The future of national cannabis brands

In recent years we’ve watched the rise of cannabis brands, but as the industry moves closer to federal legalization, it won’t be long before we see national cannabis brands fully becoming part of our cultural lexicon – just like Coke, Uber , Amazon and Google.

We’re already seeing cannabis brands crossing state lines in creative ways — through mergers and acquisitions, winning new licenses, entering into partnerships and licensing agreements, and more. However, it’s only a matter of time before federal legalization occurs, which will remove significant barriers that currently make it difficult and expensive for cannabis brands to grow and scale nationwide.

With this near future, let’s take a look at five key factors most important to the rise of national cannabis brands.

Distinction

Research shows that only 47% of US cannabis users care about “brand” when choosing a cannabis product today. Put another way, more than half of US cannabis users don’t care what brand of cannabis product they buy.

There are a few reasons why branding is not yet essential for cannabis users. Because cannabis is not federally legal, consumers do not have many product options, and of the products available at their local dispensaries, most or all are from domestic growers and manufacturers.

Today, consumers are more likely to choose cannabis products based on three factors: 1) product potency, 2) product form, and 3) what the budtender recommends. Brand plays a much smaller role in purchasing decisions when options are limited to local, artisanal produce.

When cannabis is legalized at the federal level and cross-border competition begins, branding becomes much more important. With more choices, consumers will compare specific differentiators and benefits between brands, so the cannabis producers investing in brand development today are the ones who will win in the national market of the future.

product consistency

Branding is all about consistency – from a consistent product to consistent experiences, consistent messages and everything in between. For a national cannabis brand to scale effectively, flowers and processed products must be shipped across state lines so that branded products are consistent from one state to the next.

Think about it like this. When you buy a Coca-Cola product in one state, it tastes the same as when you buy that product in another state. National cannabis brands must offer the same experience in every state.

At the same time, costs must be reduced throughout the supply chain to keep prices low for consumers. All of this is very difficult when cannabis needs to be grown, manufactured and packaged in the state where it is sold.

Therefore, unless federal legalization breaks through the state silos that are fragmenting today’s cannabis industry, national cannabis brands will find it harder to scale simply because there will continue to be barriers to production consistency and cost reduction.

Digital Marketing

Today’s national brands outside of the cannabis industry have something in common. They all rely heavily on digital marketing to connect with highly targeted consumers across the country. For national cannabis brands to develop, the restrictions on digital advertising and marketing must change.

Social media advertising and pay-per-click advertising are essential to national brand building, and national cannabis brands will be severely disadvantaged if Facebook, Google and other major platforms continue to ban cannabis-related advertising.

Search engine optimization and content marketing will be just as crucial to national brand building as quality websites that offer rich online experiences. For a cannabis brand to become a national brand, the company behind the brand must invest in digital marketing with a reasonable budget to target consumers where they are with the best digital experiences.

Expertise and experience in building national brands

As mentioned above, investing in digital marketing will be critical to building national cannabis brands, and that means companies need to invest not only in marketing initiatives, but also in marketing and branding expertise and experience. In other words, to become a national brand, cannabis companies need to hire just like consumer packaged goods (CPG) companies.

We’re already seeing these types of attitudes, and you can expect to see more in the future as we get closer to federal legalization. For example, companies like Cresco Labs, Cronos Group, Tilray, Parallel, and The Parent Company have hired CPG executives in the cannabis industry.

This hiring trend will continue, and many companies are already adding experienced CPG professionals to their teams. You can bet they are planning opportunities to establish national brands.

Brand integration after merger and acquisition

Prior to state legalization, many cannabis companies are already finding ways to build national brands on a state-by-state basis. Cookies, Wana Brands, Curaleaf, Trulieve – these are just some of the companies along the supply chain that are pursuing different strategies to build a piecemeal national presence.

One of the most popular ways to expand a cannabis brand today is through mergers and acquisitions. However, mergers and acquisitions require a coordinated strategy to bring disparate products, marketing, processes and licenses together into a consolidated, consistent brand. This includes everything from operational processes to the combination of online and offline brand presences.

The bottom line is that companies aren’t waiting for federal legalization to start building their national cannabis brands. However, the process to get these plans off the ground requires strategic planning to seamlessly and consistently position brands appropriately for national expansion.

Key takeaways about national cannabis brands

National cannabis brands are coming, but when they have the opportunity to succeed remains to be seen. It will require federal legalization for full-fledged national cannabis brands to become household names like Uber, Google, and so on. However, the seeds are already being planted by cannabis license holders in several states. Companies that haven’t taken steps to do the same are already falling behind.

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