Contentious PR: Taking the cannabis industry out of the weeds

by | Jul 7, 2017 | Analysis, Public Relations

Just recently I spoke at the Cannabis World Congress and Business Expo in New York City. The topic of my talk revolved around marketing, branding and communications for legal cannabis companies. To say that my presentation was contentious is an understatement.

Why was a conversation about public relations and marketing so antagonistic?

To answer this question, one has to take a look at the dichotomy between the black-market cannabis industry and the legal one that has sprouted up in more than half of U.S. states.  Right now, legal cannabis is one of—if not the—fastest growing industries in the U.S. According to a recent article in Forbes, the legal cannabis trade accounted for nearly $7 billion in sales in 2016:

“North American sales are projected to top $20.2 billion by 2021 assuming a compound annual growth rate of 25 percent…

To put this in perspective, this industry growth is larger and faster than even the dot-com era. During that time, GDP grew at a blistering pace of 22 percent. Thirty percent is an astounding number especially when you consider that the industry is in early stages.”

That is a massive market, and phenomenal growth. Yet the illicit cannabis trade dwarfs this figure. Nationally the illicit marijuana—I choose that word specifically—market is $20 billion right now, with 10 percent of that market coming from New York City alone, according to stats from CNBC.

So what was the crux of the argument when I spoke? It was around issues of word choice and how companies participating in the legal cannabis trade talk about themselves, name themselves and communicate to the capital markets, regulators and consumers.

My company, KCSA Strategic Communications, has been working in the legal cannabis sector for nearly a decade. Our clients span the entire supply chain: from people who grow the plant, process it and sell it, to packaging companies, REITs, consultants and investment banks dedicated solely to the legal cannabis industry. Not many professional communicators have such a wide view on an entire industry. And what have I learned?

To be effective as brand marketers, we always counsel our clients to communicate not as the company they already are, but the one they aspire to be. This means that companies making edible candies should communicate less like “pot companies” like Weed World Candies but more like M&M Mars.

Why should legal cannabis companies not embrace the black-market past of the marijuana industry, especially when the illicit market is so much bigger than the legal one?

It comes down to a few factors: regulation, money and consumer adoption.

Regulation

The cannabis industry is, well, “oddly” regulated. While cannabis is legal for either adult or medical use in more than 26 states and the District of Columbia, representing more than 70 percent of the total population of the U.S., on the federal level it is still a Category 1 illegal drug, alongside heroin and cocaine. Given that U.S. Attorney General Jeff Sessions has a long standing and unfounded dislike for marijuana, the industry doesn’t need to feed into his haze of Reefer Madness.

Money

With sales topping $1 billion in 2016, Colorado generated more than $200 million in sales tax from legal cannabis last year.  California is projected to generate more than $1 billion in revenue from sales of legal cannabis.  With this kind of money, the investment community is chomping at the bit to get involved.  For the moment, though, companies that touch the plant can only list on the OTC exchange in the U.S. and don’t have access to the NYSE or NASDAQ.  As soon as this changes, there will be billions invested in the legal cannabis trade.

Consumer Adoption

The new cannabis consumer is not the Cheech and Chong stoner of 30 years ago. The new consumer is younger, wealthier, increasingly female and is not looking just to get high. According to several recent studies, today’s consumer most probably won’t even roll a joint to consume cannabis. She will eat an edible or smoke a vape pen. Communication to this new consumer as a traditional packaged goods company would be more effective, rather than simply marketing cannabis brands to the traditional “stoner dudes.”

When I said this the reaction from the audience was mixed. For the new professionals entering the cannabis industry from banking, CPG, technology and other more mature industries, my comments resonated with them. For the legacy, former black marketers, what I said pissed them off, a lot.

These black marketers were proud of who they were and that their industry is finally being taken seriously, and they didn’t feel that they needed to change in order to benefit from their new-found (semi) legitimacy. And I get that. But with progress comes change and change makes people uncomfortable.

In the end, the issues will be resolved by regulation and the market. And having worked with hundreds of companies, across dozens of industries, I’m confident that I’m right. Time will tell.

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Lewis Goldberg
Lewis is a Managing Partner at KCSA Strategic Communications, an independent public and investor relations agency. He has been at the forefront of the burgeoning marijuana industry and has been a leading communicator for companies looking to leverage the business opportunities surrounding this new market place.

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