Six Key Differentiation Points for the Cannabis Market in Canada

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The guy blowing the smoke rings was great.  Little ones, big ones, rings within rings -all set to a tranquilizing techno-fusion instrumental.  Hypnotic.  Michael Lee, a talented, expert ‘vaper’ showed off amazing tricks. He gets paid to tour around the world to teach his moves to others, working for some vaping equipment companies no doubt.  A real job in cannabis created out of nothing more than smoke and mirrors.

Mr. Lee was the opener for a segment of ideaCity (http://www.ideacity.ca) that featured the subject of cannabis and various fractals that it multiplies into, including advocacy, business, medicine, and lifestyle.   Cam Battley, the COO of Aurora Cannabis (TSX:ACB), a speaker later in the program, pointed out that Moses Znaimer, the impresario behind the annual conference must have had a crystal ball to know that this segment of his event would take place on the very day that Bill C-45 was signed into law by the Governor-General.  For those without a program, Bill C-45, or the Cannabis Act will, after a 95-year prohibition, allow Canadians to acquire and consume cannabis again.

I’m not sure why, on this auspicious day, attendance seemed a bit thin.  Perhaps, in light of recent industry shows that have been put on, some ‘cannabis fatigue’ is setting in.  Too bad, because had people been there they would have seen some really excellent and eloquent presentations from John FowlerChris JamesDr. Peter M. Blecher, and a cooking demonstration from Ronnie Fishman.  These, and other speakers talked about numerous benefits, cautions, and individual passions and concerns about this exciting cultural change that Canada is about to experience.  I distilled their advice into six key differentiation points for success in the cannabis market, as it pertains largely to cannabis production, sales, and lifestyle.

 

  1. Advocacy and empathy.   We should never forget how we got here.  A few speakers offered backhanded kudos to former Canadian PM Stephen Harper, who, one could argue, was just as influential in Canada’s path to legalization as Justin Trudeau -another story.   It has been a long and difficult battle for the legal and medical advocates who bravely risked isolation and stigmatization, criminal prosecution and jail sentences fighting for the right to grow and consume cannabis.   As the business transitions from the fringes to the mainstream, fears abound that big corporate interests will lose interest in their recreational and medical users’ needs in favour of profits.   Being an advocate means being supportive and understanding of your clients’ reasons for choosing cannabis and helping them make the right choices.   Does your customer work in construction?  Would it surprise you to learn that construction workers are often in pain from workplace injuries, particularly back pain? Fundamentally, I have some degree of confidence in Canadian consumers, many of whom have been acquiring cannabis through underground networks for years, and they will be able to sniff out a fake.

 

  1. Love the product. This should come as no surprise.  Whether you are an entrepreneur or a worker looking for employment in the sector, it helps if you like your product.  In the case of weed, you don’t have to have Cheech & Chong’s first record to be a fan.  But it will help your sales pitch and reduce the anxiety of new consumers if you can communicate your enthusiasm and affinity to the product.  Cannabis is an exquisitely complex plant, with varying psychoactive effects, pain relief effects, flavours, aromas, textures, forms and applications.  Become knowledgeable and communicate your knowledge, countering the misconceptions, ignorance and social stigma.

 

  1. Educate, engage, and entertain. I’ve been calling this the 3 ‘E’s.   Education is key, certainly, but I worry that boring websites, endless scientific copy, and squirrely looking pie charts showing terpene profiles may not accomplish any of these things.   As cannabis is being viewed legislatively as tobacco from a marketing perspective, there are intense restrictions on what can be advertised and communicated.   Use the available media and personal contact to educate, reduce fear, guilt and social stigma.  Recognize that people are generally attention-handicapped and have little patience for technical terms, jargon, or ‘insider’ terminology.  Cannabis, above all, can be entertaining.  Its euphoric effects are well-recognized.  Teach new customers and those ‘getting re-acquainted’ with cannabis about what to consume when you want to sleep or when you want to pull an all-nighter.   What strains pair well with food or wine?  What kinds of food and wine?   What to take for relaxation, pain relief, or mental alertness – yes, alertness.   How can you cook with cannabis and how much do you need?  So many questions.  People will want knowledgeable, fun answers.

 

  1. The retail customer experience matters. Cannabis will now be a retail consumer product, so branding matters, customer service matters. Since sales efforts in Canada have been exclusively directed at the medical market, with their unique needs, some entities, whether through bricks & mortar outlets or online, may be ill-prepared to handle a retail customer.   Both locals and international tourists will need stores to buy and venues to consume the product.  What will they look like and evolve to?  It was shared by at least one speaker the approach currently adopted by Ontario and Quebec, among others, to use a monopoly approach -respectively creating a branch of their existing alcohol distribution apparatus, is short-sighted and ill-suited for retail distribution.  I can’t speak personally about what Quebec is planning, but I for one don’t trust an institution that used to sell alcohol from behind bars as little as 40 years ago to be great retail innovators in this space.  Canada was built by family businesses. This could be and should be a space for entrepreneurs and family-run enterprise.

 

  1. Quality matters. In the rush to producing and distributing cannabis, will it be a race to the bottom, achieving maximum yield and production efficiency, sacrificing everything else? Will people just seek ‘cheap thrills’, continuing to support local underground economies, or will they be become more discerning?    Will they follow ‘weed connoisseurs’ and expert reviewers, similar to the wine and spirits cultures, or will they be just as happy buying bush-weed grown in unknown conditions in the middle of a cornfield?  I’m betting, as are some experts, that quality will matter more than quantity, ‘terroir’ will become important, and a ‘farm-to-table’ approach emerges as a method of communicating product information.

 

  1. Take away the social stigma. More than anything else, consumers, and in my opinion the older, more affluent demographic, which will represent the single biggest growth opportunity for business, will need to gain or regain trust and comfort with cannabis.    Watching my father die in pain and depression, unable to take opiates due to the sickness he experienced while taking fentanyl, but unable to obtain cannabis, left me frustrated.   We can help thousands, if not millions with a change in attitude.  My belief is that businesses who successfully remove the stigma and guilt of consuming cannabis will be hugely successful in Canada and elsewhere.

The information and opinions presented here are that of the analyst and do not represent the thoughts and opinions of this website.  The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.

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