Marijuana Business Magazine March 2020

March 2020 | mjbizdaily.com 43 B randing is a vital element to any company’s success, yet it is one of the hardest strategies to successfully dial in—and its effectiveness might be even harder to measure. Done incorrectly, it is at best a bad investment and at worst the tripwire to a product’s demise. The practice is even more vital in an industry as new as cannabis, where products and businesses need to distinguish themselves among thousands of SKUs on a small number of product types—flower, concentrates, infused items and vape cartridges, for example— that are competing for retailer attention and consumer dollars. “You really have to work to find what it is that distinguishes your company from the next. This is not a market where there are a dominant couple of companies who are spending large amounts of money on marketing and getting a strong foothold,” said Taylor West, co-founder of Heart + Mind Media in Denver and a former National Cannabis Industry Association deputy director. “It’s lots and lots and lots of small to midcap-type companies. Ultimately, those folks are all competing on things like price. And one of the only ways to break out of that cycle … is to develop a brand that people latch on to. That really is the value of a brand. And it’s hard to put a dollar value on it, because it is to a certain extent intangible.” While marketing is more vital in a growing industry such as cannabis, it is also far more complicated in this space because: • The federal government’s marijuana prohibition fragments efforts. • State advertising regulations limit marketing channels and constrict messages. • Many social media platforms such as Facebook, Instagram and Pinterest also restrict cannabis advertising. • Cannabis consumer research remains scant. • Many cannabis companies are young and don’t have capital to invest in branding. • Marketing firms can lack cannabis expertise. But marijuana executives have a growing box of tools to help develop and execute a compelling and sustainable brand. Perhaps the most important tool is people—specifically, the growing number of mainstream marketing and branding superstars leaving companies such as Bacardi, Kellogg’s and Nike to apply their skills to cannabis. If your ambition is to take your brand to multiple states, make sure your licens- ing strategy includes stringent vetting of potential partners. “The trick is navigating the state- by-state operating companies. No two operating companies are formed the same,” said Jake Pasternack, CEO of Binske, a Denver-based maker of infused products. “A lot of it just comes down to the people. Do we have a good rapport? Do they view the world the same way as us?” Beyond that, forward-looking cannabis companies can turn to a number of mainstream branding and marketing firms open to working with marijuana companies—as well as a growing number of MJ-focused agencies. Internal marketing teams and exter- nal branding firms can be expensive for young marijuana companies, however. “Branding projects can vary extremely widely depending on the scope, deliver- ables and type of agency you’re working with. But you can expect a true brand strategy process—including research, messaging, positioning and visual expres- sion—to run $15,000 to $25,000 on the low end and $60,000 to $100,000 for more extensive work or a more established agency,” West said. “Keep in mind that mainstream national consumer brands regularly spend hundreds of thousands of dollars or more on brand development, so we’re still talking about a fraction of traditional marketing budgets.” That means executives need to carefully weigh whether their money is better spent on equipment and know- how or branding. “I’d rather spend $100,000 on a piece of equipment that’s going to take costs out of the equation and allow us to produce more efficiently and deliver better value to the customer than spend it on flowery language and pretty but more expensive packaging,” said Josh Rosen, CEO of Phoenix-based multistate operator 4Front Ventures. Not investing big in branding doesn’t mean not branding at all. Companies that don’t have big branding budgets— and, for that matter, those that do—still need to: • Do a combination of brainstorming and soul-searching to figure out their identity and mission. • Determine the audience they want to reach. Cannabis marketing and branding are especially difficult challenges because of strict regulations and the industry’s fast-paced evolution. Measuring these efforts is even harder. But executives can build strong companies by keeping certain strategies in mind. • A good brand starts with determining your company’s identity and mission; all else flows from there. • Cost is the most important consideration. Ask yourself what return your investment will yield. • Determining your audience is critical and can be done through audience segmentation and interviews with shoppers. • Despite greater acceptance at the federal level, CBD remains a challenge to brand because regulations remain complicated. • Rebranding and changing your company’s name can help your business, but be prepared to pivot as individual markets evolve and you gain more customer insights.