Quick, hide the stash!
I confess, I still have that Fabulous Furry Freak Brothers reflex about the cannabis segment. And for we aging ex-stoners, legalization took a lot of the counter-cultural fun out of it. As a nascent CPG, weed is in limbo, far beyond former infamy but just as far from mainstream legitimacy. While our professional world is a bit “cann-curious” about the marketing potential here, the cannabis industry remains so shackled by fragmented state-level regulation and national illegitimacy, its marketing remains undeveloped. You can listen to the entire podcast at this link.
So, what is to be learned here? Let’s take a dose with Wana, which is among the most recognizable and widely distributed edibles brands in North America, founded in 2010. CMO Joe Hodas has been involved in various aspects of the cannabis industry for almost a decade. He’s been on the agency side at Ogilvy PR and in mainstream marketing at Frontier Airlines and Smash Burger.
MediaPost: Walk us through the Federal prohibitions and State legalization protocols that constrain your marketing ambitions.
Joe Hodas: Of course, it's still federally illegal in the US, federally legal in Canada. So that creates a state regulatory environment outside of the Federal Government. But with no federal legalization, you can't have interstate commerce, you can't move product from one side to the other of two contiguous states. So, what happens is that brands like Wana that want to take and move that to a new state, we've got to find either a license in that state or build on a separate facility. We partner with somebody in the state who has the facility and the license, and we license our brand or SOPs, all that good stuff to them in that state. But that ends up meaning that we're in fifteen states. Guess what? We have fifteen different facilities, probably of those fifteen, about thirteen or so are different partners. And we're managing all of them and are trying to maintain brand consistency when in the meantime, each state also has different regulations around what does the packaging look like, what is the dosage allowed, how is product transported from A to B to get it to the dispenser. It's a big challenge. And that's really like I said the tip of the iceberg for all the various challenges that we face in this industry from a marketing perspective.
MP: But one of the aspects of cannabis marketing that I think will surprise most marketers is where you have to focus most of your attention and allocation. It's remarkable how it boils down to one main channel of influence.
Joe Hodas: Yeah, far and away the biggest channel and the biggest opportunity we have is at the store, at the dispensary, with the budtenders, on the floor. Because we can't necessarily achieve scale. So, let's say you're thinking programmatic, and you want to advertise your brand, your product across the country. This is not really that effective because I can't ensure that I'm driving traffic to a specific store to go buy my product. What ends up happening is that I can maybe create desire or the want for my product, and they go to the dispensary and the budtenders says, well, yeah, we have these [other] products on special this week for $10 less. I like it a lot better. 70% to 80% of the consumers are going to go, okay, that sounds great I'll have that product. So, all of a sudden, I'm paying to drive traffic to the store to sell someone else's product. I mean, we do some programmatic that’s really skew specific, or we have certain promotions we're looking to do. But by and large the majority of our budget goes towards budtender training and swag.
I think swag is our biggest line item right now, which is so rudimentary for most marketers, but it's important to make sure that the budtenders feel proud. Those budtenders want to feel good about their products for sale. They have to be knowledgeable and understand, particularly for a brand like Wana, that we have highly formulated products that have really significant differentiators. It's not just a gummy and so we have to make sure they understand that and how to sell that product to the consumer. So, if the folks are already in the store, the budtender is making those last miles for the influential decision for the consumer. So, that's where I need to put the most of my time and resources.
There are a lot of digital touch points that we've been able to implement both as Wana, but also as an industry. That allows us to not only have the interpersonal interaction when we drop off lunch and swag for budtenders, but also to really reinforce the brand messaging, and also the education. That is so key right now, because this is a very new industry for most people. And I think education is something that isn't going to go away for a long time, both for the consumer and the budtender.
MP: Let's drill into some of the basics of marketing here. Start with your customer. Profile your customers. Who is the target or the major niches that you're aiming for?
Joe Hodas: What we do is we focus our products based on use case more so than demography. So, I do know that my audience skew is slightly female. I do know that my audience skews a little bit older, sort of the over 30, because our products are premium, and therefore they cost a little bit more. It's hard for us to gather primary consumer data because we don't control the point of sale at the dispensary. What we really believe is [to follow] the use cases that our products help to support. We have an edible that is fast-acting. We approach that by saying, what's the occasion you're using cannabis for? If it's X, Y or Z, this might be the right product for you. We make a line of what we call Optimals. One of our best-selling products is our two versions of sleep products. So, you're not male-female demography identified, but we know you have a sleep problem. This is a product that can help resolve your sleep problem. So, we really think of it from a use case perspective more so than we do from anything else.
MP: So, in the end, what sort of traditional advertising can you do?
Joe Hodas: Well, there is some. And it's a question of the effectiveness of that advertising. So, we have access to a much more robust programmatic platform than we used to. When I first started in this industry in 2014, no one would allow cannabis advertising on their mainstream publications. Now, if I do a programmatic buy, I have access to thousands of media platforms and sites. But where I am challenged is how effective is that? I can only use that really right now as an awareness platform. I can't measure the conversion. I can't even drive to conversion. I can drive somebody to my website where I have a cart through a company called I Heart Jane. So, you can put my product in a cart through our website, but then you have to go pick it up at the dispensary. You don't pay for it through the website, you don't actually buy it; it doesn't get shipped to you. You have to reserve it, and then you go to the dispensary to pick it up. Do they go to the dispensary? Do they pick it up? Do they buy something else? I don't know, so I can't measure that.
We have access in some states to out-of-home. Not all states. I found that to be fairly good for top of funnel awareness, and particularly to do product launches. So, our sleep product was one that we used out-of-home for. We also have a lot of endemic platforms, which is where I'm finding the greatest benefit for us. So, I mentioned I Heart Jane earlier, they are our back end, I'll call e-commerce engine. But they also serve as the back end and the e-commerce platform for thousands of dispensaries throughout the country. So, if I can advertise within their ecosystem, like even programmatically, so that I can drive to their ecosystem. Someone puts the product into the cart. I'm going to have better data and understand who that person is and whether or not they actually pick it up through their platform. So that's why I think we see the greatest benefit from traditional tools. But when we don't have access to Facebook, Google, or any of the social media, paid advertising is pretty much off the table for us.