2020 was a consequential year for legal cannabis. The industry provided essential services to millions of patients and recreational consumers throughout the pandemic while leading multistate operators (MSOs), including Curaleaf, Green Thumb Industries and Cresco Labs closed out the year with record revenues north of $150 million. (Full disclosure: MATTIO Communications represents Curaleaf, the MSO that owns Select.) Cannabis also won over voters across party lines in five new states, further accelerating the legalization movement. One of the most critical states to vote in favor of recreational cannabis was New Jersey, and industry leaders and investors believe this will create a legalization domino effect along the East Coast.
In the next year, we can expect a more sophisticated cannabis industry to put down its roots out east, creating highly coveted opportunities for mature West Coast and Midwest brands to become established and nationally recognized household names. While this is a momentous occasion for operators who are hungry to enter these lucrative new markets, the next two years could make or break some of the biggest names in cannabis if they do not focus on building brand loyalty. As a cannabis communications professional based in New York, I can say with certainty that the East Coast is a completely different beast, and capturing this market requires engaging with target demographics in more transparent and modern ways.
East Coast audiences are familiar with cannabis as a consumer category.
When recreational cannabis was first legalized in Washington and Colorado nearly a decade ago, most consumers still viewed legal cannabis as an emerging medical movement and were not fully aware of the plant’s numerous wellness and social applications. Additionally, stigmas associated with consumption back then deterred canna-curious consumers from learning more about the industry.
Now, cannabis has become one of the most sought-after consumer products, especially during the pandemic. According to one of our clients, Headset, which is a cannabis data analytics provider, year-over-year retail spending among all Americans, including older demographics, has been consistently climbing, with Gen Z, millennial and Gen X consumers making up nearly 75% of sales growth last year.
There are many ways to legally consume cannabis in 2021. Customers can walk into their local dispensary and choose from a selection of edibles, pre-rolls, flowers, wax, beverages, vapes, tinctures, topicals and even suppositories to address their personal or medical needs. Unlike the first markets that came online, the majority of East Coast recreational consumers have been watching the industry develop from afar and are already familiar with cannabis’ various applications.
Residents on the East Coast are not shy about their enthusiasm for cannabis. Many of these consumers have either already engaged with the illicit market or traveled across state lines to access their favorite products. When recreational use passed in New Jersey, I was immediately inundated with questions from friends and family about what brands and products they should buy when the first dispensaries open. These questions highlight how many consumers already accept legal cannabis as a legitimate and safe industry. Operators entering this region should be prepared to answer to consumers who are asking more intelligent questions and seeking high-quality and trustworthy brands.
Established brands will become even more sophisticated in this new market.
Two qualities differentiate the East Coast from other cannabis markets: the region’s dense population and the number of limited license states. These unique conditions have created the optimal environment for established brands to build lasting brand loyalty. As cannabis becomes an increasingly mainstream product, consumers will also expect legal brands to engage with them in the same ways that conventional CPG brands do. These audiences are looking for companies with distinct brand voices, along with consistent yet bespoke cannabis experiences that address their specific lifestyles and preferences.
East Coast consumers will also expect more from established brands that land in their hometowns. Considering how the most popular West Coast brands, including Select, Caliva, Beboe, The Apothecarium and Cookies, have undergone almost four years of product formulation, packaging, and brand marketing trial and error, consumers will have little patience for subpar products or retail experiences. (Full disclosure: MATTIO Communications represents TerrAscend, the MSO that owns The Apothecarium.)
Multistate operators (MSOs) that run successful brands must quickly identify their target consumer demographics and have a plan to thoughtfully engage with them early on or risk losing lifelong customers to rival operators in this competitive space. Additionally, operators have an opportunity to creatively leverage scientific innovations and clever marketing strategies to capture new customer segments and further professionalize the legal industry.
Cannabis is on the cusp of becoming a recognized CPG industry.
From my own conversations with clients and industry leaders, I have found that the end goal for these brands and operators is to transform the legal industry into a mainstream CPG sector. In the industry’s nascent days, products had very rudimentary branding and packaging. Customers who frequented the first dispensaries were also often limited to smokable flower products that were inconsistent in both potency and quality. Now, products come in countless flavors, cannabinoid profiles, dosages, onset times and consumption methods that cater to every consumer segment imaginable.
Today, cannabis executives are increasingly focused on the product instead of cultivation, and MSOs are hiring more leaders from mainstream CPG industries. For example, at Curaleaf, the country’s largest MSO, the CEO, CMO and vice president of corporate communications come from a range of backgrounds, including multinational beverage and confectionery CPG, tech marketing and entertainment publicity. Through these hiring trends, it is clear that MSOs are having broader questions about identifying untapped consumer markets and providing them with the best possible product experience.
When conversations around cannabis shift from cultivation to CPG, branding and brand differentiation takes center stage. In 2021, weed isn’t just weed anymore — it’s a lifestyle product that millions of consumers use to showcase their personal identities. When MSOs have a consumer-oriented approach, they open the door for more sophisticated communications and marketing opportunities. In this new market, operators must lean into their core competencies and meaningfully invest in engaging with their target demographics in order to see long-term loyalty and brand growth.