How leading cannabis companies brand themselves

The pot business, no doubt, is currently the fastest growing industry. In retail alone, U.S. and Canada are projected to accumulate $172 billion in combined sales within the next six years. Even with that big number, North America is estimated to be only the fourth largest pot market, trailing behind Asia, Africa, and Europe which means that the possibility is endless.

The thing is, this rapidly emerging space is walking on eggshells so to speak. The cannabis or marijuana — whether it is for medical use but most especially for recreational use — had suffered from decades-long of stigma.

When Canada became the first G7 nation to legalize adult use of marijuana at the federal level and when the U.S. passed the Farm Bill 2018 last year, reputable cannabis companies had to emerge from negative perception to reap the rewards of the newly opened market. One key to achieve this is having strong branding and market strategy.

But building a branding for cannabis companies is challenging because there are no established brands to serve as precedent. Unlike, for example, if a startup wants to penetrate the tech industry, it has Facebook, Amazon, and Apple to “look up to.” In the cannabis industry, everything is an experimental stage at this point.

For this article, let’s take a look at some of the leading cannabis companies and how they are coping with the challenge of marketing themselves as reputable brands.

Growth strategy

A few hours after Canada legalized recreational use of marijuana (medical use has long been legal) in October 2018, retail stores immediately run out of stock. The big names in the Canadian weed industry saw that retail strategy is not the most effective way at least for the moment.

Since running out of pot supplies was the major problem, the major players immediately addressed this through growth strategy, branding themselves as the largest producer or manufacturers of cannabis in the country.

The world’s four largest cannabis names at present — Canopy Growth, Aphria, Aurora Cannabis, and Tilray — immediately increased their production goal for this year. They let the market know about their new facilities, their planned expansions, and additional land hectares of their facility locations among others. They highlight how they could address what the Canadian market needs at present.

Aside from production growth and expansions, these companies also leverage their offering by introducing organic produce. For one, CannTrust Holdings, which only began trading on NYSE on Feb 25., highlighted their use of hydroponics technology in planting the cannabis plants. Hydroponics is the process of growing plants in water rich in nutrients instead of the traditional soil growing method.

Selling the unique experience

Although the Canadian government legalized the recreational pot use, the laws prohibit the companies from promoting marijuana. The companies are not allowed to advertise the activities, services, and products related to marijuana usage.

For this reason, cannabis stores in the country are making sure that their architectural design attracts consumers. They make it modern and hip. They also make sure that they also sell unique products that will normally be bought from the competition.

Burb, for example, merged clothing and the cannabis culture with its overall branding.

“We want to sell products we’re using ourselves and make high-quality apparel that speaks to a new cannabis culture — sans rasta-pot-leaf and inspired by our own environment growing up and living in [Vancouver] BC. Creating a culture one can associate with and lifestyle one can be proud of is our main focus,” Burb co-founder and CEO John Kaye said.

The same is true with Tokyo Smoke which effectively mixes the cannabis culture with the chic architecture of its coffee houses. The lifestyle brand will soon launch cannabis apparel lines and accessories, as well as recreational cannabis flower products.

The holding company model

Just when people think that Canadian cannabis laws are complicated, here comes the United States where all 50 states regulate medical and recreational marijuana differently. Hemp, for one, had been in an extremely blurry position before the passage of Farm Bill.

Prior to Farm Bill, CBD was already legal across 50 states provided it is derived from hemp which contains less than 0.3 percent THC. But it was only after Farm Bill, that hemp was altogether categorized as an agriculture product and people started easing toward it.

Amid this complicated backdrop, one strong branding that emerged from the U.S. is the holding company structure. Apple Inc., for example, is a holding company for several subsidiaries all over the world. One major advantage of branding a business as a holding company is that it can provide shareholders with flexibility based on their needs.

In the U.S. cannabis sector, PotNetwork Holdings, Inc. (OTCMKTS:POTN) has embraced this structure. It acts as a holding company for its different subsidiaries, owning major socks in some of the pioneering names in the country. It has stakes in companies that produce hemp, distributes hemp, and creates unique cannabis products.

One of its subsidiaries is the PotNetwork News which covers financial, political, and industry news that impacts the cannabis market. The platform just recently launched the PotNetwork Magazine which will soon be available in newsstands and magazine shelves worldwide. The new magazine brand promises to dissect the untold stories behind the marijuana sector through in-depth interviews with the men and women who are shaping the industry.

PotNetwork Holdings also owned stakes in the First Capital Venture which research and produce premium grade hem extracts, the Diamond CBD which creates and sells CBD-infused coffee, hemp-infused beauty products, and CBD tinctures, vapes, gummies as well as popcorn, and cotton candy.

Other businesses under PotNetwrok Holdings are MediPets which sells CBD products for dogs and Grinders Distribution which supplies high-quality grinders to vape shops across the country. PotNetwork Holdings is also marketing 15 CBD brands across more than 10,000 U.S. retail stores.

Ancillary to the cannabis industry

One major challenge for the cannabis companies is keeping themselves updated and knowledgeable about the laws, especially in regions like the U.S. and Canada where there are different local, state, and provincial laws surrounding marijuana.

With this, being ancillary to the cannabis players is also a strong branding strategy. Ancillary businesses are involved with all the works in the cannabis industry without having to deal directly with the business of selling marijuana.

One such company is Odava which offers a platform where company CEOs and other executives can keep themselves updated with regulatory compliance. Dorsey and Whitney LLP, meanwhile, are a group of lawyers and experts that advises the cannabis companies in Canada and the U.S.

Other ancillary businesses are FinTech Hypur which provides banking and bookkeeping services to cannabis companies, Leaflink which connects producers with retailers, as well as logistics, distribution, and packaging companies.