With the cannabis industry facing several challenges, such as overproduction, competition from the illicit market, diminishing wholesale prices and more, cannabis operators might wonder if they should dial back their marketing budget.
But Laurie Parfitt, CEO of LKP Impact Consulting, a fractional CMO firm, says staying on course with your marketing budget during a downturn can benefit your business.
"I think if you can keep your marketing budgets, you should, and I don't say that just as a marketer," Parfitt says. "We are at a crossroads in the industry right now. We are in the same or similar situation as back in 2019. And the truth is that if you could spend on your marketing now and create your foothold now, while others might be scaling back, you will actually be better off in the long run."
Parfitt says scaling back your advertising dollars now while your competitors stay on course can cause your business to become obsolete in the long run. The industry and all of its critical marketing messages can easily continue on without you if you don’t stay involved in the conversation.
"The trend previously was when money gets tight; you fire all the marketers," she says. "But now what we're starting to see is people realize that in order to gain traction for the future, you can't just keep doing that. You have to invest in the marketing because, as we see in California, Washington state, Oregon, and now in Michigan, there is a lot of price compression. There are a lot of operators just opening and creating brands, so you have to really think about how you are going to differentiate yourself in the marketplace because it was one thing when we didn't have a lot out there, but now we do."
A downturn is also an opportunity for marketers to look at inefficient spending and ways they can redeploy their marketing dollars instead of cutting costs, Parfitt says.
Whether your business is rethinking its marketing strategy for 2023 or looking for new market opportunities, here are eight cannabis marketing trends Parfitt anticipates will light up in the new year.
1. Increased emphasis on brands.
Parfitt says she anticipates the industry to see more of an increased focus on brands in 2023.
"Brands previously haven't been a big thing because a lot of consumers are new to the industry, and the ones that aren't new are still potentially in that traditional market," Parfitt says. "The consumers that have been in the industry for a long time are generally going to be your flower and concentrate consumers who know what they buy, and that's it, and they don't really care what the brand is.”
According to a 2021 report from cannabis data company Brightfield Group, 65% of California consumers and 62% of Colorado consumers said they do not buy products based on the brand, but rather based on what the product has to offer, CBT reported.
But Parfitt says she's starting to see more companies establish brands that resonate and engage with consumers, as well as create impactful experiences for them.
Brightfields 2022 market forecast found that 47% of U.S. cannabis consumers said a brand is important to them when selecting a cannabis product. The report suggests that as the national cannabis market continues to form in the U.S., "marketing and consumer experiences will become crucial for establishing a lasting cannabis brand," CBT reported.
"We're starting to see the stigma reduce, and with that, we're seeing people come into dispensaries more, and start to ask those questions and start to get attached to brands, which we have not seen previously," she says. "This new consumer wants to see a brand, they want to identify with the brand, and they also want to know when they go into a dispensary, if they go into Pure Leaf versus Sunnyside versus Ascend, they want to know that they're picking up the product they want."
2. Concentrated focus on budtender training.
The industry will start to see more companies focus on their budtenders—providing increased education, training, incentives and more. "Budtenders are the gatekeeper for all brands," Parfitt says. Savvy dispensary teams will know to include front-of-house staff in their marketing messages.
"We're seeing training platforms proliferate the market," Parfitt says. "And we are seeing these learning management systems pop up and incentivize budtenders just by providing them with swag or [an incentive] for finishing the program.”
The industry is also starting to see education programs emerge that focus on connecting budtenders with specific brands, Parfitt says, adding that she’s seen some platforms pop up that allow companies to “gamify the system,” by giving budtenders incentives for selling specific brands.
“I see the positives and negatives to that because you want to make sure that the consumer's getting the right product. It shouldn't just be about what you're being incentivized to do; you have to create that balance,” she says. “However, we're now starting to see platforms pop up that focus on that budtender and how brands can engage with them, and we never really saw that before."
3. More companies engaging in out-of-home (OOH) advertising.
Out-of-home advertising, also known as outdoor media, includes billboards, bus stops, street furniture (e.g. benches), kiosks and more, Parfitt says.
