A few years ago, I had the privilege of speaking at a major cannabis conference about marketing and branding. The room was packed with exuberant attendees—many of whom were new to the industry—ready to absorb everything they could about this new and wonderful market and anxiously anticipating making their first of many millions. I felt bad that I would have to crush their dreams so soon into their journey.
I told them that within a few years, many no longer would be in the industry. I said the market was over-saturated with young, eager startups like theirs, and the legal cannabis industry was not a ticket to get rich quick. Most, I said, were under-capitalized and had no concept of the time, effort, and expense it would take to build a sustainable brand.
“Within a few years, you will be competing with major corporations with petty cash funds larger than your entire marketing budget,” I said. “You need to be in a position to either compete with these giants or be acquired by them, or you will be crushed.”
I am not a nasty person by nature, but felt it was my duty to inform these dewy-eyed newbies that reality soon would set in and the giddiness of the green rush someday would reflect the cold, hard nature that governs every other sector of business.
The fact is, the cannabis industry is turning from a happy place where everyone can dream of making it big into a hard-nosed, competitive arena where only the strong will survive. If you attended the most recent Marijuana Business Conference in Las Vegas, you saw ample evidence of this transformation.
How times are changing
I’ve been attending the conference since its early days at the Rio Hotel. According to MJBizCon stats, the first conference hosted only 402 attendees; the second only 720. Back in those days, the conference had an aura of “anything is possible.” Old hippies in tie-dyed shirts sold worm casings alongside guys selling newfangled plastic pop-top containers, the packaging fad of the time. The show was filled with wonder and innocent images of the opportunities that lay ahead.
Contrast that with the most recent show, which more than 27,000 people reportedly attended. Gone are the hippies and the smaller brands. Vanished are the little companies founded by eager entrepreneurs with dreams of hitting it big. In their place were well-funded corporations with marketing budgets the size of an average city’s annual revenue. The eager entrepreneurs have been replaced by Wall Street hawks and venture capitalists.
So, what’s the branding lesson?
The cannabis industry is saturated with brands competing for shelf space and consumer loyalty. We are going to see a major market shakedown within the next few years, and the smaller, less competitive brands will cease to exist. In other words, if you don’t have a strong brand, you will die.
If you take the time to build a strong brand now, you will be better positioned to effectively compete with the majors or become a candidate for a cushy buyout. Either way, you will make a tidy sum and your dreams will come true.
Learning from others
Building a brand strong enough to compete with well-funded major players doesn’t always mean you need a huge marketing budget, but you do have to be smart. The fact is, the largest marketing budget doesn’t always win. There is still room for much smaller companies to compete if they follow some of the lessons learned in other industries.
For starters: It’s not enough to have a great product or a terrific idea. Ideas are a dime a dozen, and greatness is no longer a goal—it’s an entry point. Your brand must stand for something, and that something better be really special. Just how many companies do you think can claim to be the best or all-natural or from Humboldt or 100-percent pure or for connoisseurs? The answer is that while many will make the claim, very few will rise to the top.
So how do you compete and create a sustainable business in the cannabis industry? You must create a brand that resonates, one that is different, interesting, truthful, speaks to an under-represented market, or provides a benefit no one else is touting.
Many untapped opportunities remain in the cannabis market. Where are the products targeting the suburbanite, the intellectual, the sports fan, the minority, the blue-collar worker, the executive, the conservative, or the socially shy? These are market sectors ripe for a brand that will cater to their interests and passions.
Don’t be afraid of targeting too narrow a demographic. It’s better to own a niche than to try to be all things to all people. Besides, you ultimately will attract customers from both within and outside your target demo. Marlboro wasn’t catering to cowboys when it featured them in its ads, but the image resonated with millions and made the brand the top-selling cigarette in the world. I imagine cannabis branding tailored to any of the above-mentioned sectors, done properly, would have appeal extending way beyond its obvious target audience.
One last piece of advice: Come up with something original. The sameness in products is getting ridiculous. Instead of trying to occupy the same space as a thousand competitors, do something different. Be bold. Be creative. Be different.
It worked for Apple. It will work for you.
Randall Huft is president and creative director at Innovation Agency, an advertising, branding, and public relations firm specializing in the cannabis industry. While working with blue-chip companies including AT&T, United Airlines, IBM, Walgreens, American Express, Toyota, and Disney, he discovered what works, what doesn’t, and how to gain market share.