Conversations with several experts in the industry have shown that branding plays a decisive role in the development of the segment.
In the US, the market for cannabis is growing.
It is estimated that by the year 2020 it will generate more employment than that generated by workforce, government jobs, or public service. The number of work positions that this implie, according to research carried out by New Frontier Data, is of 250.000.
These projections are based on the 32 states in which marijuana is already legal — for medicinal use in 25 states and recreational adult-use in 9. Progressive legalization in other parts of the country will enlarge the measured effects.
With the flexibilization of the law, more and more entrepreneurs are entering the “cannabusiness”. A long tradition of bans on the use of cannabis is giving way to investment in an ever-expanding business.
Few justifications for an outdated stigma
Because of this progressive flexibilization, many brands and businesses are being built around a long forbidden product, there is a huge amount of companies being born around a product that was prohibited for years. For this reason, the cannabis market is naturally encountering difficulties associated with this past prohibition and the stigma its consumption might have in certain contexts.
“Employment in this market may represent difficulties. People from different segments (engineering or marketing) are apprehensive about the industry and do not want to damage their reputation by working in it.”—Steve Albarran.
CEO & Co-founder at Confident Cannabis
Although cannabis entails a negative health image, many studies have revealed a harmless (or even positive) side of the psychotropic. In November 2016, for instance, the American Association for the Advancement of Science published a study confirming that opiate overdose deaths diminished by 25% in those states where medicinal use of cannabis is legal, California ( 27%), Colorado (20%), and Washington (11%) being among the states in which the legal market is concentrated.
brands need to position themselves
In this context, brands need to single out their products and communicate their identity. There are many opportunities and room for ideas in the industry, but for the moment, few companies are opting for distinction. Branding is what helps them in this sense.
“In the last 4 years, products opting for branding have experienced growth rating from 100% to 530% and their names resonate strongly among consumers.” —Roy Bingham
Founder & CEO BDS Analytics
The different parts of communication play a decisive role in connecting brands with consumers. This is because it is an incipient business with a wide range of supply. The segment’s supply cannot be reduced solely to recreational uses of cannabis. It involves derivatives which are useful for gastronomy, agriculture, and medicine (among others). It is then important to set the ground and make the value proposal distinguishable. On the other hand, communication plays a decisive role because cannabis use is still stigmatized.
For that reason, clear communication with the audiences is essential in order to transmit confidence and gain acceptance in those states where marijuana is still banned. In general, cannabis consumption is associated with negative connotations of both the product and its consumers.
“There has been huge growth of branded products. What each brand transmits is very important specially to identify the places that have been traditionally assigned to the consumer” —John Downs, Director of Business Development at Arcview Group
That’s why branding is an important tool to legitimize the industry. It can make consumers feel that the pleasure they want to indulge in is “allowed”, whether it is legalized or not. Communication can grant this “permission”. Give them safe access to a legitimized pleasure, while demystifying the traditional place assigned to the consumer.
In such a context, branding represents a major portion of the success rate of the brand’s efforts to distinguish themselves and earn a place in the consumers minds. It is what can channel other efforts, which may be useless without certain strategic decisions made regarding image and product communication. And this is because the problems faced when undertaking work in this sector are specific: they are not found in every market. These Products must ensure much more confidence than the average since they are in themselves forbidden products (only in some states, but forbidden anyway).
“The number of products and information in front of consumers in the cannabis industry can be overwhelming to the consumer, and often times cultivators, and brands have a hard time standing out from the crowd unless they have a clear focus on branding.” —Jeff LaPenna, CoFounder, CEO at The Peak Beyond
why invest in branding?
So, to take off and segment, brands need to build a visual identity and communication strategies which echoes its marketing strategy.
Only this way branding can result in clear benefits. And this strategy becomes even more necessary when we take into account the fact that this industry cannot resort to the great aid of social media.
Cannabusiness brands cannot access media communication since cannabis is forbidden in some states. Therefore, it cannot be advertised through these resources (it would entail advertising illegal products and, hence, be illegal). In this way, brands lose a highly important channel — even indispensable in the era of digital communication.
“Since the access to social networks is limited, branding within cannabis industry is more important than in any” —Terry Buffalo
Chief Executive Officer at American Cannabis Company, Inc.
Facebook, as well as other social networks, have abode by the federal prohibition of cannabis, removing from their platforms any websites linked to cannabis marketing in 2016. In the same way, the Marijuana Business Daily reported that at least 100 Facebook pages had been closed in the first months of the previous year.
The prohibition represents an obstacle for brands, which are still in the phase of identity development and trying to capture new consumers. With restricted access to the media, brands lose the possibility of creating the contact point needed to shape the perception they generate.
As a response, cannabusiness-specific social networks have been created (MassRoots, TokeWith, HighThere, among others). However, their marketing scope is lower than Facebook or Instagram (1 billion and 500 million users, respectively). MassRoots barely reaches 900.000 users.
“Brand image has an essential role in Washington. Even when someone buys 1 gram of marijuana, it comes in a packaging. Branding plays a very important part since it allows customers to choose, remember, and compare products and brands in an easy way. It is fantastic. ” —Chase Towery
COO of S2S Solutions
branding is the business
Products accompanied by a series of strategic decisions have more chances succeeding in communicating ideas and meanings. In this sense, design and communication make up a marketing strategy. They aren’t mere decorations.
Design is part of a business plan where the visual component is key. After all, investment in design increases the brand ‘s performance. In this way it is not cost. It is investment.
“We believe, and want, that when someone seed the packaging of these products they will understand it’s particular function: cannabis, food, water, agriculture”, —
Milan Patel, Chief Executive Officer & Co-Founder, Pathogen D
Cannabusiness brands investing in branding are improve their performance since they create reference frames for the consumer through clear communication, which links brands with a determinate value. This generates references in the market and increases the brand’s competitive advantage.
What brands can expect of branding is, all in all, strategic changes in their visual identity, but, essentially, a marketing change. Branding is such only if it is able to positively affect the marketing model, help differentiate from the competition, and improve the way in which consumers are connected to the brand.
“Branding plays a key role: The brand is everything “ —Ellis Smith, Co-Founder/Chief Development Officer at American Cannabis Company.
Cannabis market is a young one. It is starting to take off and is already bumping into some obstacles. Most of these obstacles are related to the steps the industry needs to take to differentiate itself from the competition in a clear way. Brands are focused on experiencing a transformation of their potential and generating more value and preference. For that, they need to clearly communicate their identity. What better way to do so than branding?