Alternate Industry Benchmarking for Cannabis Opportunities
Alternate Industry Benchmarking for Cannabis Opportunities
There is evidence of consumption of cannabis by humans as far back as the third millennia BCE and documented cannabis restriction and regulation as far back as the 14th century. The plant has been here presumably about as long as we have and so has the demand. Now, in the 21st century, there is a legitimate industry that is fundamentally strong and foundationally embryonic. The industry is here, solid, new, and growing. The winners will win big and missteps could be catastrophic. It’s imperative that the cannabis industry looks to other industries as frameworks for its future. There is no identical industry with the same opportunities, but there are absolutely opportunities for comparable assessment. There are similarities in cannabis that would be easy to tie to many industries. You can compare the cannabis industry at various portions in the supply chain and business model to industries that are functionally similar spaces and to strategically adjacent industries. Whether from the mistakes or the triumphs, the cannabis industry has a distinct opportunity to learn from and benchmark other industries which have faced similar obstacles and scenarios.
The most perceivably similar industry the cannabis industry should look to is the adult beverage industry.
In 1933, the 13-year ban of alcohol known as “prohibition” ended. Similar to how marijuana illegality has fueled the black market, prohibition created an environment for increased crime and drug use. Legitimate business has no appropriate channel of providing supply, but demand is prevalent and increasing. The economic impact of an emerging and booming industry, as seen in 1933, is too lucrative to ignore. Legalization of cannabis provides a lawful opportunity to regulate, distribute and tax the supply and, in turn, reduce associated crime and violence.
Cannabis companies should look to the post-prohibition era adult beverage industry when they are devising their branding strategies. Sure, product quality and price are a huge factor; however, consumers assume the product is comparable to others. The industry winners, just like in adult beverage, will be the companies that capitalize on the ability to carry out sensory branding. In adult beverage as well as in the entire functional beverage category, the shape of the bottle, the smell of the drink, the color and font of the logo all play a paramount role in consumer purchase decisions. Actually, tasting or trying the product is the last thing a consumer does and it’s most often AFTER making the purchase.
It’s imperative to think of cannabis as a consumer product and an experience-based product. In both, branding is key. Companies can ask themselves, “If we remove our actual product, what about our company, brand, and mission is winning the market. What is guiding our wins in these direct to consumer interactions?”
There is more opportunity and more risk in branding than imaginable so it’s not just about having a brand – it’s about the strength, continuity, viability, and impact of the brand when put up against all of the others.
Though the prohibition of alcohol is long gone, the mandates and involvement of the government in this industry is far from gone. Amendment 21 repealed prohibition and transferred much of the regulatory strength and obligation regarding alcohol from the federal government to the state. Alcohol importation, distribution, possession, and sales within the state is the responsibility of state and local government. The state by state variance in adult beverage laws leads to its own challenges and difficulties for the industry. Many brands and companies have no presence in other states because of these obstacles.
Another seemingly adjacent and comparable industry is the tobacco industry.
The tobacco industry is governed heavily which creates additional obstacles and restrictions in all aspects of the industry. Similar to the adult beverage space, branding is critical, yet extremely difficult because of government regulation. There are age restrictions and this is key to note because the cannabis industry also has iron-clad age limitations. The cannabis industry faces many of these barriers and regulations now and it’s likely that more will come as the industry grows.
It is difficult to conceptualize a brand and advertise in that voice without government interference and regulation. The tobacco industry notoriously shifted its approach to advertising and branding as companies within this space faced newly enforced regulations and guidelines. The cannabis industry can look to the result of these shifts to gauge how to approach branding and advertising in a manner that lessens the possible setbacks and will potentially be less subject to regulatory interference in the future.
One thing to note is that consumer behavior is changing and very different now than in previous decades. Technology has connected consumers and created an environment where the majority of marketing and advertising happens without the actual companies’ participation. The brand loyalty many companies could count on in the past is greatly reduced. Every product and every message must be created with the intention of winning new consumers as well as re-winning and retaining previous buyers. Additionally, every product and initiative must be strategic in aligning the messaging to be prepared for when more doors open and more restrictions are created, strengthened, and enforced.
The pharmaceutical industry is a direct competitor and as well as an adept comparison to the cannabis industry.
It would be fair to compare ‘pharma’ specifically with the medicinal and wellness categories within the cannabis industry. Big Pharma continues to face similar challenges like the cannabis industry is beginning to face in regards to the intensity and the paramount nature of product itself. The emphasis on supply chain traceability and labelling is mirrored as well. It is important to understand the difference between regulating a consumer products and medicinal products. CBD is non-psychoactive and not regulated nearly as heavily as products with more than trace amounts of THC. CBD would be considered a consumer product. The cannabis industry, especially because all THC-based product is considered a wellness and medicinal product will have to display and convey similar warning and side effect labels as conventional medication does.
The cannabis market is said to grow to USD 146.4 billion by the end of 2025. The accelerated growth creates lucrative opportunities but also creates a space with potential peril. There are so many scenarios that could go slightly awry and and create substantial error. There is immense risk and liability associated with anything “medicinal.” Every pill must be accounted for. Distribution is consequently, extremely scrupulous and secure. Every touch point is meticulously recorded and observed. The protocol is fundamental to mitigate risk and human error because the fallout of ANY mistake can be grave. The same can be said with all cannabis products. The bottom line is painstaking traceability at all levels is non-negotiable.
In all of these industries there is a start to a solution: EDUCATION. Much of the battle in these industries revolves around educating the public/consumer in order to mitigate the stigma associated with much of the misinformed rhetoric surrounding most of these industries. Also in line with this is the aspect of not using just education, but building your reputation and brand along the way. Showcasing who you are as an organization so that what you provide in terms of knowledge is valued and your brand becomes a trusted go to. Educate but also tell a story – this is how you really nail it doing both in tandem.