ side. We’re watching that and looking at how we need to adjust our standard. On November 1, we have our next Technical Advisory Committee meeting, and we’re going to be talking about the next revisions to the standard. Delta-8 is going to be one of the things we’re going to be talking about and something that we’ve been watching and trying to educate ourselves on, because there’s not just going to be delta-8, there’s other ones that are coming on the market that are going to be, you know, essentially the same as delta-8, where they’re in this gray area. We don’t want just the government to say, “Nope, you can’t do this at all.” Hopefully we can help the industry a little bit by at least providing some standardization there. That’s probably the biggest trend that we’ve been watching.

Top 5 Trends for Cannabis in 2020

By Melissa Kuipers Blake
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To ask this author to identify the top five trends in 2020 for cannabis is akin to asking her to name only five of her favorite Coldplay songs. With so much energy for both topics, a selection of the absolute most favored components of either passion presents quite a challenge. But like the cannabis industry has done for 20 years under its state-legal regime and entirely illegal federal one, this author will endure under the confines of such limitations.

Consolidation

In any new industry this is bound to happen. Particularly one with such massive government oversight and equally massive consumer demand. Original license holders are cashing out. And they should. They were the risk-takers. The originals. They raced to government buildings across the country with boxes of background checks accompanied by teams of forensic accountants, lawyers and lobbyists to walk down a path only recently paved with legalization to seek a license to directly violate federal law. They drew a line in the sand and said, “I’m in.” And the stars have aligned for them to move on in many states due to changes in ownership structures, particularly ones that now provide for out-of-state interests. They deserve to sell that to the next highest bidder for all of the pressure, investment, stress and risk that permeates the foundation of this industry. With state law changes have come multistate operators, many of whom do not necessarily understand cannabis and have probably never used it, but they know an opportunity when they see it. These companies are buying up licenses across the country and creating brand awareness among consumers with an eye toward changes in federal law that would allow for the transportation of cannabis across state lines. Once that happens, the cannabis industry will be treated like every other American producer with massive distribution centers across the country that will mimic the likes of alcohol and tobacco overnight.

Infused Products

The report further found that the edibles category could be worth more than $4.1 billion in Canada and the United States by 2022.No one wants to go to work and smell like cannabis, unless, of course, you work in a grow facility. And even then, maybe you don’t. And employers aren’t exactly excited when employees are present with the distinct aroma when it’s time to clock in. So, what’s a cannabis consumer to do? Eat or drink the product instead. In a world full of energy drinks, dietary supplements, bubbly water infused with fruit (which still doesn’t taste like anything, let’s be honest), it should surprise no one that cannabis is making its debut in a myriad of consumption applications. While most states prevent the mixing of cannabis-infused beverages and alcohol for sale by retailers (consumers can—and do—mix the products on their own), there are no limits on other targets for cannabis products. Most popular: food and drinks.

ArcView Research and BDS Analytics recently identified that consumer spending on cannabis-based food and drink reached an estimated $1 billion in 2017 in the United States and Canada, representing about 11.4% of the total $9.1 billion in consumer spending on consumable cannabis in those two markets. The report further found that the edibles category could be worth more than $4.1 billion in Canada and the United States by 2022.

There are countless food products and infused beverages on the market in America and anticipated this year, which dovetails perfectly with the American predilection for happy hours, brunch, and after-work drinks; minus the hangover, some might suggest. Any cannabis company owner will tell you the future is infused products, whether consumers are buying the oil themselves to infuse at home or asking a company to infuse something for them. The future of cannabis is, indeed, on a menu.

Movement in Washington, D.C.

