By Arundati Dandapani
Brief Overview: With the legalization of cannabis in many parts of North America, consumers expect a lot from cannabis companies medically and recreationally. But are companies meeting these expectations quickly enough? How are companies marketing cannabis when research is still in its early stages and an abundance of misinformation confuses consumers? Learn about the key challenges of marketing cannabis in uncertain times with a focus on sustainability, behaviour change (cognitive biases), cultural shifts, environmental threats, and unequal global cannabis. And look through the lens of three exciting research methodologies at what the current state of cannabis reveals about our culture today and tomorrow.
Is it Cannabis Standard Time?
Happy belated 4/20! Or should I say Easter? I considered removing my social profiles before travelling to the US from Canada after hearing stories of high profile executives being turned away at customs for “speaking at a cannabis conference”. But, Eeyore’s birthday or the Mardi Gras of Austin was on the coming weekend, and the event was rumoured to unleash Texans’ closeted cannabis culture in full bloom, according to locals. Should I have risked carrying 4:25 O’ Henry munchies to my IIEX presentation? They were being distributed for free to everyone who asked for it or passed the sponsored hunger test on 20th April in Toronto’s Kensington Market. (See images below).
If this was a high-risk presentation about a deeply misunderstood drug, I was glad my entire audience passed the age gate of being above 21 years of age (in Texas). If you are in Canada, I hope you attain the age of 19 years before reading further or consuming cannabis. Having lived with the laws and regulations across varied geographic zones I feel privileged to be able to discuss cannabis with a mainstream global business audience without fear of persecution — although the CRA imposter calls (triggered surely by the fraudsters seeing the word “bitcoin” in my last blog) instigated some seriously sky-high terror.
Cannabis is a crop that has been around for over 12000 years, first grown in the Steppes in Central Asia, travelling across India, China, Africa, Spain, and then Chile and the Americas until as late as the nineteenth century. Cannabis is everywhere. In your bible, your plastic, and may be even in your bloodstream (through passive smoke) and you may not know!
You’ll constantly experience a contrast of social tolerance versus legal acceptance, a moving lens with controversial cannabis at its centre as regulations and legislations evolve. Every market and society is different, as is every consumer. I aimed to establish the role and resilience of an age old crop in the global and North American consumer marketplace in uncertain times while offering some research recommendations to better understand or contextualize the cannabis consumer.
The story of cannabis is one of belonging and identity, which means it’s also about acceptance, upward mobility, legacy, and the power brands wield to make a difference in our consumers’ lives. Today, Uruguay and Canada are the only two countries where cannabis cultivation and use and sale for both medical and recreational purposes is fully legal, with hopes aligning on Mexico becoming the third country to follow suit. Cannabis is legal for medical use in around 44 countries and UK is the biggest exporter of medical marijuana (Prohibition Partners 2019).
Worldwide, the legal cannabis industry topped US $12 billion dollars, and it’s only expected to grow as more states and countries consider legalization. According to Prohibition Partners 2019 reports, 4% of the world’s consumes cannabis including 8% of North America (driven largely by Canada), but if you look at the market size and market growth potential, the numbers spell big business. According to Vividata’s Spring 2018 National Cannabis study, over a sizeable one-fifth (21%) of all Canadians consume cannabis, even if a majority (64%) state no intention to consume in a country with a post-legalization market potential of $4bn- $8bn in 2018.
The era of cannabis prohibition has not ended even with legalization’s footprint in key markets. The looming stigma is just one symptom of all that’s ailing cannabis marketers today. Armed with quantitative data like how many consume cannabis or intend to and how they prefer to consume and engage with legal channels, we need deeper research around the user journey from societies and markets in different phases of prohibition, cannabis socialization and legal acceptance of cannabis.
Cannabis vs. Cannabis
What cannabis does can be confusing because we still can’t predict its exact effects on our bodies. We each react to cannabis differently because the naturally produced endocannabinoids in our bodies varies. Cannabis contains hundreds of cannabinoids including two principal components THC and CBD. CBD is performance enhancing, whereas THC gives you a psychoactive euphoric high. There are thus varying levels of confusion surrounding good drug–bad drug compound “rivalries”.
