The industry needs to get in the game and play like the huge commodity it is
As the cannabis industry matures, it is deriving more momentum from connected, historically significant events.
One was the legalization of both recreational and medical cannabis in Canada in October.
The other event was the legalization of hemp in December, which freed CBD producers to do more-better-faster. Sales of CBD products alone will bloom into $22 billion market by 2022, according to a Brightfield Group report.
Now these healing CBD products will likely be seen in Target, Whole Foods, 7- Eleven and others. “CBD is the next healthcare phenomenon,” Beth Gomez, the director of research for Brightfield, says.
More states and more countries will soon legalize cannabis for both recreational and medical.
But there is a third, more profound event underway - the way cannabis businesses do business has to change because, with all the legalization activity happening, especially in huge population centers like Boston and soon, New York, there are more new, curious consumers ready to jump in.
According to a 2018 Green Market Report, approximately 29 percent of Americans report that they are likely to try cannabis in the future. Of those likely to try cannabis, approximately 52 percent are men and 48 percent are women.
There are still some hurdles to overcome in the way that the cannabis business operates, still some consumer scares about what some products do, and still some business strategies that focus more on producing the product than helping educate the consumer about why they should buy it.
For a commodity expected to be a $2 trillion industry within 30 years, that needs to change.
According to Torsten Kuenzlen, CEO of Sundial Growers in Alberta, Canada, a licensed cannabis producer, and a keynote speaker at the recent Marijuana Business Conference in Las Vegas in November, growing the consumer base means making cannabis just another commodity that looks to the consumer like any other branded commodity. Kuenzlen’s background includes work as chief commercial officer for Molson-Coors, and president of Coca-Cola in Indonesia.
“The new markets being developed have to be paid attention to and we have to have a different way of looking at it,” he says. “Cannabis is probably the most special plant we know today and we have to play to its special strengths.”
Kuenzlen acknowledged that this industry is, in some ways, an industry by stoners for stoners. “But there is nothing wrong with that,” he says. “Experienced users are a big target of the cannabis industry today.”
But, he says, the industry is going to become a multi-fragmented, multi-segmented one, where there are going to be new consumers “like my wife or my kids or myself or my dogs that are going to tie into this industry in a big way with brands we can trust.”
“That segmentation, that sophistication, means that there will be brands for all of these people. And that will shape the future of the industry,” he says.
Kuenzlen contrasts the industry as it exists now to the tobacco industry, where maybe less than one percent of its two billion consumers actually take the raw tobacco product and roll it up. Tobacco smokers have no idea about where that raw product came from, he points out. They just know the brand.
The industry takes for granted that we need strain names. “But have you ever heard of a tobacco strain?,” he says.
“Would new cannabis consumers really go into a dispensary and buy something called Purple Monkey Balls? Do they really need to know the names like sativa and indica? Do they really need to know and be exposed to that language? Do they really give a shit?”
Who is this rising group, this “cannabis customer persona”. The Green Market Report divides the consumers into more market-friendly groups:
A key finding in the report is that, as the industry matures, more women are beginning to use cannabis for the first time.
No matter how you organize them, the rising cannabis consumer base forces the industry to face a dilemma: How is this industry going to do business like the other trillion-dollar mass commodity businesses in the country – and the world – and become just another trusted commodity brand you pick up on the way home from the wine store?
A look at the bigger picture provides clues.
Cannabis has proven to be a tricky commodity to completely understand and market. A report written by three researchers at University of British Columbia and released in August 2018 ("Chemometric Analysis of Cannabinoids: Chemotaxonomy and Domestication Syndrome"), shows that there is essentially no difference from strain to strain but for the name of the strain. All varieties contain about the same amount of THC and CBD, the study found.
“It is estimated that there are several hundred or perhaps thousands of strains of cannabis currently being cultivated in legal and illegal markets,” the researchers reported. “It is possible that chemically identical or very closely related plant material is being sold under several different names by different producers and there is no clear definition of the concept of a ‘strain’.”
Another 2018 study from the University of Northern Colorado School of Biosciences ("Genetic tools weed out misconceptions of strain reliability in Cannabis sativa: Implications for a budding industry") revealed genetic inconsistencies within strains. “Although there was strong statistical support dividing the samples into two genetic groups, the groups did not correspond to commonly reported sativa/hybrid/indica types,” the reported found. “Genetic differences have the potential to lead to phenotypic differences and unexpected effects, which could be surprising for the recreational user..”
Kuenzlen says it’s because of the exceptional nature of the plant that, as an industry, we need to go further to educate the consumer, and build products that offer things to appeal to them on three levels: healing, helping, and play.
The industry has to understand that there are strategic market complexities underway like those that exist in other major commodity brands. “When cannabis companies build massive grows for offering product at the lowest possible cost instead of for highest possible quality, that is not good for the industry,” he says.
“Let’s have fantastic products that deserve fantastic prices so a consumer has fantastic experiences. Let’s not fight over who gets what slice of the pie, but how we make a bigger pie.
“What’s important for us as an industry in every country is that we learn as fast as we can possibly learn, and fix the things that are not working and make it right, and create a better experience for the consumer,” he says. “That is the only thing that matters.”
Award-Winning Journalist David Hodes is the Washington Correspondent of
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