The Rise of Cannabis Brands


The growing importance of cannabis brands is not a new phenomenon. In all new industries, the importance of branding follows a specific path. As a new industry launches, the priorities are production and distribution, but as the market grows, more companies enter, saturation becomes a reality, and the emphasis for businesses shifts to focusing on products and differentiation – the foundation of which is branding.

With medical marijuana now legal in 35 36 states the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands and adult-use cannabis legal in 15 states, brand strategies need to become a priority for businesses operating in and with the cannabis industry. As Matt K. Hawkins of Seeking Alpha says, “The maturation of the marketplace coupled with more states selling cannabis will finally give rise to national brands.”

It’s only a matter of time before legal obstacles that have hindered multi-state operations crumble. Deeper branding beyond popular edibles, vapes, and so on will become a key investment that winning companies should be planning for today.

3 Critical Factors for Branding in the Emerging Cannabis Industry

As the cannabis industry emerges in new states and grows in established states, there are three critical factors that businesses should consider to build strong brands: local share of voice, focus, and education. Let’s take a look at each in more detail.

1. Local Share of Voice

Research published by McKinsey identifies the first step of branding in emerging markets is to gain and leverage the power of word-of-mouth marketing on a local level. The reason is simple. In new markets, consumers weigh recommendations from friends and family far more heavily than anything else when adding brands to their purchase consideration lists and making final purchase decisions.

Consumers in new markets have a shorter history of experience with the industry and less familiarity with products and brands. Social validation is an important part of the education and buying process for novice consumers in the cannabis industry.

Leverage digital marketing, social media, and email marketing to drive positive word-of-mouth about your brand by communicating targeted messages tailored to local markets and specific consumer buyer personas’ preferences, problems, and concerns. At the same time, communicate how your brand, products, and services are different from competitors’ products and services.

2. Focus

My top marketing mantra is this – a focused brand is a strong brand. With that said, businesses should launch with a laser-focused strategy to capture market share in a highly-focused market.

Gaining share of voice through local word-of-mouth marketing is a great way to raise brand awareness in emerging cannabis markets. The research published by McKinsey echoes this point explaining, “Word-of-mouth’s relatively local nature means that companies in emerging markets are likely to reap higher returns if they pursue a strategy of geographic focus than if they spread marketing resources around thinly.”

This is so true in the cannabis industry because the state-by-state nuances of each marketplace (and even local nuances) play an important part in defining and executing a brand strategy. In other words, a focused and localized brand strategy is a natural fit for the structure of the industry.

Furthermore, the McKinsey research says, “By attaining substantial market share in a cluster of cities in close proximity, a company can unleash a cycle: once a brand reaches a tipping point – usually at least a 10% to 15% market share – word-of-mouth from additional users quickly boosts its reputation, helping it to win yet more market share, without requiring higher marketing expenditures.”

Bottom-line, the network effect of word-of-mouth is strong and provides a solid foundation when brands start with a focused strategy and extend strategically as they gain market traction.

Again, a focused brand with focused marketing and sales investments not only helps a brand successfully launch in a new market but also helps the brand gain market share in an organic and sustainable way.

3. Education

The cannabis industry is at the point of shifting to a consumer demand-driven market where consumers ask for brands by name rather than solely relying on dispensary budtenders (or sales representative for other businesses) to make purchase decisions.

As in all industries, there will always be deals made to acquire more shelf space, but the brands that consumers ask for by name and demand that dispensaries (or other businesses) offer will be the winners in the long-term.

In an emerging market, education is a critical component of motivating consumers to ask for brands by name and become loyal to specific brands. This includes education not just of end-user-customers but also of salespeople and everyone across the supply chain.

At the dispensary level, educating budtenders about your brand is crucial and should integrate directly with your consumer education and marketing investments. The goal is to establish a brand presence in the dispensary as well as broader consumer recognition and brand trust. When you achieve both micro (in store) and macro (broader consumer) brand advocacy, sales will go up naturally.

Key Takeaways about the Rise of Cannabis Brands

Now is the time for brands to carve out their niches in the cannabis marketplace, establish leadership positions, and prepare for local or national recognition and dominance.

Among the top five resolutions for cannabis businesses in 2021, branding ranked in the second spot. With that in mind, define your brand, identify your target audience, implement your focused brand-building strategy, and prepare to grow your brand in 2021 and beyond.

Want to see how the Cannabiz Media License Database can help you connect with cannabis and hemp license holders to build your brand? Schedule a demo and see how it can help your brand and your business grow.

Susan Gunelius

Susan Gunelius, Director of Email Marketing Strategy for Cannabiz Media, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her nearly 30-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. She has been working with clients in the cannabis industry since 2015. Susan has written 11 marketing-related books, including the highly popular Ultimate Guide to Email Marketing for Business, Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.

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