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/