Business
How branding is key to success in struggling Colorado cannabis market
As Colorado cannabis companies struggle with a glutted market and the end of the boom times, many marijuana operators who want to stay afloat and succeed are putting a strong focus on branding their businesses and products.
Colorado was the first state in the country to sell licensed recreational marijuana back in 2014, so it stands to reason these businesses have evolved to the point where they have established finely crafted and recognizable brands.
Some are using that branding acumen to gain a competitive edge in the competitive Colorado cannabis market.
Others have used that hard-won expertise to expand into other states where the market conditions might be more favorable and the homegrown companies there don’t have a similar head start in developing their core identities.
“As a brand, the idea of going to another state is great, because it provides some level of protection against the swings that could happen inside of a single state,” said Jon Spadafora, partner and head of marketing at Denver-based Veritas Fine Cannabis.
“So I think that you’re going to see a lot more of that.”
Show on the road
Spadafora attributes his company’s longevity in the Colorado market to its focus on branding and packaging its flower.
“That was a huge decision that we made that others didn’t make early, and it’s certainly paid dividends,” he said.
Veritas’ flower is recognizable with its round cannisters and detailed labeling.
The company is taking the model to New Mexico next year, according to Spadafora, by selling its flower there via a licensing partner.
As the industry matures and consolidates, he expects consumers will see fewer brands, but those brands will be available in more places.
“You’re starting to see even some of those operators seek out relationships with the brands that they see being successful in the more challenging markets,” Spadafora added.
“Knowing that when their market becomes difficult, you’re going to have those tools that have worked for us in Colorado or others in California – they’re going to be applicable in any state.”
Another Denver-based cannabis company that’s expanding operations is Green Dot Labs, which is building a cultivation facility in the Phoenix area, according to Dave Malone, co-founder and chief creative officer.
It’s the company’s first out-of-state expansion, and Malone hopes to add more states in the next three to five years.
Green Dot Labs made its name selling craft extraction products and is now focusing on the craft flower market as well.
“We’re in no rush to get out over our skis, but it is absolutely in our plan,” he said.
Colorado terroir
It’s been 10 years since voters in Colorado and Washington state legalized recreational marijuana.
That might seem like a long time for this industry, but in that time, not many brands have become widespread nationally.
There’s still a lot of room for growth, said Brian Vicente of Denver-based cannabis law firm Vicente Sederberg.
“There’s an opportunity with the right kind of marketing spend and the right branding approach to really establish some household names of cannabis,” he added.
“Colorado has been a groundbreaker. And I could see some of the creative minds that have a head start on other states launching some of those brands here.”
Brittany Hallett, vice president of marketing at Denver-based Slang Worldwide, which is the parent of the O.pen vape company, sees Colorado as possibly developing a terroir-like brand similar to how people think of Napa Valley wine or Kentucky bourbon.
“The notion of being from Colorado is a strong one to lead with from a national perspective,” she said. “And it’s something that we’ve seen good reception upon from both consumers and retailers alike as we’ve spearheaded some of our expansion efforts.”
Similar to what Veritas is doing in New Mexico, more Colorado cannabis companies might see opportunities in licensing agreements to help spread brand awareness and tackle other markets.
“The wave of the future is brands,” said Dan Pabon, general counsel for Denver-based, vertically integrated cannabis company Schwazze.
“And I think you’ll see a lot of licensing agreements across states.”
Schwazze owns and operates one of the Denver area’s bigger branded retail cannabis chains, Star Buds, as well as several other marijuana manufacturing and cultivation brands in Colorado and New Mexico.
Similar to Hallett’s point, Pabon sees opportunities for companies to capitalize on Colorado’s unique climate and weather to brand its flower and other products.
But branding is not just for export, he added. He also predicts there will be more companies from California or other states that want to sell into the Colorado market in the near future.
How it’s done
One of Colorado’s most well-known brands to expand to multiple states across the country is Boulder-based edibles maker Wana Brands, which manufactures and sells products in Colorado while licensing intellectual property in another 11 states.
Wana is the No. 1 cannabis edibles brand by market share in North America.
Joe Hodas, chief marketing officer for the company, said Wana has benefited from states outside Colorado maturing and developing their markets.
Wana sees its expansion efforts as making market share, not taking market share.
While some brands might try to disrupt a market with cheaper pricing, that’s not Wana’s strategy, according to Hodas.
The company is trying to bring in new consumers with new products, developments and innovations, he added.
For example, a lower-milligram gummy that works well for people who might have partied too hard the night before.
“We’ve had the greatest amount of time to perfect the brand and to establish a base of consumers,” Hodas said.
“It’s only going to proliferate in other markets.”
Source: https://mjbizdaily.com/how-branding-is-key-to-success-in-struggling-colorado-cannabis-market/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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