Business Cannabis Insights

CANNA-CURIOUS by Cleopatra Cohen: Cannabis Sales In A Time Of Turmoil; Welcome To The Most Wonderful Time Of The Year

Times have been tough for our industry this last year, and I have seen an immense amount of suffering, as many brands, and products I once loved have disappeared. My email blasts are coming back with 30% bounce back rates, and the headlines are full of licensing violations, stock degradation, and financial loss around the Cannabis nation. I recently attended the NCIA Conference, and learned a staggering statistic; 80% of California Cannabis Sales and it’s subsequent revenue is currently in the Traditional Market, leaving just 20% of revenue to the Recreational Marketplace. The giants we looked up to, who started leading the charge, have fallen under attack, and have retreated to the drawing board for re-evaluation and re-positioning. I ask myself – what happened?

Basically, the California Cannabis industry has crapped the bed. Legislation came to clean up, but they took the crappy sheets and tried to flush them down the toilet, resulting in severe backpressure. The backed-up pipes and pressure resulted in blown-out bottom lines, and flooded the traditional marketplace…with a bunch of crap. Because crap rolls downhill, everyone, including ancillary companies, has suffered from this. Think about it… If 80% of revenue is coming from traditional market sales, then why would brands spend money advertising in the recreational market? This month alone, over 400 licensed dispensaries were fined for backdoor sales, and most of the revenue paid in taxes is being spent on enforcement. 

Last year in the industry, regarding revenue-analytics reported the highest-grossing week in cannabis sales to be the week before Thanksgiving, continuing to thrive through the last week of the year. I can imagine this trend will continue due to the “season of giving” and seasonal emotional lulls that always seem to result from shorter days and longer nights. Black Friday is known as such because it is when most retail stores go from being in the “red” to turning a profit and coming into the “black.” Green Friday is a new phenomenon, and I encourage EVERYONE in the market to participate, but also to gain an understanding of these economic waves. If you are operating in the recreational market, how you are taking advantage of these few weeks that could potentially bring you out of the red and into the “green”? Acting on this timing may help you meet crucial sales goals that investors are looking for.

Why Media & Advertising Is So Important: 

Psychology experts report that you need to see a brand logo 21 times before you are familiarized and begin to trust their reputation. MedMen became as big as they are because they had aggressive marketing tactics that familiarized the public with their name and branding. From the billboards and city bus stops to their digital imprint, and in basic conversation, I end up thinking about MedMen on average of 3 times per day. They have successfully imprinted themselves in the minds of their local demographic in just one week, with a combination of guerrilla and mainstream marketing. Now, MedMen has also been under scrutiny for allegations of squandering away funds, and not adhering to federal guidelines regarding advertising, resulting in huge tax payouts & penalties. This reflected a loss in their overall company value, and they most definitely came in under valuation and had to take aggressive loans just to stay afloat. While I do not recommend trying to write off your marketing spend on federal taxes (because of 280-E), I can give you a few tips to help you find a better way to reach your audience without breaking the bank this holiday season.

Throwing Spaghetti At The Wall: Stop it, your momma raised you better than that!

One Marketing tactic that you should not subscribe to: “Throw spaghetti at the wall, and see what sticks.”

On average, brands should be spending about 3-4% of their gross monthly revenue on marketing. Some brands are conditioned to think that marketing is some pricey, mystical phenomenon that does not result in their desired ROI (return on investment) or is completely out of reach for their “small brand.” This is 100% false, and to be honest, the fate of your brand depends on how well you market it. Anyone can develop a product, and most companies have that before they have a solid plan on what to do with it. If no one knows about your product…then what? Sure, you may have relationships with tons of retailers, but they too want to know how you are marketing your brand so it actually moves off their shelf. Marketing is emotional intelligence, combined with statistical data. One of the secrets to marketing your brand effectively is creating a story – or a caption – that speaks to your audience. You can wow them with fancy colors and expensive packaging that feel ergonomically good, but in the end- the packaging is tossed out, and the consumer is left with one thing: The memory of how they felt. 

If I am feeling sad, I want something uplifting and easy. If I am ready to paint the town, I might want something more extreme. If I am broke but I need the medicine, I want something cheap and effective. I am left with emotion at the end, and to gauge whether or not re-purchase the product, based on that feeling I am left with after I consumed the product. Figuring out who your customer is, and how to speak to them, is something you can also discover if you market with the right media company, that will share the tracked data they retrieve to help you laser focus in on your target demographic. An easy way to blow your marketing budget and get really discouraged is to metaphorically “throw spaghetti at the wall, just to see what sticks.” Be specific with your marketing budget, audience, and goals!

