Marketing Thru Marijuana: Differentiate or Die

This is the year that hippie cannabis dies. Woodstock is 50, and has just licensed its name to mega-retailer MedMen.  Hemp is newly de-scheduled and igniting the imaginations of farmers and investors excited about the global opportunity.  Pot Culture has become Pop Culture as legalization has spread coast-to-coast and pushed marijuana into the mainstream.

For grassroots marketers who have been playing in our fragmented American marketplace — where no two states share identical regulations or standards — things have gotten tough in the last year as legal competition from Big Pharma, Big Alcohol, Big Tobacco, Big Consumer Package Goods and Big Agriculture have transformed the playing field.

“As our nascent industry rockets from grassroots to global, it’s Differentiate or Die time for independent companies hoping to stay relevant in an increasingly noisy landscape.” MJBA Founder and veteran marketer David Rheins told MJNews Network.

“You must be able to stand out from the cacophony.  My advice for the licensed cannabis business and ancillary provider alike, is to focus on defining your brand differentiation.  Find a niche, fill a niche.  Your competition moving forward is Big Industry, which has the money, the technology and the wherewithal to take a product from field or factory to shelf better than the little guy ever will.”

His advice: Build your brand authority.  “Big Industry doesn’t understand emerging markets — who the consumer are, their buying preferences and psychographics,” Rheins said.  “As a small business, you are part of the community. You are making a market — defining the industry and your space in it.  No one understands its needs and attitudes of the new market better than the grassroots marketer.  Build your brand around your values, and the values of your customers and your community.   Establish brand loyalty and authority — with your vendors, and your customers, wether you are b2b or b2c — by lending value.”

Differentiate Or Die

Rheins suggests that the New Year is a good time for all marketers to do a brand review.  As an exercise, he encourages his clients to ask their investors, employees, vendors and customers to answer a couple of questions:

1) Describe our brand value  — what do we stand for — in one sentence.

2) What products/services do we offer.

3) What is our unique selling proposition (USP) — what do we do better than other brands?

“You’d be surprised how much intelligence you’ll gain just by analyzing these questions,” Rheins said.  “It only goes to reinforce that today marketing is not simply an exercise of spending money on paid advertising.  Advertising — particularly targeted placements — can be effective, but savvy marketers today depend on an integrated strategy that includes owned media (your company websites and newsletters) and earned media — social media engagement on public platforms with business communities and groups on Facebook, Twitter, Instagram, Reddit.

In this dynamic environment, Rheins advises businesses to stay engaged and stay fresh.

Take An Annual Brand Checkup

1) Do A Brand Review: How well do your customers understand your Brand Values and USP? How well do you understand your customer segments?

2) Website Audit: How fresh is your content? Are you SEO optimized? Are you using your website to gather customer feedback?

3) Social Media Audit: How visible is your brand on key social media platforms?  How often do you post content?  How quickly do you respond to queries or brand mentions? Who in your company is responsible for social media?

4) Community Check Up: How engaged is your brand in your community — not just your cannabis community but your local community?  Do you sponsor local events? Do you give to local charities? How well liked is your brand on Main Street?

 

 

The Industries Most Impacted By The Legalization Of Cannabis

By Trevor McDonald

For an industry that’s still relatively new, we’ve seen some amazing success stories come directly from cannabis sales. In states like Colorado, marijuana is surpassing alcohol in tax revenue, which helps funnel funding to schools and other important programs.

But legalized marijuana also has a broader impact. Its effects can be felt in various industries, but some are impacted more than others.

The following industries have felt the most impact from the legalization of cannabis:

Cryptocurrency
Under federal law, cannabis is still treated like any other controlled substance. As far as the federal government is concerned, cannabis is illegal, regardless of what each individual state has to say about it. This may change with the VA Medicinal Cannabis Research Act of 2018, but dispensaries remain cautious. Because of the legal gray area surrounding marijuana, 70 percent of cannabis companies use cryptocurrency instead of traditional banks.

