Tom Newmaster is the founder of Central Pennsylvania-based FORCEpkg. He has more than 25 years of experience in branding and design for consumer packaged goods. Newmaster serves as an adjunct instructor at Pennsylvania College of Art and Design.
Every few months, I take a learning excursion to Colorado to educate myself on the emerging cannabis business. The industry is thriving and still seems to be a potential indie paradise, with brands like Ripple, TFC Bubble Joints and Coda Signature Chocolates, plus friendly dispensaries like The Green Solution, Organic Alternatives and many more.
It’s easy for craft-brands to get attention when you’re only competing within your state. But having an established name behind your brand, like Snoop Dogg, Drake (just jumped in) or Marley Natural helps. Once cannabis achieves federal approval, the playing field will change, and big brands are expected to make their move. However, many in the U.S. were and still are sitting on the sidelines waiting for the flag to drop. With national elections soon approaching, expect no national legislation soon.
Will indie cannabis brands follow the craft model?
We’re all familiar with this business model by now. Take craft beer; Independent brewers got into the business, many said, for the love of it. They found a welcoming audience in millennials. Some even resisted the temptation to sell out to the big brands. Can the same happen with cannabis? Perhaps. It seems to be working for Snoop who got a $45 million capital influx, started Casa Verde Capital and launched his own ad agency, Gram By Gram, to serve the cannabis industry. As business models go, this has all the earmarks of a big business in the making.
Taking tea to the next plateau
In a recent licensing deal with Dixie Brands, Arizona Beverage recently announced that will begin selling drinks, chocolates, gummies and topical creams laced with cannabis. The brand’s iced teas are already sold at big box stores throughout the U.S., causing some to wonder if marijuana products are on the verge of becoming mainstream. According to Don Vultaggio, chairman of Arizona Beverages, “The cannabis category is an ideal space to bring the flavor and fun of Arizona into new and exciting products.”
The biggest competitor
Before we see legacy brands competing full out, it bears mentioning that the cannabis business is currently competing against a mature, well established market … the street. In some states like California, this means the supply of weed far outstrips its demand. In fact, according to a recent 60 Minutes report, “California grows 11 million pounds more than it can consume in a year.” What does that do to the business model in California? Until the state gets its arms around enforcement, the only possible competitor for the cartels, who have built their greenhouses right in amongst legal state-registered growers, would be big brands. The U.S. market is still too topsy-turvy for most. Think early dot coms and the ensuing meltdown. Legal cannabis 2.0 is still a work in progress.
5 Cautions for packaging designers
Know your regulations
States are constantly changing their regulations, even the ones that have been in the game for a while. California introduced a slew of new regs a year ago. Here’s just a small taste:
- Child proofing and no cartoons or language that could appeal to kids
- Packaging cannot resemble traditional food packaging
- Edibles must be in opaque packages
- All packaging must be temper resistant
California is the largest cannabis market, so if you are competing for business in that state, know that there are things called “Emergency Regulations” that can be put in place at any time. So, it pays to stay current.
Know who you’re up against
The biggest market competitor for legal cannabis, as I mentioned, isn’t the next big brand; it’s the black market. One report says that “illicit pot sales are projected to outpace legal pot sales in 2019 by a significant margin: $8.7 billion to $3.1 billion.” In Canada, street sales now account for 71% of the cannabis market. Any wonder stock prices are lagging?
Know the cannabis packaging trends
How does all this impact packaging design? According to recent data, opportunities still abound as “the global cannabis market is projected to expand at a range of 26.4%.” This same report projects that “there will be a 1700% increase in weed users by the end of 2026 with packaging likely observing a 24.6% growth.”
In the U.S., packaging materials will be a key focus, and brands will be judged by their efforts in the following areas:
- Sustainability: such as recyclable and biodegradable materials
- Child and tamper-proof design
- Traceability (think connected packaging that can authenticate the brand, strain, grower and legality of the product)
Knock-off packaging is a big threat to legitimate brands. The recent vaping crisis is proof of that. According to this report, “Counterfeit packaging and cartridges can be easily found with a few mouse clicks on Alibaba … One study estimated that (in California’s pot economy) consumers are spending roughly $3 in the state’s underground pot economy for every $1 in the legal one.”
Do your homework
Yes, the cannabis market is exploding and there will be winners and losers. For package designers who seek to get some traction in this market, being aware of the hurdles and the quickly transforming nature of the industry is a must. What’s a best practice today could be irrelevant tomorrow.