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Is There Room for Celebrity Brands?

We live in a high paced environment in the world of cannabis. It’s a rapidly changing world, where I like to say, “The only constant in our industry is change.

A year ago, it would have been nearly impossible for a new company to find the mysteriously clandestine and ever elusive cannabis growers of California. Now these growers are seeking to be found, forming their own Co-Ops, building their own organizations, and crafting intelligent marketing and branding.

Changes in cannabis are not just happening all over California, they are happening all over the world. We are seeing other states in the U.S. adopt new marijuana laws. More notably, we have been seeing several other countries adopt similar laws and regulations.

Reasonable cannabis regulation is coming to all parts of the world, and recreational markets are taking charge. California will likely become a legally recreational marijuana market this year, just ahead of Canada. On the more conservative side of the industry, we see states like Pennsylvania beginning to adopt medical marijuana laws, and countries like Germany following suit.

Yes, it’s an exciting time to be in the Cannabis Industry.

How flower marketing is changing

Recognizing this trend in softening legislation and greater political acceptance, we see the effects of these changes in every part of our industry — even in the most secretive market segment, growing. Everyone sees California growers developing how their flower is organized and marketed, and its great to see this finally developing. But interestingly, we are also seeing a whole new series of groups come into the industry who are completely changing how flower is packaged, marketed and sold.

Historically, flower (yes, flower is the preferred professional nomenclature in cannabis for the socially adopted term, “weed”) has been sold to retailers in California in bulk quantities. In turn, retailers make a better margin on flower than any other products.

Packaging flower is easier and lower cost for retailers than the cost of packaging any other products in the industry, because retailers can use idle employee labor during slow periods to prepare flower at functionally no cost. However, if anyone else were to package the flower, they would need dedicated labor to prepare and package the product, which would add to the cost.

This brings us to prepackaged flower.

We have some new entrants into the Cannabis Industry who are making waves and bringing some great new products. Marley Naturals (Bob Marley), Juju Royal (Julian Marley), Leaf’s (Snoop Dogg), and others are branding their own quality flower and selling their product in prepackaged containers for quality control and brand development. These new brands give consumers a top shelf product that will appease the pickiest cannaseur, but they also take a notable portion of the margin from retailers (prepackaged flower typically costs the retailer 5 percent- to 15 percent of their margin on it).

So, does this really even matter to retailers? That is the real question.

Maybe a win for everyone involved?

The margin difference is notable in pre-packaged 1/8ths, but it is not dramatic. Bigger picture, these new brands are pricing their packaged flower to sell at a price that leaves retailers with the same margin they enjoy on edibles and other cannabis products.

So, what’s the problem? It should be a win for both, but it will be interesting to see how this plays out.

Personally, I think a selection of these great products is something that retailers should carry on their shelves. Patients like good selection and quality choices. I think anyone would be interested in trying some of these products, even if it’s just for the novelty of being able to delight in a gift that Bob Marley has sent from heaven for us to enjoy.

Retailers typically see the same margin on every other product, so why not try it on your shelf? I would recommend it.

Chris BoudreauChris Boudreau

Chris Boudreau

Chris Boudreau is a entrepreneur with over 15 years of corporate experience that includes senior management developing of a regional sales office for a national lender, executive management overseeing an entire bank loan portfolio, and operational management creating financial analysis models and reports for monitoring business performance. Chris co-founded and developed Calyx Brands, after several years of working in the cannabis space and recognizing the retail dispensary need for a compliant and well developed channel of intelligent marijuana products. Currently serves as Founder & CEO at Sunstone Distribution.

This Post Has One Comment
  1. I would ask the budtender “what’s the difference between the flower with Snoops name on it and the flower without?”

    Answer: nothing … except a higher price.

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