Marketing Marijuana: Top Opportunities And Challenges For Brands

The U.S. recre­ation­al and med­ical mar­i­jua­na mar­ket is grow­ing fast and fore­cast to reach $3.5 bil­lion this year.

Lisa Lacy By Lisa Lacy. Join the discussion » 0 comments

It may not be easy to pic­ture John Wayne with a joint, but that’s actu­al­ly a pret­ty apt rep­re­sen­ta­tion of the U.S. mar­i­jua­na indus­try as it stands in 2015. The Amer­i­can cannabis mar­ket has a Wild West feel to it with an expan­sive ter­ri­to­ry with plen­ty of space for brands and adver­tis­ers – as well as for­tunes to be made – but, like the Duke’s Old West, it’s also rel­a­tive­ly law­less ter­ri­to­ry pop­u­lat­ed with some out­laws and a few des­per­a­dos.

But as more states legal­ize mar­i­jua­na and the mar­ket grows, it’s clear this is not just a prod­uct with appeal to col­lege kids and aging hip­pies. Mar­i­jua­na is indeed a legit big busi­ness and this is a unique moment in time for both brands and adver­tis­ers, pre­sent­ing oppor­tu­ni­ties and chal­lenges to brands.

The Context of Legalization

As of July 1, Ore­gon res­i­dents can grow and pos­sess lim­it­ed amounts of mar­i­jua­na for per­son­al use.

Per the Ore­gon Liquor Con­trol Com­mis­sion, which has the author­i­ty to tax, license and reg­u­late recre­ation­al mar­i­jua­na – and will begin accept­ing appli­ca­tions to com­mer­cial­ly grow, process, whole­sale or oper­ate retail mar­i­jua­na out­lets on Jan­u­ary 4 – the abil­i­ty to buy mar­i­jua­na from retail­ers in Ore­gon is expect­ed to begin cir­ca Fall 2016.

This makes Ore­gon the fourth state to legal­ize mar­i­jua­na after Col­orado, Wash­ing­ton, and Alas­ka (as well as Wash­ing­ton, D.C.), per the Nation­al Orga­ni­za­tion for the Reform of Mar­i­jua­na Laws.

Med­ical mar­i­jua­na, how­ev­er, is legal in about half of the coun­try.

All of this adds up to a pret­ty big mar­ket. Accord­ing to ArcView Group, an investor net­work focused on the cannabis indus­try, the mar­ket for recre­ation­al and med­ical mar­i­jua­na nation­wide will be $3.5 bil­lion this year.

Gen­er­al con­sen­sus among busi­ness and mar­ket­ing experts is that this is a mar­ket that will only grow as the prod­uct even­tu­al­ly becomes legal on a fed­er­al lev­el. So just like the enter­pris­ing Amer­i­cans who set­tled the fron­tier, we are col­lec­tive­ly at a unique moment at which there is both huge oppor­tu­ni­ty, but also tons of road­blocks for this prod­uct that is simul­ta­ne­ous­ly illic­it and not.

Marijuana’s Big Branding Opportunities

For starters, there are almost count­less brand­ing oppor­tu­ni­ties with­in this bur­geon­ing indus­try.

That includes grow­ers, which can brand them­selves as sup­pli­ers of prod­ucts that pos­sess cer­tain qual­i­ties, notes Peter Lev­i­tan, CEO of strate­gic agency Peter Lev­i­tan & Co. and an investor in two med­ical mar­i­jua­na dis­pen­saries.

Then there’s the prod­uct itself, as well as acces­sories like rolling papers and vapor­iz­ers.

Also, there’s infused prod­ucts like edi­bles, as well as extracts and oils.

For his part, Kris Krane, a man­ag­ing part­ner at 4Front Advi­sors, a mar­i­jua­na busi­ness con­sult­ing firm, sees big brand­ing oppor­tu­ni­ties in extrac­tion in par­tic­u­lar as sales in recre­ation­al states shift from flow­ers to edi­bles. That’s in part because extrac­tion can pull out spe­cif­ic chem­i­cal pro­files.

We’re not talk­ing about a strain, but a chem­i­cal for­mu­la­tion that will be exact­ly the same every sin­gle time as opposed to a flower,” Krane said.

In oth­er words, a grow­er can pro­duce the Blue Dream strain, but if grow­ing con­di­tions are slight­ly dif­fer­ent, this par­tic­u­lar strain could have a dif­fer­ent chem­i­cal make­up, where­as extrac­tions ensure spe­cif­ic chem­i­cal pro­files every time.