When the SAFE Banking Act passed off the House floor with 324 yes votes, 91 of which were from Republicans, a collective cheer and wave akin to an invigorated football stadium engulfed the industry. A huge moment. One long-awaited and most needed. Momentum. Movement. Finally, a sigh of relief. One would be naïve to assume such a success in the House will be mirrored in the Senate. It will not. But that sort of statement from one chamber is a message to the other: this issue is not going away. It matters. It’s bipartisan. And employees/owners in the cannabis industry need relief from the heavy hand of the federal government when they go to work every day in full compliance with state law. With every passing day, lawmakers on both sides of the aisle are being educated by the cannabis industry about how to responsibly regulate the products and what true regulation looks like. It’s only a matter of time until these state-level practices are adopted by federal policymakers. Because let’s be honest, elections matter. And 33 states have said yes to cannabis. It’s only a matter of time until the members of Congress from those states take up the issue in a real way. And many already have.

State Legalization

In the last 10 years, 20 states legalized cannabis for medical purposes and 13 legalized it for adult use. Several national polls suggest this trend will only continue in 2020. And unlike the polling in most recent national elections, the predilections on cannabis seem to be accurate. In 2020, adult-use cannabis measures will definitely appear on the New Jersey and South Dakota ballots. Adult-use measures could also appear in Arizona, Arkansas, Missouri, Montana, New Jersey, North Dakota and Oklahoma. Idaho, Mississippi, Nebraska and South Dakota are likely to vote on medical cannabis as well.

Of note, the South Dakota measure would also legalize hemp, which has yet to get the blessing of the Mount Rushmore state. In Mississippi, voters will likely be asked their opinions on legalizing medical cannabis. This is interesting since the University of Mississippi has had the only DEA license to grow their own cannabis for research purposes since 1968, but the rest of the state has been squarely in prohibition with zero allowances for cultivation or possession.

The future is bright for the cannabis industry and its players. For a final ounce of perspective on state legalization, only three states have no legal cannabis of any kind: Idaho, Nebraska and South Dakota. And if Idaho and South Dakota’s polling is any indication, they won’t be on this short list for much longer.

Maturation

Once upon a time, drug dealers applied for legitimate cannabis licenses. They were denied. And some tried to dodge the regulated marked to continue selling on street corners and out of back doors. Some still do. But now we have a cannabis industry with true regulation and what this author likes to call “adult supervision in the room” on the cannabis conversation and those leading it. A week doesn’t go by without a Wall Street investor or Silicon Valley tycoon asking for advice on where to invest in the cannabis industry. Huge retailers are calling to ask if they can sell it. Alcohol and tobacco interests are hugely, well, interested. And the industry is being led by the likes of former baby car seat manufacturers, former food and beverage lobbyists, young entrepreneurs, and tech geniuses. Now that these individuals are invested and committed, they will continue to professionalize the industry by leading on public-facing initiatives teaching consumers how to use cannabis responsibility, how to determine a much-needed standard for impairment, and to overall improve the reputation of a product once fully illegal, and now partially legal, and soon on its way to fully legal.

The future is bright for the cannabis industry and its players. Only daylight ahead and the billows of bureaucratic smoke are parting hopefully—eventually—with regard to the incongruity between state and federal law on the issue. That’s a lot of ink to say that the next few years will be monumental for the cannabis industry. And if you’re a Coldplay fan, you just caught the reference to my favorite song from the legendary Brit ensemble.

Soapbox

Tips to Shrink your Shrinkage

By Carl Silverberg
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I had dinner last night with a friend who is a senior executive at one of the largest automobile companies in the world. When I explained the industry-accepted rate of 25-30% shrinkage in horticulture he said, “Are you kidding me? Can you imagine the story in the Wall Street Journal if I gave a press conference and said that we were quite content to throw away three out of every ten cars we manufactured?”

Yet, for all growers, operators and investors who complain about shrinkage, it’s an accepted part of the business. What if it wasn’t; what if you could shrink your shrinkage by 60% and get it down to 10% or less? How much more profitable would your business be and how much easier would your life be?

