Even though the legal cannabis industry is expected to grow by $50 billion by 2026 and hemp-derived Cannabidiol (CBD) accounted for $190 million in retail sales last year, according to Hemp Business Journal there are still challenges for cannabis-infused brands and products looking to grow and scale.
Google and Facebook — prime advertising and brand-awareness online spaces — do not allow drug or drug-related promotions on their sites since marijuana is still illegal on the federal level. Even CBD, which is used in the drug Epidiolex and was approved by the FDA in late June, is listed as an unapproved pharmaceutical and supplement under Google’s advertising policy help page.
So when vertically integrated cannabis company MedMen decided to launch its first product lineup of tinctures, cannabis flowers, pre-rolled joints and vaporizers called Statemade recently, it was imperative for the brand to launch the assortment in its own retail stores. “Cannabis products have to be sold in the state where they are sanctioned and licensed, so it made sense to make and sell Statemade ourselves,” said MedMen svp of corporate communications Daniel Yi.
MedMen, which has 19 cannabis facilities in California, Nevada and New York (14 of them also serve as retail shops), unveiled Statemade in its new Las Vegas store, which opened Saturday — the products are grown and manufactured in MedMen Mustang, the company’s neighboring factory in Reno.
Statemade was designed to parallel one’s state of mind: the aforementioned products of tinctures and cannabis flowers were created for specific desired effects, and named accordingly: There’s Joy, Zen, Ebb, One, CBD, Max and Zzz — Max, for instance, is prime for exercise and activities, while Zzz is best used for rest and sleep.
MedMen considered a high-touch retail experience important for Statemade, which the brand is dubbing “luxury” (though the offerings range from $12 to $72), so the products will sit alongside check-out and multilingual touchscreen menus. The iPad-like devices, for instance, provide customers with product information that includes the differences between CBD and THC (Tetrahydrocannabinol) — this technology-implemented approach is a new feature for MedMen stores. It also helps that, in addition to the Apple store-like environment, the products themselves are packaged in bold-colored boxes and copper-lined glass jars, much like prestige beauty, elevating the perception of cannabis use. This is a far cry from the way cannabis is usually distributed with bars or frosted glass in typical shops or dispensaries.
“MedMen has approached this launch through an aspirational lens,” said David Dancer, MedMen’s chief marketing officer. “We have taken inspiration from beauty and wellness launches to produce a premium product that is accessible, yet feels covetable.”
Yi agreed: “The old-school way of thinking was that cannabis was for two uses — recreational or medicinal — but that’s not the way people are experiencing it today; it’s for wellness, health and enjoyment. We are changing the idea of who uses it and why.”
Retail has been particularly important for MedMen as it grows its business. The company is valued by the Canadian Securities Exchange for $1.65 billion, and total revenue in its California, Nevada and New York markets reached over $19 million this year. After MedMen took over an existing licensed medical marijuana dispensary in West Hollywood in late 2015 and branded it under its own name, the single store saw revenue grow 56 percent through January 2017, and 475 percent by January 2018. Traffic also increased in the shop: by 59 percent through January 2017, and 349 percent by January 2018. Overall customer spend increased by 27 percent this year.
The Statemade products will roll out to MedMen’s other Las Vegas store later this fall and then to a new Las Vegas location in early 2019; the company plans to offer a California-made Statemade line at those regional stores next year followed by a New York-made Statemade assortment in New York stores.
Certainly, MedMen has a leg up with launching Statemade in its own stores, as it’s vertically integrated. For budding brands entering the space, partnering with larger retailers is key.
Origins launched its Hello, Calm mask, which features, non-intoxicating cannabis sativa seed oil in Sephora exclusively before entering into its own stores. Meanwhile, High Beauty — the brainchild of Melissa Jochim, formerly of Juice Beauty — launches at Sephora and HighBeauty.com on Oct. 23. High Beauty’s introductory moisturizer and facial oil, like Origins’ Hello, Calm, contains cannabis sativa seed oil mixed with bioflavonoids and plant oils. “Using the cannabis sativa seed versus CBD or THC allows us to really play in a mass scale because of the legal issues around cannabis,” said Jochim. “I can’t not be able to ship across state lines.”
Though Jochim launched her website in mid-July, she is currently using it only as a pre-sale tool before it lands in Sephora. High Beauty does not and isn’t planning on doing any advertising because of cannabis legality issues, but so far, organic search for High Beauty is up 6,033 percent since July. “We’re not trying to position our own website as our main retailer, especially with cannabis — you just can’t do that,” said Jochim, who has a two-year exclusive contract with Sephora. “It’s in my best interest to build that brand with a larger player like Sephora.”
This has been the case for indie beauty brand Cannabliss Organics, which launched in January and uses CBD oil in its products. Cannabliss is largely sold on its own site, with select distribution in smaller retailers like The Spa at Curio Wellness in Maryland and Northside Pharmacy in Brooklyn, but it’s looking for a bigger, national partner. “We are in serious talks to grow our retail presence because we are so limited in ad targeting with Facebook and Google,” said Cannabliss Organics founder Melissa Christensen. “Retail is the way for people to really find out about us.” Kartik Ram, CEO of Glamster, a luxury beauty line that includes a proprietary blend of high-performance, hemp-derived CBD called CBD 2.0, is also looking for a retail partner for his upcoming launches in November.
Aside from the legalities surrounding cannabis products, a physical retail experience offers a chance at new customer acquisition through education, especially with a currently untapped legal market. This is the case for MedMen and its female customer. “Women make up 26 percent of current cannabis consumers; however, 48 percent of those likely to try cannabis are women,” said Dancer. “As the stigma around cannabis lessens, we have focused on a singular goal of ‘mainstreaming marijuana,’ and with Statemade, we are offering something that doesn’t fit the ‘stoner’ mold or feel too medical.”
Source: Glossy
