Canadian Cannabis Will Likely Succeed, But…

 

I have little interest in Canadian cannabis and the legalization of pot, which occurred on October 17, 2018. Last Christmas my stance only solidified. My family was discussing cannabis and I voiced my strong opinions. My brother withdrew from the room and returned with a brownie, which he offered to me. When I had finished gobbling it up, he smiled and said “It was medicated!”

An hour later I was jollier than St. Nick, giggling uncontrollably like a school girl, had an attack of the munchies, and was totally sponging out!

No. I’m not crazy about pot. But when I was given a free ticket to attend last January’s IABC/Toronto’s Cannabis Communication Interactive Discussion, I thought, Why not? The event was hosted by Scott Davidson—Director of Strategic Communications, The Supreme Cannabis Company—and Ashley Chiu—Senior Consultant and Risk Research Leader, Cannabis Industry Ernst & Young. And I’m glad I attended.

Some interesting facts discussed by the presenters included:

• $22.6 B Canadian market, including ancillary (2021)
• $8.6 B estimated Canadian demand; illicit, medical, adult-use (2018)
• $2 B Canadian tourism revenue
• $3.8 M non-medical Canadian consumer (2021)
• ~800,000 estimated patients in future medical market
• 149+ publicly listed cannabis companies on Canadian exchanges

From a communicator’s perspective, what captivated me the most about the discussion was learning about the challenges that companies have, and will have, promoting Canadian cannabis products. There’s the potential for huge growth in the industry, but that growth won’t be as a result of free-wheeling advertising. At least not initially.

For the most part, advertising is just not possible at this time, and there are also stringent packaging and labeling requirements in place. Indeed, Davidson and Chiu argue, cannabis advertising—or lack thereof—is even more regulated than the tobacco industry.

According to Davidson and Chiu, the Cannabis Act prohibits promotions that target people under 18, and promotions that make marijuana use look glamourous and exciting. Canadian cannabis producers can’t even talk to the end customer about things like price or how the product will make them feel, until the point of sale!

Davidson and Chiu also argue that in light of advertising restrictions in place, Canadian cannabis companies unable to, say, take out a billboard in Yonge-Dundas Square, have to choose different channels. Davidson and Chiu say this largely involves social media, especially if companies are targeting millennials.

But hang on! Social media companies such as Facebook, Twitter and LinkedIn have policies in place that limit or restrict the promotion of drugs. The same is true of native advertising platforms and Google, so running a Google Ads campaign for your pot product may not be possible. (This article discusses possible ways to get around promoting pot digitally.)

This Financial Post article, adds that promotions in publications, such as newspapers or magazines, are allowable under the Cannabis Act—if the target audience is 18 or over. Place-based advertising is also okay in establishments, such as bars, or areas where people under 18 do not frequent, which is why billboards in Dundas-Square is a no-go!

How do Canadian cannabis companies differentiate themselves with both hands tied behind their backs in this way? Davidson and Chiu argue that rather than, for example, positioning themselves as a discount brand (“Well, if your product’s cheap, what distinguishes you from any other pot company?”), emphasis should be on creating a strong product.

“Cannabis is a consumer product,” Davidson argues. “All of the flashy packaging and exclusive events won’t work if your product is no good.”

Davidson and Chiu stress that differentiation will only occur with a superior product. If Canadian cannabis producers get the end product right, this will resonate with consumers.

Were there no restrictions on cannabis advertising, marketers would have fertile ground for telling stories—like my cannabis Christmas story—that amuse, inform and convince consumers to buy their products. What I find most interesting about the Canadian cannabis industry is its incredible prospect of growth in light of the restrictions placed on it.