Education
In states where marijuana is legal, we’re seeing a major boost in funding for education. This comes from the increase in tax money collected from cannabis sales.

To drive this point home, let’s look at Colorado as an example. Between 2015 and 2017, the Colorado Department of Education received over $140 million from cannabis revenue alone.

Oregon schools received an extra $40 million in tax revenue in 2016.

Software and Technology
Where cannabis is legal, all states require a seed-to-sale tracking system. Although there are a few companies providing software for the job, two emerge as leaders. METRC is one such company, and they received nearly $900,000 in their first contract with the state of Colorado. MJ Freeway made headlines when it secured a $10.4 million contract with the state of Pennsylvania for their seed-to-sale tracking system.

Alcohol
There are many industries singing the praises of legalized cannabis, but the liquor industry is not one of them. You might have guessed that alcohol sales would take a hit when cannabis became legal, but a few researchers at the University of Connecticut and Georgia State University wanted to see the full picture. As it turns out, alcohol beverage sales fell by 15 percent following the introduction of marijuana sales. With easier access to marijuana, people don’t seem to be drinking as much alcohol.

Big Pharma
The pharmaceutical industry has been fighting marijuana legalization since before it was legal anywhere. This because they stand to lose a lot. As people start taking cannabis and stop taking prescription painkillers for common injuries, big pharma loses. As people choose CBD oil instead of Prozac, big pharma loses. Whenever a prescription medication is replaced with cannabis, it equates to a loss for the pharmaceutical industry. In fact, one report estimates that if the entire nation legalized cannabis, the pharmaceutical industry would lose an estimated $18.5 billion in the span of three years.

Whenever anything of value enters the market, we can expect it to make major waves. Cannabis is no exception. In most industries, its impact is favorable. We’re only seeing a decline in the industries where cannabis replaces something. But based on the long and short-term effects of alcohol and prescription drugs, marijuana’s impact may still be favorable.

The Wink In Weed: Why Seattle Hempfest Is Still Worth Supporting

By David Rheins

It’s been five years since Washington opened its legal cannabis marketplace, and today adult consumers in the Evergreen state have an abundance of high-quality, legal weed available in an impressive array of product configurations at affordable prices.

Seattle Hempfest, taking place this week along the gorgeous Puget Sound, is the nation’s oldest and largest “Protestival.”  It began as forum and platform for activists, patients and pot smokers to gather together to fight for their rights to toke in peace.  Back then, firing up a joint in public had real potential consequences — and could land you with a fine or even jail time.

My fellow Hempfest Volunteers in their Green T-Shirts

Hempfest Volunteers

Today, Washingtonians don’t have to go to the park to spark up. Pot smoking is legal, accepted and somewhat normalized in the Pacific Northwest. Leading some to ask what is the relevance of Seattle Hempfest?

While more of a party these days than a protestival, Seattle Hempfest is still a must-attend annual gathering of the cannabis tribes.  Our Green Revolution is a broad tent, with a diverse set of communities.  We are advocates, patients, farmers, business professionals, parents, teachers and caregivers, all united under the belief that Federal Prohibition, and the War on Drugs — and Drugs Users — must end. There is something powerful and undeniable about seeing a hundred thousand pot smokers gather together to celebrate community.

There is still much legal reform that needs to happen before cannabis consumption is fully normalized — and it is encouraging to see the momentum behind the STATES ACT and the Marijuana Justice Act as Congress has finally gotten the word that the American public — on both sides of the aisle — are through with prohibition.  The 2018 Farm Bill, with its Hemp Farming provision, will de-schedule industrial hemp and open the way for explosive growth in hemp-based products, including consumer goods, industrial materials, foods, fuels and medicines.

