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 the cannabis industry will generate more employment than what is currently generated by the private sector, government jobs, or public service — a total of 250,000 positions per year, according to research carried out by New Frontier Data.
These projections are based on the 32 states in which marijuana is already legal, 25 of which for medicinal use and 9 for recreational adult-use. Progressive legalization in other parts of the country will allow for a more complete analysis.
With growing legalization, more and more entrepreneurs are getting into “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Few justifications for an outdated stigma: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 constructed 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 that has been associated with its consumption.
“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, if not 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 an average of 25% in states where medicinal use of cannabis is legal: 27% in California, 20% in Colorado, and 11% in Washington, the states in which the legal market is concentrated.
brands need to position themselves:
In order to stand out, Cannabusiness needs to use branding to single out their products and communicate the identity of each brand. There are many opportunities and room for growth in the industry, though few companies are currently opting for distinction.
“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, since it is an nascent industry with a wide range of products with different uses. Cannabis products are not exclusive to recreational consumption, as cannabis derivatives have uses in gastronomy, agriculture, medicine, and other industries. This is why it is important to set brand guidelines, and define a concrete and unique value proposal.
Communication plays crucial role in cannabusiness precisely because of stigmatization. Clear communication with the audience is essential to transmitting confidence and gaining acceptance in states where marijuana is still banned, and where 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 socially acceptable, whether it is legalized or not. Communication can grant this “permission”, providing safe access to a legitimized pleasure, while demystifying the traditional place assigned to the consumer.
In this context, branding is a major contributor to the success in the company’s efforts to distinguish themselves and earn a place in the minds of consumers. Branding can channel other efforts, which may be useless without making strategic decisions regarding the company’s image and product communication.This is because the problems faced in this sector are specific to the industry. These products must ensure much more confidence than products in other industries since they themselves can be forbidden products depending on state legislation.
“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?
In order to grow and take advantage of segmentation, brands need to build a visual identity and communication strategy that echoes its marketing strategy.
Only in this way can branding produce clear and tangible benefits. This strategy becomes even more necessary when we take into account the fact that this industry cannot take advantage of one of today’s most powerful advertising channels — social media!
Cannabusiness brands cannot take advantage of many communication mediums, like social media. Since it remains federally illegal despite being legalized in many states, advertising cannabis is illegal. In this way, brands lose a major channel of communication — how can you advertise without social media in the digital era? The answer — strong branding.
“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, and other social networks, are forced to abide by the federal prohibition of cannabis, removing any websites linked to cannabis marketing from their platforms as of 2016. The Marijuana Business Daily also reported that at least 100 Facebook pages had been closed in the first months of 2015.
The prohibition presents an obstacle for brands, which are still in the phase of identity development, trying to capture new consumers. With restricted access to the media, brands lose the possibility of creating the contact point needed to shape their brand perception.
As a response, cannabusiness-specific social networks have been created (MassRoots, WeedMaps, TokeWith, HighThere, and more). However, their marketing scope is lower with Facebook and Instagram reaching 1 billion and 500 million users, respectively, while 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 a higher chance of successfully communicating the ideas behind the brand. In this case, design and visual communication make up an entire marketing strategy. They aren’t mere decorations.
Design is part of a business plan in an industry where the visual component is key. Investment in design increases the performance of the brand, resulting in a large return on said investment.
“We believe, and want, that when someone sees 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 companies investing in branding are able to improve their performance by creating frames of reference for the consumer via clear communication, linking brands with their value to the consumer. This generates references in the market, increasing the brand’s competitive advantage.
By using branding, companies can expect strategic changes in their visual identity, and a resulting change in marketing. Branding is only successful if it is able to positively affect the marketing model, 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.
The cannabis market is a young one. As it begins to take off, it is starting to run into some obstacles, many of which are related to steps that brands in the industry need to take to differentiate themselves in a clear way. The cannabis industry is in the midst of a transformation in which companies must generate value and gain preference. A clear identity is necessary to accomplish this. What better way to do so than branding?.