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How cannabis brands can cultivate engaged consumers

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Image of Sandra Abi-Rashed(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the cannabis industry. Sandra Abi-Rashed is the vice president of client services at Boston-based marketing technology company Digilant.) 

The market for legal cannabis in the U.S. is expected to surge in the coming years, reaching more than $40 billion annually by 2025, according to the MJBizFactbook, creating huge opportunities to educate consumers on its benefits and create brands that eventually rival those found in the traditional  consumer packaged goods (CPG) space.

Getting to that mass-market cannabis future requires that brands and marketers navigate a highly regulated industry today, while also identifying and targeting emerging audience segments just as likely to include suburban moms and well-to-do urban professionals as the traditional “stoner” persona.

Marketers will have to be cognizant, at least in the short term, of how they engage potential new consumers as the lingering stigma surrounding cannabis after decades of anti-drug messaging could make some leery of aggressive messaging for cannabis, CBD and related products.

But given the pressure on lawmakers to relax the restrictions on its usage and reap the rewards of taxing cannabis sales, marketers can be fairly confident that sooner, rather than later, the average American consumer won’t be viewing cannabis brands any differently from other lifestyle categories.

Marketers can then focus primarily on the brand journey and determine how best to seize opportunities to educate their target audience on how cannabis fits into their lifestyle as well as the specific benefits these products can provide them.

Well on its way

Cannabis is already joining CPG categories across the board in requiring a consumer-centric, rather than channel-centric, approach.

That focus on the consumer will be the driving force for how cannabis brands can identify who their ideal consumer is and on what step of the journey the consumer is on and can be reached.

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Using an ethnographic approach to better identify and understand the modern marijuana consumer will give marketers the opportunity to integrate cannabis brands into the interests, attitudes and lifestyles of rapidly evolving audience segments.

This methodology requires different messaging and creatives to engage the various personas found among cannabis customers:

  • The connoisseur, who is knowledgeable and loyal to premium brands.
  • The experimental, who likes to discover new strains and products.
  • The mainstreamer, who views it as a way to relax at the day’s end.
  • The patient, who consumes cannabis as a form of medicine.

These groups are likely to have different media affinities, with some more open to the recommendations of friends, acquaintances or even their favorite social influencers or celebrities.

Some segments will also have different ideas about how and where cannabis should be consumed, with some groups eager to research different strains in brick-and-mortar locations and via influencers, while others will be more comfortable both researching and consuming products in the privacy of their homes.

Understanding these touch points – as well as the broad interests inherent in these various personas and how cannabis fits into their lifestyles – will enable not only better targeting but also more tailored messaging that optimizes marketing spends while maximizing the customer experience.

Historical comparisons

The most common comparison for how the cannabis industry could emerge going forward is to look back 90 years to the end of prohibition and the subsequent growth of beer, wine and spirit brands.

But a better road map for cannabis brand growth might be found in the high-end coffee category.

Once consumers decided that, yes, they were willing to invest to learn all they can about all things coffee and pay a premium to get exactly the experience they want, both retailer and CPG coffee brands were able to rush in to engage that increasingly discerning audience.

Just as high-end coffee consumers are motivated by brand characteristics such as heritage, product origins, ethical sourcing and roasts, so too are emerging cannabis personas.

A similar path is likely in store for cannabis, and key to that will be finding new ways to educate consumers not just on specific strains and delivery methods such as vapes and edibles but also on origin stories, strains, sustainable/organic production methods and other brand attributes.

Cannabis marketers are starting to leverage traditional tactics such as line extensions, celebrity spokespeople, sponsorships and partnerships with established brands from other lifestyle and CPG categories – including Constellation Brands, Diageo and Mondelez, to name a few – to build a robust narrative behind their products.

Traditional tactics

Cannabis brands are currently in the eye of the storm – an industry that is going from being prohibited to being highly regulated and from being stigmatized to becoming a source of wellness, health and relaxation.

For cannabis brands that aren’t waiting for the floodgates to open to start building their marketing strategy, the present is all about getting a solid grasp on whom they should be going after.