We are in a fight for the control of our legal cannabis industry.  Big Pharma, Big Alcohol, Big Tobacco, Big Agriculture and Big Government Regulators are all fighting to establish their places in our new mainstream marijuana marketplace. We must continue to stay involved now as the new regulations and standards of our emerging industry are crafted. I see Hempfest as a natural venue for showcasing the best and most innovative hemp products. Cannabis consumer rights need to be protected to ensure that the legal products are safe, tested and of the highest quality. Legal cannabis businesses have an opportunity to build an industry based on the highest standards of production, marketing and operations.  We need to be fair and equitable in our hiring and compensation practices, and we need to direct the windfall of new marijuana tax revenues towards improving the health and welfare of local communities, particularly those hit hard from the War On Drugs.

CurvedPapersHempfest512x440As our alternative culture takes centerstage, it is important that we stand together for our shared values.  We are witnessing and influencing the end of an era. The post-WWII, better living thru petrochemicals, conspicuous consumption society is unsustainable — and is quickly being replaced by a global, plant-based lifestyle, renewable energy zeitgeist.

MJBA is proud to once again participate as a media sponsor and exhibitor of Seattle Hempfest.  We’re thrilled to be sharing a booth with Curved Papers, with whom we’ve been touring the country on a Cannafest Destiny Tour.  We’ll be showing off our NORML 100% Hemp rolling papers, and showcasing our latest poster by Michael Guttsen, and doing social media blasts with MJBA Ambassador At Large Jake Dimmock.  Please join us at Booth #323 across from the Hemposium.

Michael O'Malley, David Hynes Michael O'Malley David Rheins

It has never been more important to stand up and be counted.  Please come out to Myrtle Edwards park this weekend, listen to the speakers, dance to the music and support the many food and merchandise vendors.  Be sure to drop a few bucks in the donation bucket:  Seattle Hempfest is an all-volunteer effort, and it depends on the support of its Vendors, Sponsors and Attendees to survive.

 

 

Constellation Brands To Invest $4 Billion USD In Canopy Growth

Expands Strategic Partnership to Accelerate Canopy Growth’s Global Expansion Plans 

CANADA: Constellation Brands, a leading beverage alcohol company, and Canopy Growth, a leading diversified cannabis company have announced a significant expansion of their strategic partnership to position Canopy Growth as the global leader in cannabis production, branding, intellectual property and retailing.

Constellation Brands will increase its ownership interest in Canopy Growth by acquiring 104.5 million shares directly from Canopy Growth, thereby achieving approximately 38 percent ownership when assuming exercise of the existing Constellation warrants.  Constellation Brands is acquiring the new shares at a price of C$48.60 per share, which is a 37.9 percent premium to Canopy’s 5-day volume weighted average price of the common shares on the Toronto Stock Exchange (“VWAP”), and a 51.2 percent premium to the closing price on August 14, 2018.  Constellation will also receive additional warrants of Canopy that, if exercised, would provide for at least an additional $4.5 billion CAD to Canopy Growth.

Constellation Brands to Invest $4 Billion USD in Canopy Growth

Constellation Brands to Invest $4 Billion USD in Canopy Growth

As a result of the new shares Constellation is acquiring, Canopy Growth will immediately upon closing have proceeds of approximately $5 billion CAD ($4 billion USD) to bolster its leadership position in the global cannabis industry.  This investment, the largest to date in the cannabis space, will provide funds which Canopy Growth will deploy to strategically build and/or acquire key assets needed to establish global scale in the nearly 30 countries pursuing a federally permissible medical cannabis program, while also rapidly laying the global foundation needed for new recreational cannabis markets.  Canopy Growth’s Canadian platform does not require additional cannabis cultivation assets, and management views other jurisdictions, including the United States, as strategic priorities requiring significant capital.

“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” said Rob Sands, Chief Executive Officer, Constellation Brands.  “Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space.  We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space.”