That to me is a real brand­ing oppor­tu­ni­ty,” Krane adds.

In fact, he points to one man­u­fac­tur­er that uses extrac­tion to cre­ate non­smok­able prod­ucts and names them after the effects they have, like Calm or Alert.

That I think is an inter­est­ing tech­nique,” Krane said. “You can talk to con­sumers at a lev­el they under­stand.”

There are also the can­naceu­ti­cals, or prod­ucts that uti­lize cannabis for med­i­c­i­nal pur­pos­es, not to men­tion the retail brands that sell all of these prod­ucts to the gen­er­al pub­lic.

The McDonald’s Of Marijuana?

As more states con­sid­er bal­lot ini­tia­tives and/or legal­ize mar­i­jua­na and it becomes more main­stream, tar­get audi­ences expand. Some of these con­sumers may feel more com­fort­able buy­ing from a brand they know, mean­ing there is also oppor­tu­ni­ty in stan­dard­iz­ing the pot-buy­ing expe­ri­ence, much like McDonald’s did with ham­burg­ers decades ago.

Krane points to Cal­i­for­nia-based med­ical cannabis dis­pen­sary and well­ness cen­ter Har­bor­side Health Cen­ter, which has two loca­tions and is look­ing to open addi­tion­al sites in dif­fer­ent parts of the coun­try, as a good exam­ple. It’s a brand that pro­vides a uni­form expe­ri­ence no mat­ter where the con­sumer shops.

Oth­er ear­ly cannabis lead­ers include brands like Dix­ie Elixirs in the edi­bles mar­ket, notes Saman­tha Chin, direc­tor of mar­ket­ing at, a mar­i­jua­na-focused trav­el guide.

How­ev­er, as of this moment, Chris Walsh, man­ag­ing edi­tor of the Mar­i­jua­na Busi­ness Dai­ly, a busi­ness pub­li­ca­tion that cov­ers the U.S. cannabis indus­try, said it is dif­fi­cult to come up with the “Star­bucks of cannabis” because of chal­lenges tied to vary­ing state reg­u­la­tions. But, he said, own­ers of larg­er oper­a­tions in states like Col­orado and Wash­ing­ton are com­pet­ing for licens­es in oth­er states, which means that some brands might emerge as lead­ers and then con­sumers want­i­ng a trust­ed name and expe­ri­ence will be able to turn to those brands. But, he notes, this could play out over quite a long time.

Building Brand Loyalty In The Marijuana Industry

There is also a lot of noise when it comes to the strains them­selves, pre­sent­ing an oppor­tu­ni­ty to the brand­ed prod­uct that can fig­ure out how to cut through it.

In fact, Lev­i­tan likens the mar­i­jua­na indus­try to the wine busi­ness in that con­sumers in both mar­i­jua­na dis­pen­saries and wine shops are faced with a slew of not only vari­eties, but also brands. Because there’s poten­tial to over­whelm con­sumers with choice, Lev­i­tan said smart play­ers in mar­i­jua­na are licens­ing names from rec­og­niz­able fig­ures like Bob Mar­ley, Willie Nel­son and Tom­my Chong from Cheech and Chong.

The great­est liv­ing voice for smok­ing mar­i­jua­na at this point – Miley Cyrus,” Lev­i­tan said. “If I was a big league mar­keter, I would try to fig­ure out how to get on her side. I would per­son­al­ly like to smoke a Cyrus joint more than an old white guy’s.”

Say­ing that Mar­ley and Nel­son are “prob­a­bly the top two names [asso­ci­at­ed with cannabis], along with Snoop Dogg,” Krane calls work­ing with celebri­ties a “pret­ty safe bet,” but notes these names can only take the prod­ucts so far and it will ulti­mate­ly come down to the qual­i­ty of the prod­uct itself, which could also still fail if con­sumers only buy these brands once for the nov­el­ty fac­tor.

Just as we’ve seen in oth­er indus­tries, con­sumers will soon be will­ing to pay more for their favorite brand­ed strain, sim­i­lar­ly to how they go to their favorite piz­za shop across town or shop for shoes at their favorite store in town,” Chin said via email. “Cannabis can often be very con­fus­ing to under­stand, so as more and more peo­ple get famil­iar­ized with legal­ized mar­i­jua­na, I could def­i­nite­ly see many con­sumers stick­ing to what they know and even becom­ing great brand loy­al­ists.”