Opt-in programs that entice consumer sign-ups by offering value-adds such as educational and entertainment content and promotions can generate that solid first-party foundation of declarative and transactional data tied to actual people.

They also give marketers the actionable intelligence they need as the cannabis industry goes mainstream in the coming years.

Cannabis will continue to be a very high-margin product for the foreseeable future, putting a premium on brands to find and nurture as many long-term loyal customers as possible.

But that doesn’t mean cannabis advertisers should be spending wildly now and painting with a broad brush in an attempt to buy awareness and market share.

The bottom line – when it comes to marketing cannabis – is flexibility in strategy and staying in step with the rapidly evolving consumer.

Smart cannabis marketing will feature plenty of trial and results-driven testing to determine exactly how their audience wants to engage brands and then leveraging those insights to effectively differentiate themselves from their many competitors.

The good news is that – regardless of where they are in the journey – consumers are ripe for engagement from cannabis brands.

All that is needed now is for marketers to pin down high-opportunity audiences using data that goes beyond demographics and includes narrowed-down interests, preferences, consumption habits and more.

Sandra Abi-Rashed can be reached at sandra.abirashed@diligant.com.

The previous installment of this series is available here.

To be considered for publication as a guest columnist, please submit your request to editorial@mjbizdaily.com with the subject line “Guest Column.”

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Kansas Medical Marijuana Hearings Cancelled After Senate GOP Leader Reroutes House-Passed Bill

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A top federal drug official says the “train has left the station” on psychedelics.

National Institute on Drug Abuse (NIDA) Director Nora Volkow said people are going to keep using substances such as psilocybin—especially as the reform movement expands and there’s increased attention being drawn to the potential therapeutic benefits—and so researchers and regulators will need to keep up.

The comments came at a psychedelics workshop Volkow’s agency cohosted with the National Institute of Mental Health (NIMH) last week.

The NIDA official said that, to an extent, it’s been overwhelming to address new drug trends in the psychedelics space. But at the same time, she sees “an incredible opportunity to also modify the way that we are doing things.”

“What is it that the [National Institutes of Health] can do to help accelerate research in this field so that we can truly understand what are the potentials, and ultimately the application, of interventions that are bought based on psychedelic drugs?” Volkow said.

The director separately told Marijuana Moment on Friday in an emailed statement that part of the challenge for the agency and researchers is the fact that psychedelics are strictly prohibited as Schedule I drugs under the federal Controlled Substances Act.

“Researchers must obtain a Schedule I registration which, unlike obtaining registrations for Schedule II substances (which include fentanyl, methamphetamine, and cocaine), is administratively challenging and time consuming,” she said. “This process may deter some scientists from conducting research on Schedule I drugs.”

“In response to concerns from researchers, NIDA is involved in interagency discussions to facilitate research on Schedule I substances,” Volkow said, adding that the agency is “pleased” the Drug Enforcement Administration recently announced plans to significantly increase the quota of certain psychedelic drugs to be produced for use in research.

“It will also be important to streamline the process of obtaining Schedule I registrations to further the science on these substances, including examining their therapeutic potential,” she said.

At Thursday’s event, the official talked about how recent, federally funded surveys showed that fewer college-aged adults are drinking alcohol and are instead opting for psychedelics and marijuana. She discussed the findings in an earlier interview with Marijuana Moment as well.

Don’t miss out on the @NIDAnews, @NIAAAnews, & @NIMHgov-sponsored virtual Workshop on Psychedelics as Therapeutics: Gaps, Challenges, and Opportunities, Jan. 12‒13, 2022. Learn more and register: https://t.co/S1zttkoYXq pic.twitter.com/C2Qrk6FN9a

— NIDAnews (@NIDAnews) January 10, 2022

“Let’s learn from history,” she said. “Let’s see what we have learned from the marijuana experience.”

While studies have found that marijuana use among young people has generally remained stable or decreased amid the legalization movement, there has been an increase in cannabis consumption among adults, she said. And “this is likely to happen [with psychedelics] as more and more attention is placed on these psychedelic drugs.”