Canopy Growth will benefit from Constellation’s deep understanding of consumer trends and shifting preferences, and proven ability to translate those insights into distinct brand positionings that build strong connections with consumers and foster brand loyalty.  Constellation’s disciplined approach and capabilities in areas such as mergers and acquisitions, finance, large-scale production, marketing and sales as a leading Fortune 500 company, combined with Canopy’s entrepreneurial approach and best-in-class knowledge and expertise within the emerging cannabis sector create a powerful combination that will ensure Canopy Growth is set up for sustainable, long-term success as the company and sector evolve.

Molson Coors Canada and HEXO Announce Agreement to Create JV Focused On Cannabis-Infused Beverages

CANADA: Molson Coors Canada, the Canadian business unit of Molson Coors Brewing Company, and leading Canadian cannabis producer, The Hydropothecary Corporation (HEXO), are pleased to announce that they have entered into a definitive agreement to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.

The joint venture will be structured as a standalone start-up company with its own board of directors and an independent management team. Molson Coors Canada will have a 57.5% controlling interest in the JV, with HEXO having the remaining ownership interest. The new company will combine the proven beverage experience of Canada’s leading brewer with a recognized innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019.

Molson Coors Canada and HEXO Announce Agreement

Molson Coors Canada and HEXO Announce Agreement

“Canada is breaking new ground in the cannabis sector and, as one of the country’s leading beverage companies, Molson Coors Canada has a unique opportunity to participate in this exciting and rapidly expanding consumer segment. This new venture is consistent with our growth strategy and our commitment to being First Choice for Consumers and Customers by ensuring that Canadians have access to high-quality products that meet their evolving drinking preferences,” said Frederic Landtmeters, President and CEO of Molson Coors Canada. “While we remain a beer business at our core, we are excited to create a separate new venture with a trusted partner that will be a market leader in offering Canadian consumers new experiences with quality, reliable and consistent non-alcoholic, cannabis-infused beverages. We look forward to partnering with HEXO, a recognized leader in the medical cannabis space in Canada that will bring robust production capacity, a track record of innovation, and, most importantly, shared values when it comes to doing business the right way and earning the trust of consumers.”

“HEXO continues to lead the way for smoke-free cannabis innovation in Canada. We are excited about this partnership with Molson Coors Canada, an iconic leader in adult beverages, as we embark on the journey of building a brand new market. With this new company, we are bringing together Quebec’s oldest, most established company with one of its newest success stories in a truly innovative partnership,” said HEXO’s CEO and co-founder Sebastien St-Louis. “As two leading companies who share a track record of excellent practices, as well as respect for law and regulations, HEXO and Molson Coors Canada have established a relationship built on trust, and together we will develop responsible, high-quality cannabis-infused beverages for the consumable cannabis market in Canada.”

Closing of the transaction, which is targeted to occur before September 30, 2018, is subject to the satisfaction of certain conditions, including execution and delivery of various transaction agreements, including governance documents and R&D and supply agreements. In connection with the closing of the transaction, subject to the final approval of the Toronto Stock Exchange, HEXO will issue to Molson Coors Canada warrants to purchase shares of HEXO.

WinkInWeed: MJNN’s Exclusive Interview With WSWA EVP Dawson Hobbs

By David Rheins

The Wine & Spirits Wholesalers of America (WSWA) founded in 1943, has nearly 400 member companies in 50 states and the District of Columbia. It’s members distribute more than 80 percent of all wines and spirits sold at wholesale in the United States.  The association made news this week by endorsing the Legalization of Cannabis for States that follow a “Regulate Cannabis as Alcohol approach.”

MJ News Network had the opportunity to speak with WSWA’s Acting EVP for External Affairs | Senior Vice President, Government Affairs, Dawson Hobbs.  In his role, Hobbs regularly testifies before legislative and regulatory bodies in dozens of states, and has established extensive relationships with governors, attorneys general, alcohol regulators and industry officials around the country.  MJNN asked him what is behind the WSWA’s decision to back the legalization of cannabis, and what lessons the cannabis industry might learn from the nation’s approach to regulating alcohol.

wswa logo

MJNN: The WSWA has just endorsed Cannabis Legalization in States that follow an alcohol model. That’s a sea change for the alcohol industry, isn’t it?

