Bringing Seth Rogen’s Houseplant to California
“Our strategy has always been the same, and that is to treat cannabis like the product that it is — which is the best product” — Seth Rogen via Fast Company
Seth Rogen and Evan Goldberg’s Houseplant brand made some big waves with their announcement will be available in the U.S. for the first time after it launches in California on March 11, 2021. The brand started in the federally legal Canadian cannabis market in 2019 in partnership with Canopy Growth. They have some well considered aspects to their CPG strategy, combined with lots of learnings from Canada that may position them well for long-term success.
From one CA to another CA
Similar to my grandparents who migrated to Southern California from Vancouver, British Columbia back in the early 50s, the Houseplant brand has its origins in our neighbor to the north. With Canada being the first country to federally legalize cannabis, Houseplant was developed and launched into the legal market in 2019. Upon launch, the brand went beyond its celebrity endorsed status and was announced in conjunction with a series of vinyl records, a component of the strategy that has carried over with the U.S. launch. Since originally launching with a line of Flower products, the brand has gone on to develop other categories, including Beverages and Capsules (soft gels) to fit into the Canada 2.0 market.
The Houseplant approach to value creation
As part of this Cannabis Packaged Goods series of essays, I work to identify how emerging brands within the cannabis category are leveraging and reinventing the traditional playbook for value creation. I believe that Houseplant is doing some interesting things around brand building and developing advantaged access to consumers that will accelerate their success within the market.
1. Perfected mass-market brand building and product innovation.
Building a mass-market brand in cannabis is extremely challenging due to the federal limitations that create constraint on areas like marketing combined with a fragmented patchwork of legal states that prohibit cross-border commerce.
Mass-market brand building
Coming from Seth Rogen, a well known celebrity with an authentic passion for cannabis, Houseplant benefits from a higher profile than most newly introduced brands. One major difference to other celebrity brands, such as Willie’s Reserve or Leafs by Snoop, Houseplant makes no mention of Seth Rogen or Evan Goldberg in the brand name. This subtle positioning will require continued marketing efforts to drive awareness longer term, but it does result in a nice blend of a solid brand that can stand on its own less dependent on Rogen’s popularity, which may go into and out of style at some point.
In addition to the cannabis products, Houseplant is introducing a line of mid-century modern inspired home goods that can connect the brand to anyone anywhere. This benefits the brand as a first line of awareness for many consumers prior to expansion into their state or even ahead of legalization in their market. In the twitter thread linked above, someone from Ohio jokingly (or not jokingly) asked to have Houseplant sold there, only to have Rogen respond with a point about the home goods product being available everywhere. Associating the home goods line with the cannabis brand will help make Houseplant top of mind for consumers, even without access to cannabis. This is similar to another celebrity endorsed brand, Jay-Z backed Subversive Capital, with its portfolio company Marley Natural’s line of high-end cannabis accessories providing products from grinders to glassware virtually anywhere.
One interesting aspect on the strategy of home goods and cannabis products, is how the brand is split on social media. This may be the result of the ever lurking risks & restrictions brands have to endure as they post cannabis content, which leads to account shutdowns all too frequently on Instagram. While a majority of existing cannabis brands have an Instagram account, they will get removed from time to time at the services own discretion, even those operating within legal markets. By splitting Instagram they can build an audience for home goods that may not have an interest in cannabis directly and they will protect themselves from losing a large follower base should Instagram terminate the @houseplantus account.
Finally, Houseplant introduced a vinyl record series to coincide with the brand, highlighting Sativa, Indica and Hybrid which corresponded to their Flower strategy in Canada. It connects the audience with the brand in a unique way, and may turn into a collectors item that drives brand awareness. Heylo, a cannabis brand based in Washington state, has done something similar connecting music to cannabis with their curated Spotify playlists with celebrities like Hannibal Buress creating playlists around cannabis themes associated with the brand.
Product innovation
As Houseplant comes to California it is innovating, in certain ways unique in comparison to its Canada strategy. One of those innovations is in packaging. With its mid-century modern aesthetics, logo-stamped tin, color-themed by strain variety and stackable functionality, the packaging is unique and will help it stand out on the increasingly crowded retail shelf. One aspect of the packaging that does seem to be carrying over is the logo, which has representations of the general effects, with vertical lines representing uplifting and horizontal lines representing calming, ie. sativa vs. indica. You can see this being leveraged in the vinyl record sleeves above.
These improvements in packaging probably come as welcome change for Rogen and co. as Canada has extremely strict guidelines on labeling products, which limits the amount of color on the packaging, the general size of the logo and massive warning labels that almost make the products look like poison. The new packaging will enable Houseplant to better differentiate on the store shelf without adhering to the draconic Canada packaging guidelines.