Let’s take the floriculture industry as our first example. You propagate chrysanthemums in February, they get repotted at the end of April and by the end of June, you might start to see some buds. In a very short time span your job changes from being a grower who manages 10,000 square feet of chrysanthemums to being an order taker. Over a period of eight weeks, you have to unload as many of those mums as possible. The sales team at Macy’s has more time to move their holiday merchandise than you do.

If you’re like most operations, your inventory tracking system consists of Excel spreadsheets and notebooks that tell you what happened in previous years so you can accurately predict what will happen this year. The notebooks give you a pretty accurate idea of where in the greenhouses your six cultivars are, how many you planted and which of the five stages they are in. You already have 30 different sets of data to manage before you add on how many you sell of each cultivar and what stage they were in.

The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.Then your first order comes in and out the window goes any firm control of where the mums are, what stage they’re in and how many of each cultivar you have left. A couple of hours after your first order, a second comes in and by the time you get back in touch, check your inventory, call back the buyer and she’s able to connect with you, those 2837 stage 3 orange mums are moving into stage 4. Only she doesn’t want stage 4 mums she only wants stage 3 so now you frantically call around to see who wants stage 4 orange mums very soon to be stage 5 mums.

And, the answer is often no one. What if you didn’t have your inventory count exact and now you have 242 yellow mums that you just found in a different location in your greenhouse and had you known they were there, you could have sold them along with 2463 other mums that you just located in various parts of your greenhouse.

It doesn’t have to be like that. We had a client in a similar situation, and they are on track to reduce their shrinkage to just a shade over 10%. The future of the industry is making data-driven decisions that free up a grower to focus on solving problems, not looking for problems.

And don’t think that shrinkage is an issue only in the purview of floriculture. It’s an even bigger problem for cannabis because of the high value of each crop. The numbers don’t sound as bad because unlike floriculture, you don’t have to throw out cannabis that’s not Grade A. You can always sell it for extract. But extract prices are significantly less per pound than flower in the bag.

Here’s how one grower explained it. “Because of the high value of the crop, and the only other crop I’ve worked with that high is truffles, you’re playing a much higher stakes game with shrinkage. Even if you try and salvage a bad crop by using all of the parts of the cannabis plant. Listen, the difference between Grade A and Grade C could be $1,000 for A while a pound of B/C is less than $400. If you produce a standard 180 to 200 pounds in your grow rooms, you’ve really screwed up. No operator is going to keep you if you just cost them $120,000.”

Soapbox

Medical Cannabis in Georgia: Federal Policy Effects on State Industries

By Reggie Snyder
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Under the U.S. Drug Enforcement Administration’s (DEA) Controlled Substance Act (CSA), drugs are classified into five distinct schedules depending upon their acceptable medical use and their overall potential for abuse or dependency. The DEA currently lists cannabis as a Schedule I drug, which the CSA defines as drugs having no currently accepted medical use and a high potential for abuse. It appears, however, that the DEA may soon reconsider its current Schedule I classification of cannabis.

This article considers how the DEA’s potential reclassification of cannabis potentially could affect Georgia’s medical cannabis industry. Specifically, the article discusses: (1) how Georgia medical cannabis distributors would operate within this new regulatory framework; (2) how this change would affect registered Georgia patients who are either currently purchasing medical cannabis or are planning to do so; and (3) whether this reclassification would cause big pharmaceutical companies to enter Georgia’s medical cannabis market, and if so, how.

The DEA’s Reclassification of Cannabis Would Likely Affect the Regulatory Framework of Georgia’s Medical Cannabis Industry

On April 2, 2019, Georgia became the 34th U.S. state to legalize cannabis for medicinal use when the Georgia Legislature passed House Bill 324 (“HB 324”), which recently took effect on Monday, July 1, 2019. In Georgia, medical cannabis is defined as a “low-THC oil” that contains 5% or less of tetrahydrocannabinol (THC)—the psychoactive chemical in cannabis that causes a “high.”