HOBBS: Well, let me just have one little nuance of clarification. Our position is that the federal government should provide a path for States that choose to legalize. That right to legalize should be recognized as long as they follow an alcohol regulatory model,  and have appropriate regulations.  We’re not telling the individual state that they should or should not legalize, we’re simply saying there should be a path for them to choose to do so, and it should be accompanied with the appropriate regulations.

MJNN: Why the change and why now?

HOBBS: This has been a long, long discussion. We’ve had a lot of conversations, dating back to when Colorado took the step on adult use. What really has driven it is we know that it’s here to stay, and we know that more States are coming.  We think that there are 85 years’ worth of lessons of appropriate alcohol regulation that we can take to the cannabis industry, and those lessons are: It’s better off to start with a good regulatory framework rather than having to learn the lessons the hard way by trial and error.  And so, it’s more of a recognition that this is here to stay and that more states are coming, and we want to be part of the conversation about how effective state regulation works.

MJNN:  Tell me what that looks like in terms of advocacy, in terms of outreach to the cannabis community, and in terms of outreach to the general population. Those of us who have been in the industry for a number of years recognize our biggest challenge has been the normalization, the mainstreaming, of not just cannabis but of cannabis users. So, tell me, how does the WSWA advocacy take shape?

HOBBS: There’s a couple of questions there, right? So I’ll start with the first part which is we’re going to be talking and we have already started talking with members of Congress about what an appropriate regulatory framework would look like, so that they can have some comfort in allowing states to legalize.

We’re going to continue those conversations and we’re realistic about the fact that this is going to be a long conversation. We don’t think that because we took this position, Congress is going to act next week.  We know that we will be part of ongoing conversations.  We have an effective, and well-established federal advocacy team and that team will be engaged on this. And to your point, we do think that part of what we bring to the table is not only our regulatory knowledge and history and experience, but a mature advocacy organization [vis a vis] the cannabis industry.  And you know, we’re going to be having conversations like these with a number of cannabis organizations. We’re going to be reaching out to quite a few, but we also expect we’ll get some phone calls ourselves and we look forward to having those conversations.

You’ll notice that our position is not new in the cannabis world.  For a long time, many advocates have said let’s ‘Regulate Cannabis like Alcohol.’ We’re saying yes, but we’re also saying, let’s remember alcohol regulations. The reason alcohol is safe and effective is because it doesn’t just end at having to be 21, which is the thing most people think of.  There’s a host of regulations on product testing and labeling and licensing of producers and distributors and retailers — all with penalties for violations of the terms that have created a safe alcohol market. So, alcohol regulation is very effective. We agree, but we just want to make sure we talked about all the regulations.

MJNN:  Have you taken a position on either the States Act, which was just recently introduced or Cory Booker’s Marijuana Justice Act?

HOBBS:  We think the State’s Act is really a step in the right direction. But, we want to apply a little bit more rigorous regulatory threshold that the states need to meet. It’s the right concept and States are the [best] pathway to legalization. But you know, one of the ways that normalization will occur is if a State chooses to legalize, the folks in the surrounding States need to feel confident that the product’s not going to be diverted to their State. The consumer needs to be confident that the product they’re getting is safe and has the amount of THC or CBD that it says it does.  For the people who choose not to consume, [they should be confident] the regulations surrounding the sale and production are going to make sure that there are no problems with diversion. And also that there aren’t problems with people getting a tainted product and possibly getting sick, and that there’s not overconsumption.

The normalization comes with people getting comfortable and, and confident. And we think that the regulatory model helps provide that.