Another new aspect of the brand is its strain-positioning strategy. In Canada, the products were classified only by variety (Sativa, Indica, Hybrid), but in the U.S. it appears they will be named after weather patterns, made famous by Pineapple Express. Rogen noted a strain in the announcement, Pancake Ice Sativa. In addition to naming, it also looks like it will be leaning in on a THC-heavy approach, with Rogen mentioning Pancake Ice testing in at 33% THC (which is off the charts potent if the results hold up). Of course, it’ll ultimately come down to quality, consistent products.
Next, for a Flower brand, strain naming can be a challenging exercise. The strategy usually comes in three different flavors:
1) Carry notable, well-known strains like Blue Dream
2) Abstract the strain and just comment on effect (ie. Uplift, Sleepy) or variety (ie. Indica, Sativa)
3) Develop unique genetics and/or naming only available to you.
It would appear that Houseplant is moving from 2 in Canada to 3 in the U.S. with their strategy, going to unique strain specific products available only with Houseplant.
Looking at Headset data for the top 50 strains by sales in California over the last 90 days, this strategy of proprietary genetics and/or naming may pay dividends. In this chart, you can see that a large share of sales (> 5.5%) go to strains carried exclusively by 1 to 5 distinct brands — which would point to unique strains not available to the broader brand landscape as a key differentiator.
2. Built relationships with grocers and other mass retailers that provide advantaged access to consumers.
With respect to #2 in the Value Creation playbook for Fast Moving Consumer Goods, Houseplant is doing some unique things such as Direct to Consumer sales, combined with celebrity endorsement.
Direct to consumer (D2C or DTC) is a new model that often suffers from the cold-start problem of building both supply and demand. Given Houseplant will be supplying its own products in the store, generating demand will be the largest challenge. With Rogen’s backing, an outspoken and passionate cannabis enthusiast with a broad appeal and over 9M followers, generating demand should be straightforward. Through channels such as social media, Rogen and the Houseplant brand can send people directly to the online store for delivery. The challenge will be broad delivery coverage as California has a large geography, and since delivery has to be associated with local licenses it may be limited to certain regions of the state.
Later, it would appear that Houseplant will be getting broader distribution with traditional cannabis retailers in the market, which will help with that advantaged access that can be had by a brick-and-mortar presence. Those stackable packages will certainly look better cleverly arranged in real-life vs on a digital listing and the store exposure will help generate broader awareness longer term from existing walk in customers.
Disruptors as Accelerants
There are a number of disruptors to the traditional value creation model for FMCG (Fast Moving Consumer Goods) that I believe are more of accelerants for the emerging cannabis category. One of those disruptors is an embrace of conscious living — purchasing products from brands that go beyond the product to have a meaningful impact in the world.
Houseplant says that it works with criminal-justice and drug-policy-reform nonprofits and social enterprises in both the U.S and Canada to provide funding and in-kind support to several organizations, including Marijuana Policy Project, Cage Free Cannabis, Cannabis Amnesty, and NORML. The company is also establishing a mentorship program that will support underserved entrepreneurs in the cannabis space; details on that will be announced in the coming months.
— Fast Company
As part of the announcement, Houseplant has made commitments to work on criminal justice reform and helping emerging entrepreneurs in the space. Cannabis criminalization has disproportionately impacted minorities and putting profits towards drug policy reform is great for the world and great for the brand. Some brands, like Farmer and the Felon from Cannacraft, also in California, have embraced this completely, developing a complete brand around the criminal justice reform. I also really like the entrepreneur angle as well, the cannabis industry is being developed in large part by those not impacted by criminalization to the same degree, and helping level the playing field is a noble enterprise and I look forward to further details on the program.
“We’re very fortunate to be from Vancouver, a place that treated weed the way it did when we were kids, and the whole reason we’ve been so fortunate with this company is because of where we’re from and [being] able to cultivate this life around cannabis that other people haven’t,” says Goldberg. “There’s a responsibility that comes with that.”
What to watch for
Everything here sounds like they’ve put a lot of energy into really developing a clever strategy for a very competitive market. That said, it will ultimately come down to execution. Here is what I’ll be watching for over the coming months:
- Is it strictly Flower, or are we going to see Pre-Roll, Vapor Pens, Beverages and more from Houseplant?
- What is the delivery area for their D2C delivery service and how many consumers does it reach?
- What type of retail distribution will they achieve in Spring?
- What segment of the market does Housebrand compete in? I’m guessing premium given the endorsement, quality packaging and high-potency.
Regardless, congrats to the founding team Seth Rogen, Evan Goldberg, Michael Mohr, James Weaver and Alex McAtee on the upcoming launch and best of luck with the brand!