Georgia State Flag

If the DEA reclassifies cannabis, the regulatory framework of Georgia’s medical cannabis industry under HB 324 would likely be affected. For instance, depending on how the DEA elects to reclassify cannabis, low-THC oil products manufactured and sold in Georgia could become subject to the U.S. Food and Drug Administration’s (FDA) costly, complicated and time-consuming drug approval process. Then, any low THC oil products that the FDA approves will be subject to federally mandated quality, efficacy and potency standards for FDA-approved drugs. Also, any federal standards that stem from the DEA’s reclassification of cannabis will trump any conflicting provisions in HB 324 or any other conflicting rules, regulations or procedures established by the Georgia Access to Medical Cannabis Commission (GAMCC), the seven member state agency responsible for promulgating and implementing the state-based rules, regulations and procedures necessary to produce and distribute low-THC oil in Georgia, and the Georgia State Board of Pharmacy (Pharmacy Board). However, even if the DEA reclassifies cannabis, the following state regulatory framework established by HB 324 will remain unaffected:

  • The GAMCC will likely continue to oversee the state’s medical cannabis industry.
  • The following two different types of dispensary licenses issued under the legislation will still likely remain: retail outlets (issued by the GAMCC) and pharmacies (issued by the Pharmacy Board).
  • Licensed dispensaries will still likely not be located within a 1,000-foot radius of a school or church, and licensed production facilities will still not be located within a 3,000-foot radius of a school or church.
  • Pharmacists who dispense low-THC oil will still likely have to review each registered patient’s information on the state’s Prescription Drug Monitoring Program (PDMP) database to confirm that they have been diagnosed with one or more of the 17 approved conditions and diseases. The legislation does not require retail outlet dispensaries to review patient information on the PDMP database or employ a pharmacist to dispense the drug.
  • Registered patients will still likely be prohibited from vaping low-THC oil or inhaling it by any other electronic means. The legislation does not expressly prohibit the use of other, non-electronic delivery methods of low THC oil such as pills or nasal spray.
  • All licensed dispensaries (and all licensed production companies) will still likely be subject to an “on-demand” inspection when requested by the Georgia Bureau of Investigation (GBI), the GAMCC, the four-member Medical Cannabis Commission Oversight Committee (MCCOC), or local law enforcement. The GAMCC and the Georgia Drugs and Narcotics Agency (GDNA) will also still likely be able to conduct one, annual inspection of dispensary locations. And, upon request, licensed dispensaries will still likely be required to immediately provide a sample of their low-THC oil for laboratory testing to the GBI, GAMCC, MCCOC, GDNA or local law enforcement.
  • All licensed dispensaries (and all licensed production facilities) will still likely be required to utilize a GAMCC-approved seed-to-sale tracking software.
  • All licensed dispensaries (and all licensed production companies) will still likely be prohibited from advertising or marketing their low-THC oil products to registered patients or the public. However, they will still likely be allowed to provide information about their products directly to physicians, and upon request, physicians will still likely be allowed to furnish the names of licensed dispensaries (and licensed production companies) to registered patients or their caregivers.

The DEA’s Reclassification of Cannabis Would Likely Affect the Availability of Low THC Oil

To date, approximately 9,500 Georgians are registered with the state’s Low-THC Registry, which allows them to purchase low-THC oil from licensed dispensaries. Since the legislation’s passage, the number of registered patients has increased significantly and continues to steadily rise. If the DEA reclassifies marijuana, this patient number will likely increase at an even faster rate because the public will likely perceive reclassification as an acknowledgement by the federal government that marijuana possesses health and medicinal benefits. If that occurs, statewide demand for low THC oil could quickly outstrip the supply.

Georgia Gov. Brian Kemp
Image: Georgia National Guard, Flickr

Under HB 324, the GAMCC is tasked with ensuring that the state has a sufficient number of retail outlet dispensaries across the state to meet patient demand but is limited to issuing only six production licenses. As the number of registered patients continues to grow, the GAMCC may be forced to recommend amendments to the statute allowing it to issue additional production licenses to increase the state’s supply of low THC oil, and depending on how many additional patients are added to the state’s Low-THC Registry, the GAMCC may also have to issue additional dispensary licenses to keep up with patient demand by relaxing the geographic limitations on locating dispensaries.

