News April 20, 2023
A Distributor’s Guide To Cultivating Sales in the Cannabis Industry
As the legal marijuana market continues to grow, use these stats, strategies, insights and product picks to ignite sales in this maturing segment.
SECTIONS
Sales have certainly sparked at Cannabis Promotions (asi/42996).
The St. Petersburg, FL-based supplier, which (no surprise) specializes in promotional products for the legal marijuana industry, has doubled its business, on average, every six months for the last five years. “We’re on track to do $10 million in 2023,” says Ryan Tickle, vice president of sales.
Cannabis Promotions’ success throws into relief a broader reality: The legal cannabis industry continues to grow in the United States, and with it, sales opportunities for promotional products distributors in the market.
With 4/20 happening this week – the unofficial official holiday of the cannabis community – ASI Media shines a (black)light on the industry with insights, strategy and product picks. Though not without its complexities, the cannabis sector is proving to be an industry with plenty of opportunities for distributors who can gain an understanding of the marketplace and deliver value to clients.
Market Size & Projected Growth
Projections on the exact size and growth trajectory of the legal cannabis market vary, but there’s broad consensus that the industry is growing – even if not as quickly as it once did.
Cannabis industry data provider BDSA reports that global cannabis sales will increase at a compound annual growth rate (CAGR) of about 13% between 2021 and 2026, rising to $55 billion. U.S. cannabis business will account for 73% of global legal sales in 2026. Last year, BDSA believes that legal cannabis sales in the U.S. jumped 6% over 2021 to about $27 billion.
$33.6 billion
Predicted size of the legal U.S. cannabis market in 2023 – a forecasted year-over-year increase of 12%.(MJBizDaily)
Challenges related to factors like supply glut in more mature marijuana markets like California, Washington and Oregon, as well as a lack of federal legalization reform and continued issues around banking for the industry, mean the market isn’t accelerating sales as rapidly as it once did, analysts say. Still, continued state-level legalization initiatives and growing patronage in new and recently legal states are helping to keep overall expansion opportunities blooming.
MJBizDaily, which has provided cannabis business information since 2011, also is forecasting growth. It says combined U.S. medical and recreational cannabis sales could reach $33.6 billion in 2023, what would be a 12% year-over-year increase driven especially by the opening of new adult-use markets. Medical/recreational cannabis sales may tally $56.9 billion by 2028, with an additional economic impact of $170.7 billion from the industry in that year, MJBizDaily reports.
The outlook for the adult-use recreational side of the U.S. marijuana industry is strong, at least for the near term, “as states with the potential for massive markets, such as New York, work out the final details to launch programs that have been approved,” MJBizDaily says, noting that recreational revenue alone could tally $22.5 million this year in the U.S.
Product Pick: Clipper Lighters
Refillable clipper lighters like this model (C-CLIP) featuring vibrant logos make popular merch items in the legal marijuana market. These get up to 3,000 lights per fill. From Cannabis Promotions (asi/42996)
Legal Complexities
If one word could sum up cannabis’ relationship with the law, it might be this: Complicated. Cannabis remains illegal at the federal level. The Controlled Substance Act prohibits the manufacture, distribution, dispensation and possession of marijuana.
While illicit federally, states have taken varying approaches to legalizing cannabis to different extents within their borders, creating a complex patchwork of regulations across the nation. The legislative complications include sundry rules regarding how products can be marketed and advertised in states where some degree of cannabis consumption is allowed under state law.
The Legal Landscape
This map shows the legal status of cannabis under state law in each state.
As it stands, 21 states have legalized cannabis for medical and recreational use. Other states have allowed cannabis for medical purposes, but rules on qualifying conditions vary. The legislative picture is often changing: Kentucky just approved medical marijuana this year, while Rhode Island, Maryland and Missouri green-lighted recreational adult use in 2022 legislative measures.
The upshot for distributors is that it’s wise to be informed about the legalities in states where you’re delivering merch solutions for cannabis brands – and then apply that knowledge accordingly. “You don’t want to provide rolling trays and papers, for instance, in a non-combustion state – one that doesn’t allow cannabis to be smoked,” says Justin Herman, president of OnPoint Promotions (asi/466954), an affiliate distributor of Top 40 firm iPROMOTEu (asi/232119) that generates approximately 50% of its business with customers in the cannabis space.
Promo pros don’t have to go it alone on legalities. Brittany Walterscheid, proprietor at New Mexico-based distributor Pecos River Brand Co. (asi/439020), suggests partnering closely with key individuals at cannabis clients who are already steeped in the legalities in states where they operate. That will help ensure promo initiatives are within allowed legislative frameworks.