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"The first step in the marketing funnel is building brand awareness," she says. "A great way to build brand awareness is to be where consumers are, and consumers drive the highways, consumers take the bus, consumers sit in subways."
Cannabis OOH advertising laws vary from state to state, even if the state allows OOH advertising, it’s up to the jurisdiction in which the advertising is taking place, Parfitt says, adding that, “the jurisdiction can be stricter than the state, just not less. Cannabis companies always need to adhere to the strictest guideline.”
4. Increased efforts on marketing activation.
Parfitt says she anticipates cannabis companies to increase their efforts on marketing activation in 2023, which is the "execution of campaigns, events, and experiences that generate awareness of your brand" and focuses on "enhancing the path to purchase for customers, often through an interactive experience," according to the Consumer Data Platform Recourse.
"Activation is all about how you engage and inspire consumers and budtenders,” Parfitt says, adding that the industry saw marketing activation die down the last couple of years due to the COVID-19 pandemic.
Examples of marketing activation include conducting educational seminars, hosting sponsored events and vendor days, providing budtenders with incentives, and more, she adds.
"Now that dispensaries have opened up and you can actually do in-person things, and masks are kind of going by the wayside, it's really important that brands start getting in front of consumers … and budtenders in dispensaries,” Parfitt says.
5. Products emerging that support the industry.
Parfitt referenced a product like this that she’s come across called HIBEGONE, which can remove THC from consumers receptors in as little as ten minutes. She anticipates products like this, that can help alleviate a euphoric feeling for consumers who overindulged in cannabis or help those who might not be familiar with potency levels or dosing limits, continue to emerge in 2023.
"I think you're going to start seeing products out there that will help people come down from a high that's too much for them or a high where all of a sudden they realize they have to go do something, and they need to come down for it," Parfitt says.
She anticipates majority of these products to be sold in the form of edibles.
"I think we are going to see products like that proliferate the market, especially with social consumption becoming a thing," she says. "It could also be sold anywhere because there's no active [THC] ingredient in it, and it will help consumers feel more comfortable that if they take too much there's a way to just sleep it off."
6. Social consumption will continue to become more normalized.
While social consumption has become increasingly popular in 2022, Parfitt anticipates it will continue to emerge into 2023.
For example, several states have already taken steps to implement cannabis consumption lounges, including Nevada, California, Colorado, Michigan, Illinois, and New Jersey.
"We're also starting to see consumption events, which will be a good way for brands to get their name out there," Parfitt says.
7. The smoking accessories and equipment market will expand.
Smoking equipment and accessories will become a more significant part of the industry in 2023, Parfitt anticipates, as they are not subject to section 280E of the Internal Revenue Code, which prohibits cannabis-related businesses from deducting "ordinary and necessary" business expenses.
“Accessories are starting to become a big player as markets mature, consumers become more sophisticated,” she says. “Co-marketing accessories with cannabis product provides a solution-based marketing program that increases basket size, builds brand and customer loyalty and has the opportunity for an education related event.”
Parfitt added that the industry is also starting to see brands release consumption accessories as an art form and referenced Jerome Baker Designs, a consumption accessories brand that creates “collectible, exclusive product and CannaDevices utilizing local glass blowers to create high value, moderately priced pieces.”
With that, “accessories provide the perfect intersection of cannabis and culture,” she adds.
8. Greater emphasis on co-manufacturers and distributors.
There may be a greater emphasis on co-manufacturers and distributors in 2023, resulting in several brands expanding nationally.
“Partnering with an MSO (multistate operator) used to be the main way that you could get your brand produced. Now, we are seeing co-manufacturers open and distribution companies start,” Parfitt says.
Utilizing co-manufacturers and distributors within legal markets to produce and sell products presents an “asset lite way to launch your brand,” Parfitt says.
“You could have the opportunity to partner with other brands that the co-manufacturer makes, or the distributor sells, to have multi-manufacturer promotions and events as you are part of a House of Brand concept,” she says, adding that you can also “leverage the scale and spend your marketing dollars more effectively.”
This is part two of a two-part series. CBT spoke with Parfitt to discuss what marketing trends emerged in 2022.
