The cannabis space is red hot right now, with newly powerful Democratic leaders saying they plan to make reform legislation a key priority in the current Congress. Over the past year of the pandemic, the industry has seen massive gains as many states with “stay in place” mandates identified the category as an “essential service.” Nevertheless, we have yet to see a major national player emerge as a ubiquitous brand, either on the retail or product level. If you work or heavily consume in the space, you might have become familiar with some of the players — but there’s no Pepsi or Kleenex in the industry by any stretch of the imagination.
There’s a good reason for that, of course: Cannabis is still prohibited at the federal level. However, it would be silly to think that major players aren’t eyeing this space and aligning themselves for the inevitable moment when that all changes. And rest assured, when this space moves, it’s going to move fast.
So, what’s it going to look like when national cannabis brands finally do emerge on the scene? Let’s take a look.
They’ll Enter Through CBD
The biggest area to watch right now, in terms of identifying the companies likely to take cannabis by storm, is the CBD space. The CBD industry is far more hospitable to national brand-building than cannabis right now. CBD products are already sold in all 50 states thanks to the 2018 Farm Bill, and CBD products can be transported across state lines. CBD companies can use the same brand in all markets, and they also have the ability to work with national retail chains.
Perhaps most importantly, CBD is at a tipping point when it comes to mainstream acceptance and adoption. This is even more so the case in this new era of social distancing, which is exacerbating the demand drivers (pain, anxiety, sleep issues) leading a consumer to purchase a CBD product for the first time. This hasn’t gone unnoticed.
For example, Dosist, an innovator in dose-controlled cannabis therapy, recently expanded its previously THC-focused product line into no-THC CBD products. This will allow the brand to expand its footprint in cannabis, possibly years before they actually are in a position to grow that business.
At present, “CBD” itself is the “brand” known to most consumers. Because of that, in the short term, it seems likely that brands with “CBD” in their names, or an implied medical affiliation, will have an advantage. Longer-term, we’re going to see CBD touted more as an active ingredient—think of it as the NutraSweet of health and wellness.
The CBD brands to watch will be the ones with prominent advertising and, increasingly, broad distribution at physical retail. While the effect of the latter will be muted over the next few months, amid the COVID-19 retail shutdowns, pervasive distribution mid-to-long-term will be key to positioning a brand for a smooth transition into cannabis.
The Focus Won’t Be on Vertical Integration
In addition to emerging from the CBD space, it’s a pretty safe bet that the first major national cannabis players won’t be ones that have exhausted themselves on vertical integration. In these early days of cannabis, we’ve seen a number of companies attempt to fully own the CBD and cannabis supply chain — from growing to processing to distributing to brand-building to selling. It’s an…
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