Hemp derived CBD often wears a halo for its medicinal positive effects and is even fully legal all over US through the recent passing of the US Farm Bill Act of 2018. CBD works “better on mice than on men” in terms of proven effects, but prescription Epideliox does reduce seizures caused by epilepsy. However, together, CBD and THC can have the potential to combat pain or anxiety more effectively as they interact with another through what are known as entourage effects medically. We must not discount their combined power.
21st Century Culture Wars
Four of the world’s ten biggest cannabis companies are in Canada, and six are in USA. According to Vividata’s Spring 2018 Canadian Cannabis Study, a third of all Canadians have consumed cannabis recreationally at some point, and close to half of all medical users, and a fifth of all recreational users, consume cannabis daily.
Globally we are witnessing a revolution. To watch a taboo product gain legal status in a lifetime – is disruptive. Cannabis is disrupting the way we live, do business, respond to crisis, community and change. It is making us all cultural anthropologists across the uneven plane of time as a lot of the migrating population might experience.
What is more acute is the moral dilemma we are facing with the role (rise) of cannabis in a post-legalization world. The US government collected 4.7 billion US$ in legal weed tax revenues alone in 2018, in Canada it was . We can’t ignore the inequalities and crimes being accelerated by this high-growth industry from active and more efficient black markets, continued arrests of minorities for drug-related crimes, lack of action on expungement of criminal conviction records for those caught with low amounts in possession, and discrimination against immigrants participating in cannabis industries. Supply demand gaps, overpriced legal cannabis and logistical challenges with licensed retailers failing to open for business on time exacerbates these problems.
Pyramid of Weed
To watch a commodity move from the underground and up the ladder of mobility across so many time zones is a privilege. The journey to legalization means more to North America than it does in other parts of the world because the nature of stigma in these markets can be more divisive for a product so (relatively) new here. It is worth noting how legal weed grows a pinnacle of affluence exploiting product and service opportunities in niche beauty and wellness commerce. And although cannabis has always been consumed across the classes, the fight for cannabis-affluence will never be more pronounced in legal markets than it was before legalization. Too simply, it’s the gold rush for the lucky few even as we learn to exploit its potential to the fullest (of our research lifetimes).
Cannabis as Technology
Technology enabled retail/cannabis/anything will score the edge? As of now post legalization numbers on digital purchase of cannabis (those who buy online for eg. through Ontario Cannabis Stores) is in the single digit percentiles, even as over half (53%) of Canadian current users who prefer to buy online are in the 25-34 year old age group (Vividata Spring 2018 Study). For such an early stage product as legal cannabis, brick and mortar is still the preferred point of sale. People want to see, touch, feel, experience and understand what they are buying and why. Especially if we want to lace it in our coffee and cakes.
Shopify in Canada has made strides with enabling allied cannabis (accessories, other brands) entrepreneurs to set up their retail operations online. For a product with a blank memory slate, it is up to the imagination of brands to create new genres or labels around consumption that cut across every consumer aesthetic and preference.
Cannabis as with every technology creates haves and have-nots. When Amazon enters the game we will witness real disruption in the supply chain. And, it is only a matter of time when blockchain becomes mainstream, securing the safety and privacy of all cannabis related transactions for buyers and sellers, impacting tax collection too.
Are you the Apple Store of Weed or a Walmart?
If tech enabled cannabis fuels more legal weed sales, who is going to be the Apple store vs. Walmart of weed? Walmart is already considering entering Canada’s legal marijuana market to introduce infused beverages.
Those in Canada who can’t afford legal weed (or even those who can), will continue to get it from the black market, or delay buying it from legal avenues where weed is 50% more expensive (Statistics Canada).