“Work with the company’s marketing and compliance manager,” says Walterscheid. “Become an extension of their team.”
Despite the state-to-state variability, there’s a good rule of thumb to follow when marketing and advertising cannabis clients, says Tickle.
“The most important thing is to make sure you’re following laws to protect children,” he says. “Everything from child-resistant packaging to making sure the packaging doesn’t appeal to children. You don’t want to make cannabis packaging for cannabis gummies that look like Sour Patch Kids. Always check the laws in every state.”
Product Pick: Rolling Trays
A simple-but-effective giveaway for this market is a tinplate tray used for rolling joints. From Cannabis Promotion Group (asi/43038)
10 Strategies for Sales Success in the Cannabis Market
For cannabis market companies, promotional products can prove an important means for distinguishing themselves in an increasingly crowded field. Here are top business-building strategies for distributors to follow to help such clients, straight from industry pros already finding success in this niche.
1. Know the Client Scope: There are a variety of players in the cannabis industry that are potential merch customers. Medical dispensaries sell to patients with prescriptions. Recreational dispensaries can sell to adults. Growers/processors make the product and may sell to dispensaries; some may also have their own dispensaries. Companies that provide equipment and agricultural products used in cultivation are also in the mix. So are doctors that can issue scripts as well as organizers of industry trade shows. Cannabis testing labs feature in the milieu, too; they test product to, among other things, ensure it’s safe for human consumption. Also, don’t forget about CBD oil brands. Take time to learn about the unique merch/marketing needs of each and then craft solutions based on that.
2. Understand the Terminology & Be Real: What does it mean when something’s “dank?” What’s dabbing? What’s a bubbler? If you don’t know, you better find out about these and other common terms used in the cannabis world before pursuing business in the niche. Ignorance will be sniffed out quickly and you’ll come off as an outsider.
To that point, distributors that support the cannabis industry could have an easier time cracking into the market and building sales, as they may be more relatable and seen as authentic, say promo pros already working with cannabis clients.
“I can sell to a dry cleaner without knowing much about dry cleaning, but in the cannabis world you need to know about cannabis to be trusted,” says Nancy Gudekunst, president of Oregon-based Higher Promos, a distributorship founded particularly to work with marijuana industry clients. As part of its efforts aimed at being a true partner to the industry, Higher Promos supports cannabis advocacy organizations like NORML through means that include financial donations.
Product Pick: Sustainable Packaging
Products used for packaging marijuana, such as bags, jars and tubes, sell in high volumes, and there’s increasing interest in sustainable packaging. This 3-oz. custom hemp plastic jar (CT-HPJ3), which is biodegradable and 100% recyclable, is one of the hot items in the category. From Cannabis Promotions (asi/42996)
3. Look Locally: To start stoking sales in the cannabis sector, consider identifying potential clients in your area. Many are keen to work with nearby small and medium-sized businesses. “Being local is big,” says Pecos River Brand’s Walterscheid. “In my experience, they always want to support the community and that includes other local businesses.”
4. Be a Brand-Building Partner: Competition in the cannabis market is stiff. Strong branding is necessary to stand out from the pack. That should be music to the ears of distributors who can play a vital role in helping shape and advance clients’ brand identities by serving as consultative marketing partners.
Become such a partner by taking time to understand what’s singular about each client or the particular initiative they’re undertaking – what makes their story compelling. Then, help tell that tale through creative graphics and messaging on products that are a good fit for each of the client’s marketing efforts. To that point: Always know and understand the end-user, how the client wants to influence them, and the context in which those recipients may be receiving/buying and using the merch.
Distributor Andrew Nunes provided this bamboo fan for Coast Cannabis Co.
“Clients are often wearing a lot of hats,” says Andrew Nunes, president of CB Disco (asi/173050), a Massachusetts-based distributor that works extensively with cannabis clients. “They know they need merch, but they don’t necessarily have time to think about what will work. That’s where I come in and try to be a marketing resource. By doing this, you deliver value.”
Quick Tip: Cannabis-specific products like rolling papers and grinders aren’t just for cannabis companies. Any entity keen to influence a marijuana-friendly audience can potentially gain marketing traction with the items. Think bands/musical artists, festival/concert organizers, and even certain wellness/spa centers.
5. Deliver Swag Solutions for Events: There are no shortage of events and in-person happenings that cannabis companies participate in and for which they’ll need merchandise. Think lanyards, branded apparel for client representatives, and in-booth giveaways for industry-specific trade shows. The giveaways can be cannabis-focused products but don’t have to be; Walterscheid, for instance, says pizza cutters and chip clips have been a hit. Pens, lip balm, T-shirts, and clear logoed bags could also be winners.
