Alongside electric cars and plant-based meat, legal cannabis promises to be one of the nascent but high-growth industries that will become mainstays of future generations of consumers. And like its sibling startup categories, beyond a few shining hotspots, no clear brand or market leaders have emerged yet in the space.
Legal cannabis is one of a handful of non-tech consumer categories born in the modern, social media, omnichannel era—a striking contrast to the fact that cannabis is an ancient plant that humans have been consuming for thousands of years (in various cultural and legal contexts).
But unlike cars that run on electricity or hamburgers made from plant proteins, cannabis isn't an innovative evolution of a well-understood commodity. Instead, it's a truly unique, highly individualized and multi-faceted concept whose product experience complexity is dwarfed only by the regulatory and format maze that awaits consumers. Legality aside, the potential consumer base is as wide-ranging as any consumable product on the market.
Cannabis companies are faced with the daunting task of targeting (of-age) Gen Zers, the HENRYs (high earners, not rich yet) set, baby boomers and everyone in between. While the variety of consumers, consumption habits and strains may mirror the challenges that the spirits industry faces, using go-to-market playbooks from alcohol, pharma, health/wellness, beverage, CPG and beauty is not necessarily the path cannabis marketers should follow, even if the formats and presentations of cannabis seem alluringly boilerplate to those categories. Because while the form factors and use cases of these industries are borrowed familiarity for cannabis innovation, the context and benefits are dramatically different.
Though not exhaustive or complete, we feel cannabis marketers should keep the following in mind as they create their brands and go-to-market playbooks for the future:
This is not a Field of Dreams scenario.
The early years of recreational cannabis seem to be pointing to one stark fact—that this is not a "Build it and they will come" market.
Yes, in every state that has opened a regulated market, we witness a huge tidal wave of initial demand and revenue pour in, driven by a combination of the curious and the longtime black-market consumers. We're also seeing that this initial green rush of demand tends to settle into a highly competitive, price-sensitive scrum for customers as the hype wears off, formerly black-market consumers return to the now value-priced illicit outlets, and consumers who represent the real growth curve find themselves intimidated and confused as to the best way to begin their journey with cannabis.
Illinois' recent opening of a recreational market seems to be mirroring this trend. Four-hour long lines into dispensaries and an acute shortage of product on shelf are already conspiring to dampen sales in the weeks following a frenzied launch. This proves again that demand is not necessarily the issue, so much as succeeding in a less-than-ideal regulatory and competitive market.
Given that reality, cannabis brands, retail or product-oriented, must work hard to establish the foundational bedrock of awareness and familiarity in these early, swirling days of the market. The brands that invest substantively, intelligently and consistently in these early days will enjoy stable growth and consumer loyalty in a category and era that promise little of either.
The best way to mass growth is via niche appeal.
While cannabis' appeal spans a vast range of demographic and cultural segments, cannabis brands must decide who their key core audiences will be and design the entire brand experience to their needs, wants and desires. Cannabis looks to be a giant category comprised of myriad highly specialized brands, rather than a few dominant mass players (think of this as a rapid escalation of the trends seen in beer, wine and spirits in the past decade).
Though it may seem paradoxical, the brands that assemble themselves around a specific consumer mindset or cultural context, niche as they may seem, will break through. Consider this a beacon strategy in which a brand calls out to specific consumers in a noisy, hard-to-decipher marketplace. Once that first wave of loyalists are delighted and ready to evangelize, top-line growth will be much easier to unlock for these brands.
Content and collaborations are king.
Outbound advertising in even the most progressive cannabis-legal states is a mixed bag of the individual sensitivities of publishers and platforms. It will be years before a clear regulatory framework enables substantial above-the-line media campaigning to occur.
Cannabis brands should look to build capabilities and expertise in content creation and out-of-category brand partnerships/collaborations. Much like Red Bull's transformation from beverage marketer to action sports content machine, the cannabis brands that learn to use the content and partnerships (be they brands or influencers) to overcome the regulatory challenges will be able to leapfrog the operations that continue to wait for mass-media channels to open up their audiences to the category.
As marketers begin to find success in the cannabis industry, a more concrete and surefire playbook will become apparent. In the coming years, lawmakers will continue to adjust regulations, consumers will continue to destigmatize the product, and advertisers will experiment on how best to market this phenomenon. An industry with such massive room for growth has earned the attention of investors, advertisers and consumers nationwide, and it rightfully deserves its own unique marketing approach. It is just a matter of time before this nascent industry finds its footing and reaches its full potential.