Business
Opinion: Cannabis brand health might be more important than sales, data suggests
Cannabis marketers are stuck between a rock and a hard place.
They need to drive immediate sales while building the foundational brand equity that will set up the brand for success over the long term.
Some believe that brands don’t matter yet in marijuana, while others are expecting consumer packaged goods-level results.
Marketers today have an arsenal of tactics at their disposal to help build their brand and drive sales:
- They run advertisements, sponsor events or even engage celebrities to drive top-of-the-funnel awareness.
- They develop clever brand positioning targeting strategic consumer segments.
- They redesign their packaging to stand out from the crowd.
- They establish in-store campaigns to win over budtenders or entice new customers.
- They can create loyalty programs to encourage repeat purchases.
All of these initiatives cost money.
Yet, most marijuana marketers have no way of objectively reading which initiatives are actually working.
Know the why
The majority are armed only with point-of-sale data that will tell them which of their products sold, but not why they sold, to whom and if those consumers will buy again.
Was it your new packaging that drove the bump in sales? Or was it your billboard campaigns?
Is your positioning resonating with your target customer?
Do you even know who your current customers are and who you are missing?
The question then becomes not only how much of your marketing budget are you wasting but also how much opportunity cost are you incurring by not maximizing your brand’s potential?
Brand health
This is where brand-health tracking comes into play.
Brand health is a toolkit that tells marketers objectively how well their initiatives are performing, not just in terms of sales but also what is resonating with consumers.
It gauges consumer awareness, consideration, purchase and loyalty of each brand in a competitive set to give brands a clear read on how they rank versus the competition.
Brand-health tracking provides clear key performance indicators for marketing and allows you to track the performance of your tactics over time.
No large CPG brand would even consider deploying billion-dollar marketing budgets without having a toolkit to gauge exactly which marketing dollars are driving return on investment and which are wasted.
In the early days of cannabis, the bigger companies raised billions of dollars and burned through it without carefully watching the impact of the spend.
We know now that much of that money was wasted.
First-mover advantage might have seemed imperative at the time, but it doesn’t mean anything if consumers don’t care about your brand and will just as easily jump over you to the next.
Canadian brands
To illustrate the issue at hand, let’s examine what happened to some of the premium flower brands in Canada over the past year.
According to our research, most premium flower brands in the market had a moment of success in late 2021/early 2022, but many started to struggle with their brand health as early as the second quarter of 2022.
The majority have yet to recover.
What we saw was an influx of new premium flower brands hitting the market in force during 2022, creating more competition for premium shelf space and consumer attention than was seen in previous years.
Some of those new brands have gained attention from consumers earning them more of what we call “share of shelf,” or the percentage of overall retail “shelf” space occupied by a given brand.
Those brands that lost share of shelf in the past year are the ones who ultimately lost brand-health awareness and purchasing.
Focus on what’s working
What we learned is that early success in product sales is not an indicator of a brand’s staying power, especially in an overcrowded market.
Had they gained an early understanding of what matters most in a brand to their consumers, they might have been able to keep some of that awareness and first-mover advantage.
In today’s market, marijuana companies are in an even more challenging situation – capital is difficult to come by, so, naturally, marketing budgets are getting tighter.
At the same time, as cannabis continues its slow evolution into a CPG industry, marketers in the space are beginning to recognize that brands do in fact matter.
This year is shaping up to be one of widespread consolidation and shakeouts for the marijuana industry.
That means less focus on grand experimentation and land grabs and more focus on optimizing what is proven to work.
More than backward-looking sales trends, understanding brand health – or, in other words, the brand attributes that keep your customers wanting more – will be the key factor in who survives and who doesn’t in 2023.
Source: https://mjbizdaily.com/cannabis-brand-health-might-be-more-important-than-sales/
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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