MJNN:  One of the differences, however, is that in the legal cannabis world, we’ve got a real Balkanized approach. Meaning: every State has its own regulations, and there is a wide range of not just who can participate, but what products are sold, how they’re packaged and brought to market. What’s your take on that? You’re talking about standards. It’s kind of tough to have standards when you can’t sell it oil in Arizona, and you can’t sell flower in New York.

HOBBS:  I think some of those things will equalize over time. I think the lesson from the alcohol space is that every State does alcohol regulation differently, but they have a lot of commonalities. In certain states you can buy alcohol in a grocery store and other states you can’t. Those decisions are made by the state and they’re made for reasons that have to do with the culture of the state and citizens of the state.

As you know from cannabis, folks in New York and folks in Utah have different attitudes towards intoxicating products, and we should respect that because there’s cultural reasons that those differences exist when it comes to the types of products that can be sold. I think you’ve seen in the alcohol space over 85 years, there has been sort of a harmonization.  Spirits used to be much less available than other products, and now they’re becoming more equally available with wine and beer. We don’t have a position on whether that should be the case or not, but we do have a strong position that the state should be able to decide and I think you’ll see something similar. We see cannabis as in this experimental phase of folks at looking at what works for their community.

MJNN: Let’s talk a little bit about economic opportunity.  A senior executive at Molson recently advised investors that legal cannabis was cutting into their market share, and we’ve seen some pretty significant investments from spirits and alcohol marketers in Canada, Constellation Brands probably being the most visible. We’ve also seen the introduction of a number of cannabis-infused and CBD-infuised beverages, including beers and wine. Tell me, how much of your new position is based upon the realities that our industries are evolving or co-evolving together?

HOBBS: I think that evolution will continue, but I don’t think that’s unique to the alcohol industry. I’ve read quite a bit about folks from other non-alcoholic beverage industry’s looking at the cannabis space. I think some of the food manufacturers might look at being involved with the edibles space. Perhaps not the hugest, but I think some of the smaller ones, for sure.

It’s only natural that folks in [the wine and spirits] industry might look at the same thing, and you know, some of them will choose to get involved in that somehow. That really wasn’t the driving force of our decision. The driving force of our decision was that we have 85 years of experience in dealing with a regulated socially-sensitive product, and it would be silly not to bring that experience to this conversation and talk about appropriate regulation.

MJNN:  You talked about how spirits had been mainstreamed over the years. We’re now seeing whiskey ads on tv.  Ad restrictions certainly have been one area that’s been plaguing legal cannabis, in terms of our ability to do things like outdoor or for legal cannabis entities to market their product on TV. What’s your position there?

HOBBS: Well, we think that our industry has done a good job, and continues to improve, by making sure that we aren’t marketing products to those who should not have them, particularly those who are under age. Similarly, that our product is marketed in a responsible way that doesn’t make unsubstantiated either health claims or implied health claims that may or may not be true. We just think that there’s a good lesson there for the cannabis industry: to take similar steps to prevent ads from being marketed to those who are underage, or are very careful about —  and I understand the medical component, but in this early phase especially–  being careful about the health statements they make. That will go a long way to helping people be comfortable with the advertising by the cannabis industry.

You know, we all have to accept that, just like when alcohol ads appear in a new space, there’s a period of adjustment. Organizations in our industry have codes of advertising, ethics and standards, and I think a lot of those same standards can be applied to the cannabis industry pretty effectively.

MJNN: What other lessons do you have for entrepreneurs who are building the legal cannabis industry one grassroots market at a time?

HOBBS:  One of the biggest lessons that we’ve learned in our industry is that there’s a difference between effective regulation and excessive regulation.  And our alcohol space has lived in the world of effective regulation. So don’t be afraid of it. Don’t be afraid of effective regulation, because it will help your industry thrive the way ours has.  We have the safest alcohol industry in the world. It’s also the one that provides the most consumer choice and opportunity. So, we view that as a big success and one that can be copied for other products.

Executive Vice President for External Affairs | Senior Vice President, Government Affairs