The cannabis industry is lighting up with new brands, dispensaries and platforms to help customers—and sellers—find their path in this rapidly evolving world.
States are increasingly becoming more open to the use of marijuana by consumers, with California joining Washington, Oregon, Nevada, Colorado and Alaska in legalizing the product for recreational purposes this year. According to BDS Analytics, a cannabis research firm, cannabis sales are expected to reach $3.7 billion this year. Americans are also growing more open to marijuana legalization, with 61 percent in favor of it, according to a 2018 Pew Research Center survey.
The cannabis industry has to move fast in order to keep up with itself. And while the product is somewhat unconventional, the industry still offers a lot of insight and strategy into how to reach consumers. Do familiar marketing techniques work on these consumers? Or do they tend to favor newer innovations in personalization and e-commerce?
Adweek spoke to five different cannabis companies who are trying to figure out what works for them and their cannabis consumer.
Education is key.
As cannabis becomes a more normalized topic, brands are finding that educating the customer on different strains and ways to use the drug is vital to getting consumers something they like and will get them to come back.
The Green Solution, a family-owned Colorado-based cannabis company, believes education is necessary and makes owning and operating 14 brick-and-mortar stores so important.
“We help them understand different consumption habits,” said Eva Safar, VP of Marketing at The Green Solution. “It’s a lot of education that you can’t get anywhere else.”
The more educated a customer becomes about the variety of cannabis products and how those affect their body, the easier it is for them to order, added Safar. Education makes cannabis more accessible and brings down both taboo and misinformation barriers that consumers have maybe already encountered.
Jamie Feaster, VP of Marketing at Eaze, also sees education as a core part of the company’s business.
“We recognize that the market is opening up and there’s a new wave of consumers coming in,” said Feaster. “The number one question on their mind is ‘Which products are right for me?’ It’s more than having a good product.”
Education is necessary when dispensaries or cannabis delivery services have to raise their prices.
For example, Andre Shavers, CEO of The Medical Strain, a delivery service in Oakland, Calif., said that once he tells his customers what the taxes on his products are for, they become more understanding and feel less outraged.
The taxes in California can vary from county to county but overall, it’s about a 45 percent tax on recreational weed. According to Mother Jones, it’s “more than twice as much as Oregon and Alaska” and many pot advocates argue that it’s too high for consumers.
Personalization is incredibly important.
It’s one thing for a retail company to know your shoe size and store that information for you. It’s a whole different game when cannabis comes into play, since people have different preferences or might need more steps to understand what exactly it is that they want or need. This is where both education and customer service come together to provide a personalized experience for the consumer.
The Green Solution looks to its stores to provide this necessary connection and level of personalization for its customers. The in-store “concierge level” experience for them is to help both regular customers and first-timers. You can zip through the store and head to the express check out area or you can browse and learn more about the different types of products from an associate.”
The personalization also comes in the form of a loyalty program for The Green Solution. The company offers customers a variety of perks with The (GREEN) Lifestyle Rewards Program, like a 5 percent reward with every purchase, birthday bonus points and seeing promotions that the rest of the public won’t. The program is available both online and in-stores, with communication through email and texts.
The Medical Strain focuses its personalization efforts by talking to its customers. Since it’s a delivery service, knowing your customer and what time works best for them to receive a product is vital.
Branding goes a long way.
Buying cannabis can be an extremely personal process; people like certain strains or might want to consume it in the form of an edible or topical—the possibilities are almost endless.
This process is why more companies are turning to either popular branded products or a branded online ordering system.
“Given the fierce market competition, it is almost becoming an expectation from their end customer,” said Joel Milton, CEO of Baker, an ecommerce platform that offers dispensaries a variety of customer engagement products like loyalty programs or online ordering.
Ryan Smith, CEO of LeafLink, a B2B cannabis marketplace, believes the future is in branded cannabis products. Otherwise, there’s no reason why the consumer should remain loyal to a specific dispensary or distributor.
“There are 100 people who can grow and call their product [a certain strain] and it’s very hard to differentiate from both a B2B buyer and B2C buyer [on] how that’s any different from one grower to the next,” said Smith. “But brands can have baked into them [a] mission, purpose, objective and clarity to what they’re actually selling.”
These new companies should take the time to learn from the tech industry’s early mistakes around inclusion and diversity (namely, that it failed to account for it). They need to remember the millions of people who are incarcerated for marijuana possession and other related crimes, or have records due to these type of arrests, who do not get to reap the benefits of the expanding industry. There are several organizations working to make the cannabis industry more inclusive—and companies should reach out now.
Shavers previously served five years on felony probation for possession of a quarter ounce of marijuana.
“Everyone should have a fair chance, especially people that were incarcerated for it,” Shavers said.
As the market demand grows and regulations loosen around recreational marijuana, the time to create a cannabis-related company is now.
“There’s an incredible opportunity to build lasting [companies],” Smith said. “The Coke’s and Pepsi’s of cannabis exist somewhere but there’s still so much opportunity to grow and the [the industry] requires just as much, if not more, attention from people that have built great brands.”