Meanwhile, other events clients may participate in can include festivals/concerts where marijuana paraphernalia products like lighters and rolling papers, along with stickers, pins, sunglasses, T-shirts and headwear, could be a good fit. Flying discs, can coolers, sunscreen, feather flags, and information leaflets could work for state fairs and community events in which cannabis brands participate. Clients could also be involved in event sponsorships for which they’ll want swag.
Notably, some cannabis clients will do pop-ups at dispensaries to promote their brand or a particular new strain of marijuana; rolling papers, grinders, stickers, hats and rolling trays are among the goods that could significantly help bolster the marketing effort. So could providing products like pins or pens with backer cards that feature info about the brand and/or new strain.
Indeed: Last summer, Nunes provided several thousand custom branded bamboo fans for Coast Cannabis Co. The fans were given out, in part, at hot and humid summer events so attendees could cool themselves – a deft bit of merch-marketing in that the fans were attractive and conveyed the Coast brand, while also being useful to end-users. “They were very popular,” says Nunes. “People are still mentioning them.”
Product Pick: Grinders
Grinders like this zinc alloy product (CGRIND05) with a magnetized lid are used to break apart marijuana into smaller, smokeable bits. Recipients can use the items to grind herbs, tobacco, tea and the like as well. From STOPNGO Line (asi/57655)
6. ‘Brand Everything’ for Dispensaries: Says Tickle: “Walk into a dispensary and find out what they’re carrying that isn’t branded. Everything they sell should be branded. It’s a very similar cost and they’re going to have a lot of competition, so branding is everything.” Items for packaging products like jars, tubes and bags should definitely be logoed.
7. Create Merch Clients Can Sell: Herman and the team at OnPoint Promotions like to flex their creative muscles to help dispensary clients cleverly brand products they can then retail to their customers. Distributors should emulate the effort – and in so doing become a partner that helps clients generate revenue from more than just their core cannabis offerings. Trendy T-shirts and headwear – including bucket hats and five-panel caps – are among the swag items that can feature in a dispensary’s retail line, along with products used in the cannabis consumption process.
For one customer, Pecos River recently developed, printed, packed and shipped 15 different apparel SKUs for the company to sell in its dispensaries. To further refine the positive impact of the line, Pecos River then “provided data reports on top-selling items and developed the replenishment program based off those reports,” Walterscheid says.
Product Pick: Rolling Papers
Rolling papers can promote a variety of cannabis businesses, including growers, recreational adult-use dispensaries and marijuana trade shows. The sleeve on the booklet of these standard 1-1/4 size rolling papers (LEAF000) can feature full-color process imprints. Available from Tekweld (asi/90807)
8. Provide Client Apparel & Uniforms: Apparel, including caps and headwear, accounts for about 43% of total North American promo distributor sales, ASI Research shows. Small wonder then that cannabis brands are eager for the items, too. Beyond including garments in cannabis client retail lines and giveaways, distributors can also provide wearables as part of company apparel and uniform programs.
Walterscheid, for instance, has a customer that cultivates marijuana and owns dispensaries for which she has provided a private label apparel program. Executives received sharp Columbia golf items. Cultivation workers were outfitted with products that included moisture-wicking tees. Budtenders – folks who work with customers in the dispensaries – received lanyards, long-sleeve T-shirts and hooded sweatshirts.
9. Rev Up Reward & Gifting Programs: These can be internally and externally focused. For instance, dispensaries and growers/processors may want to thank employees for achieving certain goals with swag that can include a wide gamut of products, such as clear backpacks and reusable water bottles. Meanwhile, dispensaries could thank loyal customers who spend a certain amount in a shop with a branded gift. Similarly, testing labs can show appreciation to clients with merch-filled kits.
10. Help With Brand Launches: When a cannabis provider debuts new a strain/brand, they need to get word out. Distributors can help raise the visibility of the novel offerings with timely merch. Herman did just this last year, when he came through on a crunched timeline to provide items like staff T-shirts, enamel pins, rolling papers and grinders for 35 different locations when a client launched a new brand.
Case Study: Think Custom
Coming through for the client gave Justin Herman a high.
The president of distributor OnPoint Promotions recently got his creative juices flowing to build from scratch a custom nylon hat for a dispensary customer that was celebrating its company anniversary.
To make the unique headwear, Herman sourced a nylon material in a color that was an exact PMS match of the company’s branding. He also worked to have a completely custom patch for the hat made separately. Herman then coordinated closely with vendors on the production of about 7,000 of the hats. Delivering on time, the headwear was given away at each of the dispensary’s approximately 60 locations. Says Herman: “The hats got a great reaction from our customer and their customers. It was a really successful project.”