Since its legalization in Colorado in 2014, the cannabis industry has grown exponentially, with 2021 sales skyrocketing nearly 40% more than 2020, reaching an estimated total of $25 billion (PreparedFoods). It takes experts to adapt to the industry’s ever changing consumer preferences, marketing censorship and design best practices.
Ellen Bruss, Kate Lucks and Steph Bruss from the EBD team gathered with LeVon Terry, CEO of Capfluent, Amanda Fox, Co-Founder of Lova and Scott Calliham, Co-Founder and President of Collective Hemp, to share insights on this intricate industry.*
When did you start working with the cannabis industry and how has your role evolved? What drew you to the industry?
LeVon Terry: I got involved in the cannabis industry in 2015. For me, the draw was not about a passion for the plant and more about the opportunity to be a part of an emerging industry. Having spent the first part of my career in the world of investing and finance, the opportunity to participate in an industry with no established norms or entrenched players intrigued me. I wanted to apply my knowledge and expertise in new ways. While I initially thought my skills would be best suited as an operator, I quickly realized that many cannabis companies lacked the sophistication and know-how to access the capital necessary to sustain and/or grow the business. Today, I work alongside founders, management teams and investors to maximize the value of their cannabis enterprises.
Amanda Fox: From the moment legalization happened in Colorado, I knew I wanted to work in cannabis. Five years later, I moved to Colorado and began doing my own research on the category by visiting as many stores as I possibly could. At one point, I had been in every store in the Denver Metro area and realized I could make an impact from a marketing and design perspective. I’ve always been drawn to emerging industries where you can build something from the ground up. I like being part of the change and, in this case, seeing plants, people and communities grow. I’ve been in the industry since 2017 so going on five years. Cannabis years are really like dog years so it feels like 30+! It is not for the faint of heart. As an owner, it’s important to try as many roles as possible so you know what you are asking others to do. I’ve been a bud-tender, managed stores, purchased and received products, renovated stores, changed point of sales systems and much more. The best part is growing teams and growing to be a more strategic thinker and executor.
Ellen Bruss: We started working in cannabis in the summer of 2013 with O.pen Vape, which became a major brand in the industry. This was prior to legalized retail sales in Colorado in January of 2014, so we were able to set the stage of how the brand could take the industry to a new level. I was drawn to the industry because it was a new frontier, with products that had never been marketed. Our clients were coming from other industries, so not very many had retail knowledge. They came to cannabis because they saw that it was helping people, be it their mother’s cancer or a friend’s chronic pain. It was exciting to create strategic brands and use our retail knowledge to elevate the purpose driven work our clients were doing.
Steph Bruss: I’ve worked with the cannabis industry since I moved to Colorado three years ago. Experiencing the industry from both brand and agency sides allows me to really see the passion that goes into making these products from all angles. I was drawn to the constant change and growth of the industry so I’ve stuck around ever since.
Kate Lucks: While at EBD, I’ve been working directly with founders in the cannabis industry to bring their products and dreams to life through Tinnie & Smalls, our in-house cannabis design studio. Prior to that, I experienced the industry evolve since Colorado went Medical in 2009 and my longtime friends started The Clinic Colorado. I witnessed firsthand the triumphs and pitfalls of starting a business in an emerging industry. My husband also works in the industry, so cannabis is very much a part of our dinner-time conversation.
Scott Calliham: I’ve been involved in the industry since 2014 when we obtained one of the first Recreational/Adult Use Product Manufacturing Licenses in Colorado, where adult use was first legalized. I’ve stayed on the rollercoaster ever since!
How does your approach to branding and strategy adapt from traditional CPG when designing a cannabis brand?
Ellen: The biggest difference is the amount of rules and regulations surrounding cannabis, both on the packaging and in store. It is by far the most complex packaging we do. The regulations also affect what we can do on social media and advertising. In the early days, we would get packaging to the printer and the regulation would change because Colorado was ground zero – working out the details and moving at the same time. It was a very complicated process for the O.Pen Vape team. Their belief in what they were doing kept them going, but it was challenging and many companies did not make it.
