Expanding MSOs Talk a Big Game—So Why Are We Still Waiting for National Cannabis Brands to Emerge?

We saw several M&As over the past few years that promised big things for cannabis, including the potential emergence of a national brand. These MSOs talked about being national players. Some were successful, but many failed to take decisive action to achieve this goal. One exception comes to mind—Curaleaf acquiring Cura Partners, Select’s parent company, in February 2020. Curaleaf bought a brand with good bones and focused on action, quickly expanding Select across states where Curaleaf had production facilities. We take a more in-depth look below at the key differences in successful approaches, such as Curaleaf, contrasted against other efforts.

What Is Stalling Brand Expansion?

It is easy to point to challenging regulatory environments as the culprit to brand growth, given the complex maze of state and local regulations. However, these ever-present issues are familiar territory for operators, and companies like Curaleaf show that these challenges can be overcome.

Put bluntly, the regulatory environment does not fully account for the hesitation we see with many brand expansions. My hunch is that the real problem lies within business fundamentals, including having the right marketing team to execute the business plan.

For example, GTI acquired California-based Beboe in early 2019. At the time, the luxury-driven brand was only available in California and Colorado. The business world took note of the acquisition, with a July 2019 Forbes article reporting that GTI’s “muscle” would expand the brand across multiple states by the end of 2019. Instead, the brand is just now expanding to Illinois in late 2020.

Other brands took similar paths, with hyped-up acquisitions followed by a lack of action on building out the newly-acquired brand.

Cannabis and CPG: Does the Shoe Fit?

Cannabis’s rising reputation, along with the pandemic’s impacts on the consumer product goods (CPG) sector, has many marketing professionals giving cannabis a fresh look. At the same time, MSOs sense an opportunity to poach marketers with impressive resumes from big CPG companies. As a result, we are seeing increased headcount in many marketing departments, but not the level of activity or action one would expect from these talent acquisitions. Many companies believe that high-profile CPG marketing hires will bring unique expertise or insights that translate seamlessly into cannabis, but that is rarely the case. In fact, some of these people may be slowing down the industry by bringing top-heavy bureaucratic practices from other industries and attempting to force them onto cannabis.  

Looking to the industry’s roots, smaller cannabis brands operate much like startups, with the creativity and agility to quickly innovate, launch and expand brands. At Cresco Labs, brands like Cresco, Remedi, Reserve and Mindy’s, along with the brand strategy of Rise/Rest/Refresh, were all launched in multiple markets in a very short period of time. While we did have strong marketing staff and consultants, many non-marketing cannabis professionals helped to form these brands as they knew the industry and what consumers wanted. We knew we were launching a First Generation product, but we were oriented toward execution. Get the brand on the shelves and know it will improve over time. And don’t waste time and money on complicated and highly designed packaging. Rather, ensure packaging extends the brand visually, is consumer-friendly and compliant. 

With the recent influx of CPG talent into a maturing industry, we now see brand launches stall out. Many marketers leading these campaigns come from slow-moving CPG giants whose success is built on long-term momentum. These corporations are at a different phase of the business lifecycle, operating in a vastly different landscape than cannabis.

Learning from Curaleaf’s Example

Curaleaf’s acquisition of Select is a case in point. Curaleaf recognized that Select was a solid brand and built off that success, allowing them to expand the brand’s footprint more quickly. Their marketing team did not spin their wheels trying to rebrand or re-tool, losing time and money in the process. Instead, they were oriented toward action, getting Select into new markets.

Curaleaf’s approach provides an important lesson for other MSOs. Do not get hung up on building the perfect marketing campaign before launch. Instead, focus on getting the product out into the marketplace first, then improve on the marketing from there.

Forging a Path Ahead for Cannabis Brands

We often look to the CPG sector as the future of cannabis, but the industry is not there yet. Instead of emulating a big CPG brand like PepsiCo, MSOs would be best served by creating strategic plans that reflect the industry’s growth phase and recruiting people who have a bias for action. Compared to the CPG sector, the cannabis industry is still young, nimble and agile. MSOs need to keep those advantages in mind when developing business plans and hiring people with the skillset to execute those plans.