Guerilla Marketing + Viral Marketing + Mainstream Media = Integrated Marketing Strategy – with profitable results. 

Guerilla and Viral Marketing both utilize mainstream media as a platform for development and exposure. Viral can be more cost-efficient than Guerilla Marketing – and both can reach consumers in memorable ways that translate to higher sales numbers. Understanding and applying these strategies in your marketing campaigns can provide distinct competitive advantages that can help you grow your brand and achieve your financial goals. All marketing uses some type of mainstream platform to reach your desired target demographic.

GUERILLA MARKETING:

Using imagination and ingenuity, this style of marketing breaks conventional rules and can be much more affordable for smaller marketing budgets. Guerrilla marketing is the art of non-traditional marketing tactics – backed by science – to bypass traditional outlets and reach your target. The term “Guerilla” comes from none other than the likes of Che Guevara, made famous by his book “Guerilla Warfare,” where he describes new rules of engagement to outsmart opposing forces. For Example: 

VIRAL MARKETING:

The power of “word of mouth” and “the referral” is a great example of Viral Marketing to reach your audience through your friends and contacts. We have all seen viral videos, memes, and campaigns, but the mystery is in how to get a piece of content to go viral. The key to this type of result is a mixture of timing and mainstream platforms. Your content will never go viral unless you utilize the right media platform, at the right time. For example: The best time to post an intended viral holiday campaign is before November 25th, 2019. NUGL Media provides a great platform for cannabis products and information, but it may not be the best platform for “Home Improvement” content. 

Most cannabis brands are limited to the states in which their license resides, and sometimes even more hyper-local borders. For instance – the city of Los Angeles has approximately 100 to 150 licensed dispensaries at any given time. If your brand resides in 50% of those dispensaries, you are going to want to target customers that are within a few miles of the dispensaries where your product is located. If you distribute through delivery services, you may want to focus on the greater Los Angeles metropolitan area vs. hyperlocal efforts. Marketing campaigns also need to be implemented with timing and structure. For instance, if you want the best results, you should start advertising at least 90 days prior to your target time to reach your marketing goals. If you are running a Valentine’s Day sale, you’ll want to begin your marketing efforts in mainstream media no later than January 1st – with a small lead-in – and a powerful marketing push starting Feb 1st. This will subconsciously imprint your brand in the minds of your consumers, and your catchy campaign messages will be so familiar that consumers cannot resist your brand as a purchase option. Once purchased, they will share that message with their friends, who, in turn, share it with more people, fueling the cycle of exponential growth.

“DON’T HAVE A MARKETING BUDGET? THROW AN EVENT”- Richard Branson

EXPERIENTIAL MARKETING:

Nothing sells your product better than the opportunity to get face-to-face with your consumers and retailers. Experiential marketing is one of the MOST effectual tools that marketers have. Unfortunately, due to sampling laws, brands are no longer able to sample out products on site, but they can utilize clever event planners and organizers, to purchase the products for their own personal use, and have them on-site for their event attendees to try out. I express to every brand I come across to get involved with their local event companies and team up with them to collaborate and create culture, community, and loyalty to your brand. 

Integrated Marketing Strategy:

Warner Brothers created a successful integrated marketing campaign, creating fake news, fake political campaign websites for Harvey Dent, providing fans with shareable campaign posters, and other tools to create hype around its release of “The Dark Knight” in 2008. Using guerrilla, viral, and experiential marketing techniques to create marketing campaigns can leverage the power of the local and mainstream audience’s attention. Your job is to tell the story of your brand – or the story that you want your brand to tell. Understanding your audience, timing, and utilizing mainstream media platforms is crucial to your brands’ marketing success. With the strict marketing and advertising laws, Cannabis brands can still achieve their desired results without breaking the bank, by just using these techniques. 

With all of the current challenges this burgeoning new industry faces, we need to pull together now more than ever if we want to survive in a legitimate, thriving marketplace. WE have to create the change we wish to see — and get a hose to clean up all this crap!!

 Stay tuned each week for more Canna – Curious topics, and tips for the cannacurious at heart.

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