Steph: Cannabis branding and marketing strategy is becoming increasingly closer to traditional CPG as brands develop products that meet a narrower set of consumer needs. More mature pricing strategies, measurable marketing activity and retail footprints help establish brand equity. In a market with low brand loyalty, cannabis brands can set themselves up for future success by building brand equity now.
How do you cater to a wide range of cannabis consumers with varying levels of product knowledge and experience?
Scott: Constant and consistent education, and don’t assume consumers have a depth of knowledge or experience. They will let you know if they are already aware of the information you are communicating, but they won’t tell you about what they don’t know.
Amanda: At LOVA, we designed our retail stores to have three distinct paths or shopping experiences. We have experienced customers who can place a pre-order or walk directly to the counter to purchase. They know what they are looking for and often times they want to speak one-on-one with a bud-tender about specific strains, terpene profiles and more. In every store, we have an experience room where customers can walk around freely and look at display products to learn more on their own. In each experience area, we have interactive iPads where customers can take quizzes and learn more about products from our catalog. Lastly, each store is set up for a direct one-on-one experience so, if a customer needs a full education, our bud-tenders can give them their undivided attention and answer any questions they have. We make sure to have display products of every product in the store and our bud-tenders are required to take our in-house training program to learn about the new products, try them and give feedback. The industry is evolving quickly and we are constantly updating our stores to include more educational materials and opportunities for the customer to learn – whether they are brand new or have advanced knowledge of cannabis.
As the cannabis industry grows rapidly, how can design be utilized to differentiate brands from one another?
Ellen: Design and messaging are key to any brand’s success, they tell your story, explain who you are and create a mood. Having a consistent story about what you are doing is the most important thing you can do.
Amanda: Design is at the center of differentiation for any brand, especially cannabis. Cannabis is unique in Colorado where dispensaries have access to many different types of products and there aren’t as many supply issues as in other states. Thus, the brands and stores have to be differentiated for customers to choose them. If a product stands out on the shelf, a customer is more likely to ask about it and purchase it. That is why at LOVA, we put so much emphasis on our lighting, the location of our display areas and the heights of our shelves to showcase various brands. Our bud-tenders are really ‘bud-masters’ as we like to call them. They are the customer’s guide and support in making purchasing decisions. If a store is set up in a way that makes it easy for a bud-tender or customer to see your product, they are more likely to purchase it. If a customer had a good experience or liked the look of a brand’s packaging, they are more likely to tell a friend and that becomes organic growth.
Steph: Brands can differentiate with design that builds off consumer insights unique to their product and brand. They should also be able to extend past packaging to digital assets and other creative touchpoints.
Scott: Packaging design and digital communications design around the Customer Value Journey are paramount to success. This is now a very sophisticated consumer marketplace and if you don’t distinctly differentiate and connect at a visceral and emotional level, you fail.
As cannabis-related consumer products become more widely available, how do you establish your credibility in an ever-growing field?
LeVon: The consumer marketplace has a number of challenges, the first of which being regulatory. In a market where regulations vary from state to state and even county to county, it can be difficult to establish your voice (and therefore credibility) as a consumer brand. In my experience, companies that find ways to engage with consumers directly have had the most success. Whether that engagement is in the form of in-store activations, online dialogues or other forms of brand representation it has to be authentic and it has to feel like a fair exchange of value to the consumer.
Marketing for cannabis brands is incredibly nuanced due to advertising regulations, how do you shape brand communication strategies to effectively communicate with consumers?
Steph: Compared to a traditional marketing mix, cannabis marketing is still focused on consumer relationships in omnichannel marketing. Direct consumer interactions, word of mouth marketing and first party data are still incredibly effective. Marketing activity to support this includes bud-tender education, events, organic social growth, loyalty programs, apps and email marketing. More mature brands are starting to leverage sponsorships to build out a brand narrative, but these are often cash-intensive activities.
Ellen: We do a lot of research on what is going on in the industry and we very clearly target who we are going after. Every piece of packaging, sign and word you say should speak to that audience. With the regulations, we have to be creative as to how we get that messaging out.
What are the biggest factors driving change in the cannabis industry?
