This post also appeared Nov 19, 2015 in the Huffington Post Canada (Business section) as a shorter edited version. Click here to view that article.
Like opening the window and getting a breath of fresh air, the Liberal party swept to power in Canada recently with a “sunny days” attitude. Under the leadership of Justin Trudeau, son of former Prime Minister Pierre Trudeau, Generation X has taken power, promising open communication and a team approach with an agenda for change. It would seem collectively Canada is destined to return to more traditionally left leaning social values.
One of the more potentially controversial policies promised by the Liberals is the legalization of marijuana. Whether we agree with it on not, Canada is likely to see marijuana openly available for sale within the next four years.
Pot is about to get hot.
I liken the opportunities for marijuana to the new frontiers that alcohol marketing faced after prohibition ended in the US in 1933. While there are age and legislative restrictions in place governing alcohol, its promotion is legal, and increasingly more sophisticated. Take one look at the shelf of your local liquor store or a glossy magazine and it’s a bounty of brands, stylish logos and labels, where it’s as much about defining a segments lifestyle as the actual product. I expect the same will eventually be true for the business of pot.
When I was in Colorado earlier this year on business, I observed stylishly upscale dispensaries which felt more like entering an Apple store then a place to buy cannabis and accessories. Various strains were displayed in jars, alongside tablets where customers could look up origin, medical uses, quality standards and positive and negative effects in a self serve manner, free of pressure. You could open jars to sniff and smell samples. Halogen directional lights and sparse design elements otherwise gave an industrial design feel. There was not a lava lamp, beads or a dodgy character in sight.
Groundswell, pictured here, and Euflora are already doing this in Colorado.
So what might the future of this industry look like in Canada once pot is legalized? And what marketing insights might there be for businesses unshackled by legislation as they grow quickly in the age of digital?
To get some insight I interviewed two industry leaders in Colorado. Chris Sams is the CEO of Marijuana Marketing Guru, an arm of Jemsu , a large SEO company in Colorado. His company specializes in marijuana advertising, search engine optimization, “cannabusiness” web design, and analytics and reporting. Olivia Mannix is the Co-founder of Cannaband, a niche marketing agency created as a specialized off shoot from their parent company Marca, a general marketing agency. Canabrand specializes in branding and identity, market selection, and ensuring all parts of the brand are congruent and on strategy. As such, both CEOs saw an opportunity for specialized marketing services to the industry when Colorado legalized marijuana in January 2014.
While sale and distribution is legalized, there are still many restrictions. But they have found that those restrictions present creative marketing opportunities. Chris Sams noted that the use of social media such as Facebook, Instagram and Twitter is limited, since marijuana advertising is prohibited on those platforms just like the promotion of pharmaceuticals and alcohol. But since a lot more consumers are searching online for information, having a strong website and being optimized for search is key. The company has also had success partnering with blogs to do advertising on sites. He sees the combination of a push strategy through ads and blogs and a pull strategy through SEO as progressive digital marketing opportunities. Olivia Mannix at Cannabrand, sees the broad reach of media and publicity as a key component to maximizing exposure in a restricted environment. She sited her client Neos, and their cannabis infused vapourizing pen, as an example. Since the sale of cannabis is restricted to those over 21 in her state, they had found an ABC affiliate TV station in Colorado where 70% of the audience was over 21 years. The “Adventurous Life” TV spot they produced was lifestyle focused and didn’t show the product, appearing to meet all legal restrictions for advertising. When the spot was pulled at the last minute they were able to create a PR story around it, which was picked up by Bloomberg Business and its outreach to national news outlets, creating 250,000,000 media impressions within a week. Cannabrand has also been successful getting New York Times and 60-Minutes coverage for their client Mindful, as they shifted the branding from a medical use position to the recreational user.
Beyond the promotional opportunities created by restrictions and the obvious opening up of the distribution chain through dispensaries and online, there were three other marketing trends they observed.
1. Segmentation. There are two broad segments, medical use and recreational. Both executives saw growth and greater acceptance in the medical use of CBD products for pain management, appetite control and cell generation involved in the treatment of cancer, MS, epilepsy and Aids. But they agreed that recreational use held the greatest growth opportunity.
2. Targeting. “We definitely see segmentation in the industry and capturing a wider audience across all segments,” noted Chris Sams of Marijuana Marketing Guru. Within the recreational use segment, these were the areas where both interviewed saw growth.
- Women: Whether we’re ready for suburban Mom’s on a “rocky mountain high” it would seem they are a prime target for expansion beyond the traditional youth, or Cheech & Chong stoner market we are perhaps predisposed to think of first as users of marijuana. Notes Mannix, “Women are the new vertical growth. Vaping is of interest since it is discreet, there’s no odour, they can control the amount of product, and there’s no calories like alcohol and edibles. Plus lighting a burning a flower appeals to women.” She also noted that women like to get together to try products, they are prime targets for high-end accessories, and they are a natural for spreading word of mouth in their networks.
- 25-35 year old urban professionals: Sams noted that the 25-35-yuppie market prefers the upscale and professional branding approach, which has emerged as a way to present product in a legal and appealing way. Dispensaries have popped up in locations to better serve this market. And services such as “Bud & Breakfast” stays for $500/night are clearly targeting an upscale market.
- Athletes: This target group is a blend of medical and recreational use, seeking CBD products for cell generation and healing properties.
- Baby boomers: Mannix referred to this group as “Those over 50 who were coming out of the cannabis closet.” This was the original hippy generation who had a high likelihood of experimentation in their youth. Now largely with grown children, not needing to set moral standards, or frankly seeing the benefits of legalizing an industry to protect youth from indiscriminant producers, they have become more accepting of legalization. And with that, they are seeking relaxation and perhaps a revisit to their youth.
3. An explosion of products and services. Of course there is an expansion of dispensaries, but it goes far beyond that. With push back sentiments from anti-smoking, the two biggest product growth areas were with edibles and vaping. CBD products for medical use were also a large growth area. But even within traditional weed, there are strains and brands with different properties and benefits. Then there’s the paraphernalia like pipes, vaping pens and infusers to further round out offerings. And not to be out done, services have also gotten into the offering with pot tours, events and festivals, growing schools, marijuana cooking classes, and smoking lounges and social clubs. “I’d say that the diversity of products, now that it’s recreational use, have quadrupled in the last two years,” notes Sams. “It’s no longer a dispensary system, there are new products across the industry.”
So is Canada ready for this?
Cannabrand just announced a plan to expand their brand into Canada. Olivia Mannix, Co-founder notes, ” We’ll be looking for strategic partnerships with talented creative shops and PR firms in Canadian cities.” It seems Colorado, having seen the future, is ready to prosper here. It’s quite clear from a business and marketing perspective, that the opportunities for the industry are endless.