But the novelty of scarce goods is an important facet that drapes this niche good. Scarce (and prohibited) substances attract more attention and beget potential binge consumption. It’s just like how the reverse holds true, as goes the central argument in #WaronDrugs that decriminalizing all drugs bears a huge drop in drug arrests, incarceration, improves rehabilitation, leads to reduced overdose deaths (especially opioid poisoning), reduced HIV/AIDS and no major rise in drug use as observed below in Portugal.
Photo by: Batool Batalvi, Registered Psychotherapist
Photo by: Batool Batalvi, Registered Psychotherapist
Sustainability Over Po(t)pulism
Canada’s cannabis consumers unanimously seek a sustainable future, one that is green and without plastics. They are prepared to pay more for eco-friendly products and they want companies to take initiative in conservation, recycling and sustainability.
Weed is not yet federally legal in the US although repeated polls show more Americans in favour of complete legalization. Even in states where it is legal, immigrants are prevented from participating in the cannabis industries or workforce as it tarnishes their record.
Where they make law in Texas. They were voting on the decriminalization of marijuana for possession of upto 1 ounce in this gorgeous provincial capitol building – while I was presenting on cannabis research at iiex yesterday! Was glad to take this mini civics tour on my way out. pic.twitter.com/reS2H66tai
— Arundati Dandapani (@itadnura) April 26, 2019
Celebrity Endorsements Elicit More Controversy or Market Share?
Cannabis gains such momentum in sustainability it turns users into the staunchest of advocates. Former Olympic Gold winner snowboarder Ross Rebagliatti lost (and reclaimed) his gold medal for cannabis being found in his bloodstream. The international shame he endured, catalyzed him to launch his own flagship billion dollar cannabis brand in BC named after his own controversial Olympic Gold.
21st century celebrities across the ages and spectra have sworn by heightened creativity from cannabis use, and make strong brand ambassadors but there is no proven link between cannabis and creativity. Celebrity endorsements open up another whole landmine of marketing challenges where legal cannabis is not allowed to list benefits or advertise on appeal that might misguide youth or underaged segments. This is important because the largest current consumers of recreational (and total) cannabis are millennials and this shifts towards boomers when the consumption is just medical. Also, the most preferred way to consume cannabis is currently through smoking a joint (57%) whereas among potential consumers a majority (55%) would prefer edibles — signalling huge opportunities across age groups but also for new users (Vividata 2018).
Diverse Consumers Seek Variety
I met a different kind of artist and marketing genius who painted his walls with magical murals of delicious colourful candy and bright hues of googly eyed graffiti in downtown Toronto. G owns Cannabis and Cafe, a cannabis themed coffee shop that gave away free coffee to all visitors on 4/20. He is the type of budtender or barrista everyone wants to go to for all their weed problems. And, he refers them to the nearest dispensary and store for those who find his cafe anti-climactic. It is worth contextualizing his friendliness: According to a 2019 Brightfield Group survey compiled by Lift & Co., 92% of all legal cannabis purchases are influenced by budtender interactions. Even among comparable industries, this statistic stands out as pretty high and probably the highest in all hospitality (non-commission driven) service industries.
Before October 2018, Vividata’s Spring study reveals that most of the cannabis consumers in Canada (68%) were getting their cannabis from friends, followed by private dispensaries (18%) and doctor’s prescription (13%). After legalization, current consumers continued to favour private dispensaries (23%) followed by government dispensaries (18%) and then pharmacies (10%).
Design Experiences!
Walking out of G’s store I understood two things: cannabis had changed retail, and legalization was changing cannabis. Old cannabis relied on stoner culture, memes, icons, rolling a joint, cliques, bro-culture; but new cannabis was everywhere, in your coffee, gummy-bears, lip-balm, powders, lotions, sprays, the works. Multi-sensory experiential opportunities (events and occasions) were truly democratizing a much misunderstood drug that was being swept into the mainstream by big business and capitalism. To understand today’s cannabis consumer especially the new consumer, one needs to research their desired need state. You need deep qual insights that can be generated through design research – which is an ensemble of experiences that allows respondents to co-create their desired cannabis purchase (and consumption) experience in small groups or one-on-one.
