Build Your Strategic Advantage: 9 Tools

Columns - Tomorrow in Cannabis

Having quality cultivars that are desirable and exclusive to your company is a clear advantage.

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March 28, 2019

A strategic advantage is something that a company has—be it a product, process, idea or combination thereof—that enables it to stand out amongst the competition and, potentially, stake claim on a market niche. In a time when competition is fierce, especially in the well-established West Coast cannabis markets, any tool you can use to distinguish yourself from your peers is going to help your bottom line.

Here is a breakdown of wide-ranging advantages that may help a company define itself and remain relevant in an ever-expanding marketplace.

1. Access to Exclusive Cultivars

Having quality cultivars that are desirable and exclusive to your company is a clear advantage. Look at it this way: There are certainly ubiquitous cultivars that customers demand that many companies must supply, but if a cultivation business or retailer has access to the same cultivars as every other company, little incentive exists–outside of quality, production costs and selling price–to patronize that particular business/brand over another.

Having exclusive and superior genetics, or, better yet, breeding them in-house and never releasing them as seed or clone to the public, potentially makes those genetics patentable. This can be a strategic advantage in and of itself: If patented, the cultivars can then legally be licensed to companies in non-competing geographic locations.

Alternatively, a cultivator may choose to license exclusive genetics from a particular breeding company, similar to how today’s traditional ornamental plant industry operates.

In a time when competition is fierce ... any tool you can use to distinguish yourself from your peers is going to help your bottom line.

2. Proprietary Products

Beyond genetics, having proprietary products and/or securing intellectual property (IP) can be a game-changer for a company. Patenting cannabis-based formulations, for example, is another way of standing out. If a patent or other IP mechanism isn’t an option, that formulation still can be kept as a trade secret not to be shared with anyone outside the company.

If your company is not in a position to develop its own proprietary products, establishing exclusive partnerships with other brands can help you gain access to those products. Many cannabis companies have successfully established themselves as a go-to for specific processed products and/or brands, and those products may only be produced by or purchased from those regional partners.

Beyond the blend of food ingredients (which can offer another strategic advantage if you’re targeting people with dietary restrictions), the cannabinoid and terpene blends created in different products can be trade secrets, whether they are water-soluble cannabinoids, bio-available cannabinoids, specific terpene formulations (in combination with cannabinoids) or the compounds used as flavor ingredients.

3. Efficient Cultivation and Extraction Methods

Drip or automated irrigation, conveyor belts, mechanical potting and seed-planting systems should be employed in any large-scale cultivation facility (if it’s within financial and logistical reason). Any possibilities of using geothermal, hot wastewater (where heat is recovered from hot exhaust gases, hot cooling water or other heat-filled waste) or any other energy-saving, eco-friendly practices can be beneficial both as cost-cutting and strategic advantage tools.

Make sure your processes match your desired output to ensure you are running a lean operation.

Extraction methods and processes must be at the height of efficiency as well, which begins at the time of harvest. Make sure your processes match your desired output to ensure you are running a lean operation. For example, if you’re looking to preserve all available terpenes, it is preferable to extract from fresh-frozen cannabis. To target specific compounds such as CBD and leave out terpenes, it is preferable to dry before extracting.

Whichever method is chosen, it must be performed efficiently, which means as automated as possible with minimal labor. The goal is to create a superior product that sells for a superior price at a lower cost.

Automating production can provide you a strategic advantage with efficiency and reduced labor costs.
Headshot by Brian Kraft; Photo by Molly Condit at SunStreet Photo

4. Location

The more remote the company is, the farther it is from the market/customer, which means more transportation costs to ship and receive supplies. Being close to your primary materials or supply outlets is something everyone needs to consider in their business plan. Getting specialized materials to remote locations can be problematic, and any delivery delay can be deeply disruptive to your business.

Choosing a location that keeps you near your customers and suppliers will lead to savings that will position you to remain competitive in the marketplace.

5. Recognized Logo/Branding

When choosing a company name and logo, consider customer perception a priority. Who is your company’s target customer? Is it a young millennial demographic? Does it include business professionals? Seniors? It is always best to keep your intended customer in mind when developing your company name, logo and branding, as well as when you are establishing partnerships with other companies, social media influencers and advertising companies.

Having quality cultivars that are desirable and exclusive to your company is a clear advantage.

Also, avoid parodying another company’s name, logo or brand character likeness. While it might catch your target audience’s eye or get you some social media play, it most likely will land you in a lot of trouble. The short-term success of doing so will not be worth the long-term costs.

6. Strive to Employ Advanced Technologies

Whenever possible, strive to be a leader, not a follower—and be the first to innovate. Successful companies continually investigate the research and development of new advanced technologies whenever fiscally wise. Successful cannabis companies are continually aware of current market trends, especially with regard to extracts and extraction technology. Many companies are rapidly developing superior equipment and technologies for both small-scale and very large-scale extraction utilizing a multitude of methods, all with an eye on efficiency and superior-quality production. As industrial hemp production comes into play with the passing of the 2018 Farm Bill, I expect to see industrial scale of CBD isolation on a never-before-seen level, which will in turn encourage development of CBD refineries to extract the targeted compound as efficiently as possible.

The Pharm in Willcox, Ariz., utilizes a geothermal well to create 80 percent of its heat.
Photo by Molly Condit at SunStreet Photo

7. Social Media Presence and Company Affiliations

Companies recognize the power of social media in creating a positive company image. What can be overlooked is that a decade of hard work can be destroyed in seconds with one misguided post. Unless being edgy and controversial is part of your company’s identity, avoid putting off a significant portion of consumers with off-color or irrelevant posts. Don’t post comments or opinions that may anger or offend your customer base. Instead, stick to what you’ve identified as your target audience’s interests. Does your brand project a healthy lifestyle with posts of relaxing situations? Is it for yoga enthusiasts? Are you targeting nature-lovers, or is your focus primarily on action and sports and those who engage in them? Regardless of what it is, maintain your focus, corner your niche and develop a dedicated following.

8. Management Team and Surrounding Team Members

It is undeniable that a company is judged by the behaviors of its ownership and management team, so prepare to have your every affiliation and behavior during both work and off-work hours scrutinized. Whether we like it or not, we often are judged by the company we keep and sometimes we are deemed guilty by association. This can be a positive when surrounded by the best, and a curse when partners fail to meet your standards. The most successful companies surround themselves with the best in their designated field and act accordingly as a representative of the company for which they work. Executives embroiled in scandal or lawsuits, or who have less than transparent relationships with other related companies, can ultimately hurt your entire organization. A quality and reputable team should most definitely be considered a strategic advantage, to say the least.

Getting specialized materials from remote locations can be problematic, and any delivery delay can be deeply disruptive to your business.

9. Community Relationships

A positive relationship with your community is a clear strategic advantage in that customers can choose (and feel good about) where they spend their hard-earned dollars. What is your company’s reputation in your local community? Is it known to interact and engage in voluntary services or philanthropy? Do you support your neighborhood as a responsible business owner should? Don’t brag about your contributions and appear boisterous or brash, but let customers know about your passion and how their transactions directly help their community.

Making sure that you use every advantage you can come up with is a surefire way to ensure that you positively stand out from your competition and ultimately find long-term success.

Kenneth Morrow is an author, consultant and owner of Trichome Technologies™. Facebook: TrichomeTechnologies Instagram: Trichome Technologies k.trichometechnologies @gmail.com