Seeing Green: Can Brands Win?
Business Insider’s Jeremy Berke recently asked investors for their predictions on the hottest cannabis start-ups. He came back with 11 consumer brands and 11 technology companies which investors say are poised for a big year.
Even though most of the investors are touting companies in their portfolio, the consumer-brand recommendations seem reasonable enough. They include low-dose beverage company Cann, discount player Old Pal and Canndescent, the high end company known for ditching strain names.
One of the reasons cannabis branding is so difficult, is that the products are so similar. Whether it’s in a vape pen, a joint or a canned beverage, all the companies are selling THC and CBD. Packaging and other brand ephemera is all the companies have to distinguish themselves.
It also remains unclear (to me at least) whether customers can tell the difference between luxury and economy products. With so little to go on, investors seem to be assessing cannabis companies by looking under the hood at their numbers and management teams.
But even that can seem a little 2017. At the moment, multi-state operators are emerging as dominant forces in the industry. While they all have in-house brands they are developing, these companies aren’t ascendent because of their brands, or even because they’ve sold a lot of product. The deep-pocketed MSOs are building up their presence in key markets. Once they’re ubiquitous, customers will be happy to buy whatever they’re selling. Do people go to Starbucks because they love the coffee or because Starbucks is everywhere?
So far, there has been relatively little overlap between these two theories of the cannabis marketplace. The most carefully tended brands come from California, where the MSOs still have a relatively limited presence.
But sooner or later, and probably sooner, high profile brands are going to catch the eye of the largest operators. The big unanswered question is whether customers will pay more, or drive farther, to acquire a preferred product. Or will they be satisfied with whatever is close by and on sale?
In short, will cannabis brands matter? Or will the ultimate winners be determined by access, location and other factors largely unrelated to their products?