These Are The 4 Big Buzzwords in the Cannabis Industry Right Now
Last month, Kevin O’Leary, of CNBC’s Shark Tank, opened his keynote speech at MJBizCon NEXT in New Orleans with an earnest assessment of the cannabis industry, “I’ve worked in all eleven sectors of the S&P, and I have never seen anything like this.”
He was preaching to the choir. Thousands of cannabis industry leaders, many of whom would not have looked out of place at the tech conference sharing the convention center, had gathered in the Big Easy to compare notes, make deals, and continue to build one of the world’s fastest-growing industries.
With consumer demand growing and wholesale prices of cannabis dropping, industry leaders discussed what is going to happen next on the frontlines of this rapidly-evolving industry as it hurtles towards $10 billion in sales. Here are the trends to watch.
Branding: New Companies, New Consumers
“Cannabis is a commodity,” O’Leary reminded the crowd. As this reality settles into the industry, having a strong brand will be the only way for companies to survive. You can expect to see an increased emphasis on branding and a glut of new products hit the market in the coming year.
Joe Hodas is a former Dixie Brands executive who was responsible for marketing some of that industry’s most successful brands. He is now COO of investment firm General Cannabis. Hodas predicts that the increased growth of the overall market will allow niche products to proliferate and thrive. “The majority of product is still purchased by the core consumer. But companies need to speak to the new and future consumers,” he warned.
Brands will have to learn to speak to these new consumers in a different way. “Mainstream society--who is the prime target for cannabis--the 30-something professional, they don’t want to feel edgy,” says Co-Founder & CEO of Marijuana Business Daily Cassandra Farrington. "They want to feel like it’s as normal as having a glass of wine. The branding I am seeing working has to do with getting that image into people’s minds.”
Nancy Whiteman, CEO of Colorado’s Wana Brands, shared how her brand has captured 20 percent of Colorado’s edibles market. After experimenting with a variety of baked goods and confections, Whitman found what she cheekily called Wana Brand’s “sweet spot” in gummies. In a constrained market with limited shelf space, she honed in on products that worked for her customer and then focused on delivering a consistent experience. Wana now commands 50% of the state’s growing gummies market and has expanded into Arizona, Oregon, and Nevada dispensaries, with Florida and Illinois on the immediate horizon.
Sustainability: Good for the Environment, and the Bottom Line
As individual state markets have matured, there has been an undeniable downward trend in wholesale prices of cannabis. In the coming year, cultivators will be taking a closer look at how energy consumption affects their margins and looking for new solutions. This is good news for the industry--and the planet.
Farrington sees sustainability as integral to the continued growth and acceptance of cannabis. “There are a lot of detractors out there for the industry,” she says. “One of the few things that there is actual truth to is that this is a high resource intensity plant to cultivate and to distribute. We have to be very mindful that we are sucking up all these resources and we need to be actively combating the use of these resources so the detractors cannot hang their hat on that.”
One non-profit, the Resource Innovation Institute, is attempting to overcome the secretive nature of the industry to develop industry standards for energy, carbon, and water use. The organization launched the Cannabis Power Score, a tool that growers can use to compare their energy use statistics to others in the industry. They currently have collected data from over 100 farms with a goal of building a data set of 250 farms by the end of summer.
Consolidation: The Big Will Get Bigger
With new states coming online and new money entering the industry, insiders are expecting to see increased consolidation across the cannabis sector. As the sector expands you can expect to see the big getting bigger and smaller players getting squeezed out or gobbled up.
During a keynote address, Chris Walsh, Founding Editor & VP of Marijuana Business Daily noted that in Colorado, just five companies run more than seventy retail cannabis dispensaries, about 14 percent of the market. Startup expenses and cost of compliance are rising, and the mature medical marijuana industry is moving into the hands of well-capitalized companies.
Farrington expects to see companies that have defined market share by doing one thing really well build out their capabilities by acquiring their vendors. “People are expanding their own capabilities through very trusted partners by bringing them officially in under the one roof,” she says. She cited Medicine Men, Denver’s largest dispensary as an example. The company recently purchased a lighting company and a nutrients company, growing their existing portfolio of cultivation facilities, dispensaries, and consulting services.
International: The Market Up North Is Killing It
O, Canada. As Cannabis continues to be classified as a Schedule I drug by the United States, the federal government is stunting much-needed research, keeping institutional investment at bay, and blocking exportation. This is not the case in Canada. Our neighbors to the north have seen a massive increase in exports, including a 300% increase in oil and a 10x increase in exportation of dried Cannabis according to MJBizDaily, and cannabis stocks are traded on the country’s national exchanges.
Jennifer Sanders of CNS Equity Partners says that as Canada becomes a global leader, she expects to continue to see Canadian firms pump investment into the United States market.