If there is a single defining challenge at the heart of the U.S. cannabis industry, it’s route-to-market strategy
The following Cannabis Corner article this week has been developed from recent published sources by PorterPartners, and is deemed to be of prime current interest to FON members who have cannabis-related investments in their portfolios, or are considering such investments.
If there is a single defining challenge at the heart of the U.S. cannabis industry, it’s route-to-market strategy. The key is to get products from the grower or manufacturer to consumers in a consistent, cost-effective way.
This is a huge problem for emerging cannabis brands hoping to compete in the U.S. market. But it’s also an opportunity. The companies that crack the code on route-to-market will reap some serious rewards—especially once federal legalization becomes a reality.
Developing close relationships with consumers, retailers, and distributors is absolutely essential for cannabis brands in a way that it isn’t for other CPG (“consumer packaged goods”) categories. In cannabis, you can’t just make a phone call and get your product on the shelf. In part, this is because the retail market is still small. There are roughly 34,000 liquor stores in the United States, and another 36,000 bars and nightclubs. There are only around 8,000 marijuana dispensaries.
Here’s what you should watch out for with cannabis branding:
1. Strategic Partnerships With Top-Tier Brands
GOOP is coming to cannabis. Gwyneth Paltrow, Casey Neistat, Tove Lo and others all invested in microdose THC beverage company CANN. For instance, Caliva took the world by storm with their announcement of Jay-Z coming on as their chief brand strategist. Caliva was acquired, along with Left Coast Ventures, by Subversive Capital Acquisition Corp., which launched a new organization The Parent Co., where Jay-Z will act as their chief visionary officer. Cure pharmaceuticals did the same with Nicole Kidman. Celebrities are getting familiar with their names being associated with cannabis brands that are trusted, innovative and true. It is clear that more companies will start partnering with exceptionally executed cannabis brands
2. Leading on the Sustainable Packaging Front
Brands in cannabis are already quite socially conscious given the nature of the industry and the fact that hemp itself is a bioremediatory (a.k.a it takes toxins out of the soil just by growing), and also is considered a sustainable material source. The amount of cannabis packaging required legally creates a sizable waste product and consumers of the plant will trend towards brands that solve this issue creatively and beautifully.
3. Smart Packaging
Cannabis comes with some hefty regulations. Yet the way they label is anything but, it’s ugly, it’s confusing, it’s not linked to online sources for more information. That will change. We’ll likely have smart packaging that links to our phones, more information available through QR codes and experiences and coupons linked to packages.
The basic structure of the cannabis industry is still taking shape. And negotiating this uncertain terrain requires a specific kind of knowledge. Generic CPG experience won’t get you very far. What’s needed is a background in CPG combined with a deep understanding of the cannabis space. There aren’t that many people out there with this kind of expertise, however the brands who seek out these individuals will be the ones who finally crack the code on route-to-market.
If any FON member would like more information on this article, or to discuss this or any other aspect of the cannabis industry, please contact Dean Porter at (843) 849-3191, or by e-mail at dean@porterpartnersgroup.com. PorterPartners is a free resource and member benefit available to all FON members providing insight and information relating to the cannabis industry.