“I think, to a certain extent, with all the attention that the psychedelic drugs have attracted, the train has left the station and that people are going to start to use it,” Volkow said. “People are going to start to use it whether [the Food and Drug Administration] approves or not.

There are numerous states and localities where psychedelics reform is being explored and pursued both legislatively and through ballot initiative processes.

On Wednesday—during the first part of the two-day federal event that saw nearly 4,000 registrants across 21 time zones—NIMH Director Joshua Gordon stressed that his agency has “been supporting research on psychedelics for some time.”

Tune in today and tomorrow for the @NIH workshop on Psychedelics as Therapeutics, which will examine findings on psychoplastogens for treating depression, post-traumatic stress, and substance and alcohol use disorders. https://t.co/Qzxte5xJt9

— Joshua A. Gordon (@NIMHDirector) January 12, 2022

“We can think of NIMH’s interests in studying psychedelics both in terms of proving that they work and also in terms of demonstrating the mechanism by which they work,” he said. “NIMH has a range of different funding opportunity announcements and other expressions that are priorities aimed at a mechanistic focus and mechanistic approach to drug development.”

Meanwhile, Volkow also made connections between psychedelics and the federal response to the coronavirus pandemic. She said, for example, that survey data showing increased use of psychedelics “may be a way that people are using to try to escape” the situation.

But she also drew a metaphor, saying that just as how the pandemic “forced” federal health officials to accelerate the development and approval of COVID-19 vaccines because of the “urgency of the situation,” one could argue that “actually there is an urgency to bring treatments [such as emerging psychedelic medicines] for people that are suffering from severe mental illness which can be devastating.”

But as Volkow has pointed out, the Schedule I classification of these substances under federal law inhibits such research and development.

The official has also repeatedly highlighted and criticized the racial disparities in drug criminalization enforcement overall.

Delaware Lawmakers File New Marijuana Legalization Bill With Key Equity Revisions

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Lawmakers in Virginia Disagree on Cannabis Conviction Re-Sentencing

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Adult-use cannabis sales could begin next year in Virginia, but lawmakers in the commonwealth remain at loggerheads over what to do about individuals currently incarcerated on pot-related charges. 

The Virginia Mercury reported that a committee of state Senate and House members “tasked with making recommendations for the legislative session that begins Wednesday concluded its work this week with a proposal to begin recreational sales in 2023—a year earlier than initially planned,” but those lawmakers “said they ran out of time to reach an agreement” on the subject of re-sentencing for cannabis convictions.

The current state of play in Virginia looks quite different than it did last spring, when a Democratic-controlled general assembly passed a bill that made Virginia the first state in the south to legalize recreational pot. 

Virginia’s Democratic Governor Ralph Northam signed the bill into law, hailing it as a new day for criminal justice in the commonwealth.

“What this really means is that people will no longer be arrested or face penalties for simple possession that follow them and affect their lives,” Northam said at the time. “We know that marijuana laws in Virginia and throughout this country have been disproportionately enforced against communities of color and low-income Virginians.”

Last week, as lawmakers convened in the capital city of Richmond, the GOP officially assumed control over one-half of the general assembly. And on Saturday, the Republican Glenn Youngkin was sworn in as the new governor of Virginia. 

The recommendation from the Cannabis Oversight Commission to begin cannabis sales next year came last week ahead of the opening of the legislative session.

Youngkin said in an interview earlier this month that he “will not seek to overturn the law on personal possession,” but the governor-elect—who defeated the Democrat Terry McAuliffe in November—balked on the subject of pot sales.

“When it comes to commercialization, I think there is a lot of work to be done. I’m not against it, but there’s a lot of work to be done,” Youngkin told Virginia Business. “There are some nonstarters, including the forced unionization that’s in the current bill. There have been concerns expressed by law enforcement in how the gap in the laws can actually be enforced. Finally, there’s a real need to make sure that we aren’t promoting an anti-competitive industry. I do understand that there are preferences to make sure that all participants in the industry are qualified to do the industry well.”

The subject of how to handle individuals currently serving time for cannabis didn’t come up in that interview, nor was it addressed by the legislative committee last week.