Crowd Intelligence Unveils Group Predictions
A simultaneous research approach to tracking market potential is leveraging the wisdom of crowds or prediction markets, to forecast the next big opportunity (or threat) in cannabis. Prediction markets rely on expert and non-expert opinion, so the biases are minimized for some pretty accurate prediction models. For instance, you could ask your crowd whether they think cannabis will poach alcohol sales, and they may surprise you, or you could ask about the success of edibles or the popularity of CBD infused drinks, the rise in car accidents from driving while high or the popularity or adoption of online cannabis purchases.
Behavioural Science Cannabis Insights
Behavioural science insights use psychology to understand consumers’ drivers and motivations but especially their biases including how they feel about the ambience, their cannista or the product packaging. Do consumers feel comfortable in a certain environment, or with a certain budtender, or are they put off by certain human (or technological) interactions and approaches? You can design nudges that aim to deeply understand your consumers throughout their path to purchase and leverage those to keep customers returning to your store. Surrogate branding opens up another host of opportunities for non-users wanting to engage with your brand’s non-cannabis verticals while allowing you to initiate consumers into your core culture.
Future of Cannabis? Green!
If legal cannabis is the next big thing since bitcoin, businesses in North America are keeping a strong tabs on the next big opportunities and threats in this space. Complete federal legalization of cannabis would mitigate the culture wars in the US for a more equitable and comparable trade nationwide, to compete together globally in North America and beyond.
Hemp could be an answer to plastic waste reduction in the oceans as we learn that anything you make from a tree or petroleum or cotton can be made more sustainably and cheaper with hemp, and the legalization of hemp was a starting point in the big inroads to be made in industrial cannabis.
Hyperlocal consumer insights will capitalize on category rituals among increasingly diverse recreational cannabis users. Ganja yoga, cannabis cookouts, elevation church, cannabis and music, are just some examples of marrying cannabis use with cherished user rituals to “engage community and foster discovery”, perhaps drawing parallels with similar or allied industries experts will point out.
More uncanny parallels between the #craftbeer and #cannabis industries in North America and associations are just one way their #innovations take scale: https://t.co/UYPiItxAdj
— Arundati Dandapani (@itadnura) April 15, 2019
According to Gallup, US popular opinion is in all-time favour (66%) of complete federal legalization of cannabis (which by the way is about the similar levels of acceptance we are seeing in Canada). This is probably a reflection of a) desire for change and b) the great work brands are doing in offering education and experiences that are de-stigmatizing cannabis use. Canadians wait for more consumer data and October 2019’s government legislation on edibles, extracts, topicals, tinctures. Cannabis advertising is clearly more mainstream (especially as the legal US recreational markets allow for more categories) in the mature US markets than in Canada’s more discrete or regulated social advertising circles and events. But try following a couple cannabis brands on Instagram and be prepared to be followed back by about fifty and receive (personalized to graphic) Whatsapp and Telegram messages. It is only a matter of time when the marketing problems self-adjust to the evolving regulatory environment as the threshold for consumer curiosity shifts into something more definitive or enduring.
More than ever in times of early stage research and limited or proprietary competitive data, we have a moral urgency to be good for our consumers. As legalization casts a moving lens on consumers’ perceptions, barriers and motivations to achieve desired behaviour changes, we must embrace every user journey with careful depth and preparation. If the future of cannabis is about ushering in a zillion new sub-categories, innovating with retailing platforms, allied brands and micro-brands, we must prepare. Understanding the moral fabric of a people and painting an aspirational canvas around reliable knowledge, diverse data sources, sustainability, socioeconomic equity and overall well-being is where our efforts must channel as responsible marketers. Cannabis attracts diverse value systems steeped in global (and local) legend and stigma as slow-changing regulatory environments compete with fast-shifting market forces, calling for unique cultural insights, research ethics and branding etiquette to be measured. Let’s get right to it!
[I first gave this talk at IIEX North America 2019.]
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