Amanda: Acceptance and understanding! As with anything, once people start to accept something they have been unfamiliar with or learn more about a topic they didn’t quite understand, the stigma gets released. With positive results for medical patients and more opportunities for people to consume cannabis safely, it is only a matter of time before federal legalization happens.
Kate: Emerging recreational markets are one of the biggest factors driving change in 2022 and beyond. The limited number of licenses in these markets are mostly being held by Multi-State Operators with limited product lines. There will be a need for diverse brand differentiation by all license holders, especially regional license holders, to gain market share as there are fewer companies fighting for consumers who are being introduced to cannabis for the first time.
LeVon: Again, I think the driving force in our industry is regulations at all levels – federal, state and local. Regulations will dictate the rules of engagement between the brand and the consumer. I also think that access to capital will continue to shape the industry. As barriers to entry become higher, there will be a greater need for collaboration, creative financial solutions and strategic partnerships that do not exist in other industries.
Steph: I think everyone is vying for their place as the next Procter & Gamble or Coca-Cola of the cannabis industry, with a focus on value creation – for the consumer, for M&A and new product innovations.
Scott: Obviously, the impact of global legalization efforts, but in a more nuanced manner I’d say the rise of the strong, successful, educated, health-conscious female consumer demographic, as well as woman-led cannabis businesses beginning to stridently influence the course of the industry. That is a beautiful and powerful thing to see evolving along with the rest of our cultural norms.
What role does design have in shaping the cannabis industry’s next steps?
Ellen: Design has become a key element in what makes a product successful. Our grandparents bought products because they were good, now if you have a bad brand, consumers equate that with your product. If you have a well formed brand that tells your story, it says to your consumers that you are serious about your product. Now more than ever the quality of your brand can mean success or failure.
Steph: Unlike more established industries, the cannabis industry still lacks a distinctive visual identity. Looking at the wellness category for example, it’s very easy to picture packaging with a vibrant, mature color palette with nods from fashion or luxury nods and visual cues that showcase ingredient transparency and simplicity. With a relatively blank slate, new cannabis brands can develop visual identities for emerging consumer sets that not only support their unique brand positioning but also shape consumers’ view of the industry as a whole.
Kate: Gone are the days of appealing to only one genre of buyer, the legacy-user “bro”. Various buyer profiles have emerged with wide scale legalization and consumers are testing the waters more and more. Design will continue to have to evolve with these additional audiences to be able to compete on shelf. Sustainability with packaging will also need to be addressed by the industry. Overall, the cannabis industry has been red flagged by environmental groups as being one of the biggest offenders of single-use plastic packaging. Child-proof, regulatory compliant, recyclable alternatives are emerging and smart designers can help implement change by utilizing and promoting these alternatives to clients.
What are the elements of a successful cannabis retail brand?
Kate: Longevity and a full “kit of design parts” are helpful when designing a cannabis retail brand. In the early days of the industry, you could slap a logo on a plastic tube and your product would fly off shelves. Brands were also regionally centric, especially in Colorado. Now consumers in existing markets are much more sophisticated and aware of the potential uses and nuances of various cannabis strains. Branding will need to continue to evolve to meet consumer expectations – especially at a high price point. Brands should also utilize sustainable packaging and be able to appeal nationally due to consolidation of brands and the inevitability of federal legalization. In addition, there is a pressing need for more product training tools in emerging markets. From the retail experience, to Point-of-Purchase materials, to educated bud-tenders who teach 1st-time consumers, marketing materials and product information is essential for brand loyalty. Digital, consumer-friendly, on-brand resources are also extremely important to ensure brand success.
Scott: Amongst literally thousands of retail and medicinal brands competing for consumers’ attention, you simply must decipher your demographic’s needs and figure out how to fulfill those better than anyone else. This takes a deep understanding of your customer archetype/avatar and relentlessly pursuing them with distinctive and targeted marketing messages. Digital design matters in shaping their impressions of your brand more than you’re probably imagining.
Ellen: This is very similar to the CPG market. Consistency across all platforms is a way to differentiate your brand from competitors. Achieving it means that your consumer will recognize your brand whenever they see it. And that recognition builds every time they see you in the market.
*Please note that elements of this text have been altered for readability