The Virginia Mercury reported that the “Virginia Department of Corrections says 10 people are currently serving sentences in which the most serious offense was marijuana,” and that in “all of the cases, the people were convicted of transporting five or more pounds of marijuana into the state.”

“All 10 are expected to be released in the next six years, according to the department, which presented the data Monday to the assembly’s Cannabis Oversight Commission,” according to the report. “Another 560 people are serving sentences partially related to a marijuana offense but have also been found guilty of more serious offenses.”

In the interview with Virginia Business earlier this month, Youngkin did discuss the potential economic windfall from legalization, particularly for minority communities.

“I am all for opportunities for minority-owned businesses, women-owned businesses [and] military-owned businesses,” he said. “We also have to make sure that they have the capabilities to compete and thrive in the industry. So, I think there’s work to be done. All of that will be on the table. Again, I don’t look to overturn the bill, but I think we need to make sure that it works.”

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Colorado Hits New Record with $423 Million in Annual Revenue From 2021

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The state of Colorado is reporting a new record amount of revenue collected during 2021, including update sales data in overall tax and fee revenue collected since 2014 when legal sales began.

The Colorado Department of Revenue (DoR) announced on January 11 that the state has made a new record with total annual cannabis sales. “New record alert! In 2021, Colorado collected over $423 million in revenue from marijuana sales (compared to the previous record of over $387 million in 2020). Colorado also surpassed $2B in tax and fee revenue and $12B in marijuana sales to date,” the agency wrote on its social media pages.

A detailed press release shared that monthly data for December 2021 reached $30,609,563 in tax and fee revenue (with a total of $423,486,053 between January and December 2021) and $2,018,933,005 since February 2014.

Similar in cannabis sales, the latest data revealed $158,462,549 was collected in November (with a total of $2,060,952,959 collected between January and November 2021) and a massive total of $12,039,747,032 collected since legal sales began in January 2014.

These figures are based off of the state sales tax (2.9 percent), cannabis retail sales tax (15 percent) and retail cannabis excise tax (15 percent). The DoR notes that for cannabis sales data, the official sales figures won’t be released until sometime in February 2022.

Sales data from October, November and December were reported to have decreased, with both cannabis sales and prices dropping below the usual rate. The price of smokeable flower per pound in the last three months of 2021 dropped by 28 percent ($1,316 to $948, according to Westword) in reference to the average market rate (AMR). In comparison, the AMR for the end of 2020 reported $1,721 in price per pound.

The states of Washington and California, however, have collected $3 billion and $3.1 billion in tax revenue, compared to Colorado’s newly achieved $2 billion. Of course, Washington’s sales tax is up to 46 percent in certain regions, and California’s sales tax reaches up to 38 percent. Colorado’s tax percent is the third highest in the country.

According to Marijuana Policy Project Policy Director Karen O’Keefe, Colorado’s cannabis industry is more consistent, which leads to steady flow of funds for the state. “When you have that kind of funding, economists say you have what’s called a multiplier effect, where you not only have the initial investment in the stores, the jobs and the tax revenue, but then that money is in people’s pockets who spend it again,” O’Keefe told Westword. “So it’s as if each dollar is two or three dollars, which is the way economists usually look at it.” She also notes that this long-term investing has led to the creation of 40,000 jobs and over 1,000 Colorado businesses.

“Some of the more recently taxed states are focusing on specifically investing a good chunk of the revenue in communities that have borne the brunt of marijuana prohibition and that have had disproportionate marijuana arrests,” O’Keefe continued. “You’ll just continue to see more tax revenue, more people working in the cannabis industry, operating cannabis businesses.”

Colorado’s cannabis industry is thriving in many other ways overall as well. At the beginning of the year, Governor Jared Polis signed an executive order to pardon 1,351 cases relating to cannabis possession convictions of two ounces or less. Psychedelic decriminalization is also ramping up in Colorado, with two potential ballot measures being proposed through New Approach PAC. One bill proposes legalization of multiple different psychedelic substances such as ibogaine, DMT, mescaline, psilocybin and psilocin, whereas the other bill focuses just on psilocybin and psilocin.

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