Thus, the DEA’s reclassification of cannabis likely would affect the amount of low THC oil available to registered patients in Georgia.

The DEA’s Reclassification of Cannabis Would Likely Cause Large Pharmaceutical Companies to Enter Georgia’s Medical Cannabis Market

Large pharmaceutical companies typically manufacture, market, sell and ship their products on a national and international scale. Given cannabis’ current status as a Schedule I drug under the CSA, these companies have largely steered clear of the burgeoning medical marijuana industry because of the inherent risk of violating federal law. If the DEA reclassifies cannabis, that risk will be diminished greatly, and the companies therefore will likely decide to enter the market by acquiring existing medical marijuana companies with established national or state-level medical cannabis brands.

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways.Depending on how the DEA reclassifies cannabis, low-THC oil in Georgia could be subject to stringent federal standards, including the FDA’s complex and expensive drug approval process. Georgia medical cannabis companies will likely not be accustomed to complying with such federal regulations. Large pharmaceutical companies, on the other hand, are very accustomed to dealing with the federal government, including FDA drug approval. So, if the DEA reclassifies marijuana, pharmaceutical companies will likely view reclassification as a tremendous opportunity to enter the Georgia market by leveraging their experience and institutional knowledge dealing with federal law to acquire or partner with a licensed Georgia cannabis company that has an established brand of low -HC oil.

Entering Georgia’s medical cannabis market won’t be easy, however, because HB 324 prohibits licensees from transferring their licenses for five years and requires that the original licensee be a Georgia business. But, HB 324 does not prohibit them from selling their businesses, which necessarily includes any licenses the business owns. Purchasing a licensed Georgia medical cannabis company requires payment of a production license business transfer fee. The fee for the first sale of a business with a Class 1 production license is $100,000 and the fee for a Class 2 license is $12,500. The fee for the second sale is $150,000 for a Class 1 production license, and $62,500 for a Class 2 license. The fee for the third and fourth sales is $200,000 for a Class 1 production license, and $112,500 for a Class 2 license.

Conclusion

If the DEA reclassifies cannabis, Georgia’s medical cannabis market will likely be affected in multiple ways. Specifically, depending on how the drug is reclassified, the regulatory framework for medical cannabis companies likely will change to include both state and federal requirements, potentially including the FDA’s complex drug approval process. Also, the amount of low-THC oil available for registered patients to purchase likely will be diminished precipitating the need for the GAMCC to modify the statute to allow for issuing additional production licenses and relaxing the geographic limitations on locating dispensaries. Finally, large pharmaceutical companies likely will attempt to enter Georgia’s medical cannabis market by purchasing existing, licensed Georgia companies that have established low-THC oil brands.

Jennifer Whetzel

Branding for Cannabis Companies 101: Part 1

By Jennifer Whetzel
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Jennifer Whetzel

Busy entrepreneurs often skip steps in their business development process, particularly in the cannabis space. Since this is a new industry, there isn’t a long history of marketing/advertising efforts to look back on; the standards are still being developed. But more often, businesses simply may not have a budget large enough to pay an agency, and they may not feel confident executing these efforts on their own.

Fortunately, you can do a lot independently to get your name out there. This three-part series will give you a quick primer on branding – what it is, why it’s important and how to do it. But first, we need to discuss the differences between branding, marketing and advertising so that you know what kind of tools you have at your disposal.

What is Branding?

Branding should be considered a prerequisite to marketing and advertising.

Branding: Who
Marketing: What & Why
Advertising: Where & When

Branding is simply thinking about your company from the inside-out. It’s asking yourself questions about the kind of person your brand would be, down to its beliefs, personality and sense of style. Ultimately, we do this to build a deep emotional connection with potential customers. When you know who you are and put yourself out in the world, you’re signaling to them that you are a good match for each other.