Marijuana Marketing Challenges For Brands

But that’s not to say cre­at­ing a brand­ed strain is an easy task.

Per­haps the most obvi­ous chal­lenge is that this is still an ille­gal sub­stance.

Despite clear oppor­tu­ni­ties on the prod­uct side, because the indus­try is so small – and ille­gal – there hasn’t been a ton of mon­ey put into brand devel­op­ment, Krane said. But, as not­ed, there’s huge growth oppor­tu­ni­ty, which means there’s a real prospect for brand con­sul­tants to work with emerg­ing cannabis busi­ness­es to devel­op smart brand­ing and mar­ket­ing for com­pet­i­tive advan­tage.

At the same time, geog­ra­phy is anoth­er huge hur­dle.

In the devel­op­ment of every indus­try, for every type of prod­uct, there are a hand­ful of real­ly strong, rec­og­niz­able brands,” Krane said. “Because cannabis is so new as a legal indus­try and restrict­ed to geo­graph­ic areas, that hasn’t real­ly hap­pened yet. It’s still in the brand devel­op­ment phase.”

Call­ing nation­al brands “the next evo­lu­tion of the indus­try,” Walsh agrees the mar­ket has not yet seen big brands emerge because “the indus­try has been very high­ly region­al­ized.”

While some brands are begin­ning to sur­face as known enti­ties, they won’t be known nation­al­ly like alco­hol brands because cannabis is still a state-by-state indus­try. For exam­ple, Krane notes that if Col­orado-based Dix­ie Elixirs wants to sell prod­ucts in anoth­er state, it has to build an entire­ly new fac­to­ry and cater to an entire­ly dif­fer­ent set of reg­u­la­tions, mak­ing it much more of a chal­lenge than any oth­er indus­try “because of this patch­work of geog­ra­phy.”

In a lot of cas­es, there are laws and restric­tions about only oper­at­ing with­in a spe­cif­ic state or city, so branch­ing out and sell­ing your prod­ucts in mul­ti­ple states and mar­kets has been dif­fi­cult if not impos­si­ble for com­pa­nies that actu­al­ly han­dle mar­i­jua­na,” Walsh said.

He notes com­pa­nies that instead pro­vide prod­ucts and ser­vices for the indus­try – like track­ing soft­ware, inven­to­ry tech­nol­o­gy or extrac­tion equip­ment – are in bet­ter posi­tions for the time being to devel­op indus­try-lead­ing prod­ucts on a nation­al scale.

How­ev­er, Walsh notes, com­pa­nies in the mar­i­jua­na indus­try are start­ing to fig­ure out ways to expand into new states and skirt the inabil­i­ty to trans­port prod­ucts across state lines by set­ting up licens­ing deals in oth­er states with local com­pa­nies, which then process the brands/formulas under their names.

This includes com­pa­nies like Dix­ie Elixirs, as well as GFar­maL­abs, which is also in the mar­i­jua­na-infused prod­ucts busi­ness, he said.

Anoth­er brand chal­lenge – and sign that marijuana’s so-called Green Rush was apt­ly named with its Wild West Gold Rush par­al­lels – is that lack of fed­er­al reg­u­la­tions to date means brands can more or less get away with mak­ing bold claims they may not be able to oth­er­wise.

Like the wine indus­try exam­ple, Krane notes there are so many dif­fer­ent types, but it is hard to know if a giv­en strain real­ly is what it says it is. Like, for exam­ple, a dis­pen­sary could car­ry Super Sil­ver Haze, but it might actu­al­ly be anoth­er kind of Haze that looks sim­i­lar and yet the dis­pen­sary calls it Super Sil­ver Haze because con­sumers are more like­ly to buy that name, Krane said.

How­ev­er, there have been some steps to tack­le this prob­lem in Colorado’s more mature mar­ket, where every plant is RFID tagged and brands must print genet­ic infor­ma­tion on labels, which “makes it hard­er for busi­ness­es to play those kind of shenani­gans,” Krane said.

Where do you see the biggest poten­tial, and biggest chal­lenges, as mar­i­jua­na legal­iza­tion grows?

Lisa Lacy

Written by Lisa Lacy

Lisa is a senior features writer for Inked. She also previously covered digital marketing for Incisive Media. Her background includes editorial positions at Dow Jones, the Financial Times, the Huffington Post, AOL, Amazon, Hearst, Martha Stewart Living and the Dian Fossey Gorilla Fund.

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