Brand marketing has finally become a buzzword in the cannabis industry as a growing number of companies look to expand across city, state and even international boundaries.
In the past, many dispensaries, retail stores, infused products businesses and even growers relied primarily on word-of-mouth in their local communities, online listing sites like Leafly and Weedmaps, and ads in regional alternative newspapers to get their names out.
This worked well when the industry was relatively small and confined mostly to regional opportunities.
Now, the barriers to growth are falling, and many businesses are trying to figure out how to make their products a household name.
Several established medical marijuana companies are planning to extend their brands into new markets such as Nevada and Illinois, for instance, while recreational businesses in Colorado and Washington State are eyeing opportunities in Oregon and Alaska.
Opening a store or putting a product on a shelf in one state that’s recognizable to users who live in another is key to developing a successful expansion strategy, as people tend to gravitate toward what’s familiar.
What’s more, with over 90% of cannabis companies expecting to grow this year, according to the Marijuana Business Factbook, branding will become essential from a competitive standpoint going forward.
“Branding is absolutely essential,” said Bruce Nassau, the co-founder of Tru Cannabis, a company that owns of five recreational shops and dispensaries in Colorado. “It’s all about customer recognition.”
The ‘Walgreen’s Model’
Nassau should know – prior to buying the shops that fly under the Tru Cannabis label, he owned a company called Telecrafter Services that installed and serviced cable television in people’s homes. He said he spread nationwide after working hard on a brand marketing campaign in an attempt to get his name out.
His plan worked. Soon, everybody in the cable TV industry, including executives at large cable companies, knew Telecrafter’s name and reputation. That opened a lot of doors, he said, and helped grow revenues.
That’s what he wants for his rec shops and dispensaries, what he calls the “Walgreen’s Model,” meaning Tru Cannabis patrons from Denver can find a Tru Cannabis store in Seattle or Portland at some point, know the name, logo and reputation, and feel comfortable going in.
To build the company’s brand, Nassau changed the name of the rec shops and dispensaries he purchased to Tru Cannabis, designed a logo that adorns each store and standardized the customer experience so each shop would give a sense of familiarity to patrons when they walked in the door.
He said consolidating under one brand and logo not only helped with name recognition, it brought down advertising costs, as he could pay for one ad for all five rather than having to purchase one for each store.
Nassau is in the minority, though, as the number of business owners in the cannabis space who’ve built companies and know how to implement a brand marketing campaign are few and far between due to the industry’s infancy.
Dixie Elixirs is one of the few edibles companies that has created a well-known brand in the industry, even though it currently offers products just in Colorado.
Since advertising in the cannabis industry is so restricted, Dixie executives use a combination of press relations, marketing and word-of-mouth to stay fresh in the minds of their customers.
The company also markets its products not only to consumers and patients who consumer the product, but also to dispensary owners who sell it, said Joe Hodas, Dixie’s chief marketing officer.
Dixie worked with a creative agency to design a logo, then branched out on its own to design its packages in an attempt to build its brand. It’s also a consistent presence at industry trade shows where cannabis business executives congregate, and its executives have appeared on respected national news programs, including “60 Minutes.”
Dixie hopes these efforts will pay off when it expands into two new states, which it hopes to do soon.
Hodas said when Dixie first started, very few companies were doing any sort of brand marketing.
“Nobody was doing anything to differentiate themselves – they were all dropping product into a plastic bag,” he said. “The packaging is the initial handshake with that customer.”
Look to Beer Industry
Cannabis companies interested in branding can look to other industries for examples of what works.
The beer industry in particular has done a great job of brand marketing, said David Welch, the managing partner of D|R Welch, a law firm that helps companies protect their brands.
Consumers buy Budweiser products, for example, because the cans have the recognizable names, logos and catchphrases on the side, even though most people can’t differentiate between the beer and its competitors.
“Bud Light sells more beer than Miller Lite, and it’s not because of the taste,” Welch said.
Bud and other longstanding beer companies have developed names and logos consumers can easily recognize – and remember.
But it’s not an overnight process, said Jared Mirsky, the owner and founder of Online Marijuana Design, a branding and advertising agency that’s served the industry since 2011. Most business owners spend a lot of time building and designing their facilities to be functional and appealing to the eye but give no thought to their marketing.
“A lot of people come in and want shotgun work,” he said. “They spent all this time on the build-out of rec shop or build-out of their grow, but then they come in and say `I want a logo designed in 30 days.’ It’s just not possible. You need to take as much time to do this as you do building your facilities.”
Once names, logos and marketing efforts are established, cannabis companies that manage to build success on the branding front could become industry leaders in a short amount of time.
“As this industry becomes more mature it’s going to be a bigger issue,” said Nassau, who is “looking at some opportunities” to expand in the Pacific Northwest. “Even if you just want to be a good-sized state company, it makes sense to brand. If you’re doing your job right, people will say `these guys are great’ just by looking at the name.”
Tony C. Dreibus can be reached at email@example.com