When you have a brand that consistently forms emotional relationships with customers, that bond converts to both income and long-term company value, making your spending on marketing and advertising go further. It gives you a competitive advantage over companies with weak or non-existent branding (and in the U.S. cannabis industry, there are plenty of those). Moreover, it’s a key factor that venture capitalists and friendly Fortune 500s look for in potential investments.

So, what should you be asking yourself when it comes to branding? Start with exploring the fundamentals. Decide on the philosophical, emotional and visual characteristics of your brand.

As far as the philosophical questions go, it’s important to codify your mission, brand values, customer promise, core competency and future vision to build a strategic brand. Think about what you’re offering, how it will change lives, and what unique qualities will help you make it all happen.

The Four Ps: Product, Price, Place and Promotion.The philosophical characteristics help you decide who you are. Your emotional characteristics are the ones that connect you with the world. These would include your creation story, your brand personality and tone of voice. How does your brand see and respond to the world? Why? People love consistency. Having a consistent presentation makes your brand feel more authentic; in turn, people are more receptive to you.

The visual qualities are how the world should see you. These assets should include your color palette, fonts, imagery and logo. Making decisions about your brand’s appearance may feel subjective and overwhelming to people, but it doesn’t have to be. Basically, evaluate these ideas and assets in terms of how your audience is likely to respond to these elements. For example, how does your happy-go-lucky audience feel about a logo that is lime green versus corporate blue? Which color best reflects your brand sensibility? You know who you are; the visual characteristics are how you plan to show it.

Marketing

As a discipline, marketing traditionally involves making strategic decisions about the four Ps: Product, Price, Place and Promotion. These decisions become significantly easier once you have defined your brand.

Essentially, marketing addresses the way your brand lives in the world. It tells potential customers what you sell, and why they should choose your brand. It involves making thoughtful decisions and having a strategy for decisions such as product names and your corporate culture.

You also need to think about your pricing strategy and how that manifests in front of customers. For example, are you a high-end product with a premium price or the Walmart of weed? What’s your customer service strategy? Are your budtenders in flannel or lab coats?By now, you know who your brand is and how you want to present it to the world. Now you need to get consumers to see it that way. That’s where advertising comes into play.

Marketing also involves decisions about collateral—namely, your product packaging, brochures, signs and trade show booths. It also impacts your brand’s in-person presence. That could include experiences like events your company attends, trade shows where you have a booth or table, sensory experiences or even AR/VR experiences with your product.

By now, you know who your brand is and how you want to present it to the world. Now you need to get consumers to see it that way. That’s where advertising comes into play.

Advertising

Generally, advertising relates to paid campaigns that are carefully written and designed to tell potential customers where, when, why and how to connect with your brand and buy your products and services.

Fortunately, you have the tools to thrive by putting in the work to get to know your brand.These campaigns are often launched within the space of owned media, such as television commercials, radio and print ads and billboards. There are tons of digital and social media options. Your job is to find the ones that your customers interact with and decide what you want to say about yourself. For example, what kind of sites would you want to place ads on? What state of mind are customers in when they go to those sites? And what message do you want them to get from you in that moment?

Normally, answering these questions would be daunting. But since you’ve already decided who your brand is, you may already know what colors you want to use for this ad. You’ve already considered what your mission is. You know how your brand should appear to the world. And since you’ve unlocked these truths, you’ll be able to develop campaigns that feel genuine, unique, and memorable.

Connecting with consumers and making them remember you isn’t optional. It’s what will ultimately decide whether your business survives or not. Fortunately, you have the tools to thrive by putting in the work to get to know your brand. It’s tough, and it may not come easily at first. But we don’t start a business because it’s easy. We accept the risks and frustrations because we love what we do. Tell everyone why they should too.