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Cannabis brands must comply with federal law that forbids interstate commerce outside of their state-siloed operating license. To sell across state lines, they must abide by different rules, acquire additional licenses and permits, and install separate operating infrastructures for each state.
Given the limited sales potential, no one starts a cannabis business thinking they will only operate within one state. The economics don’t work. The engine for growth begins with developing strong brand awareness to leverage your opportunities and spark growth.
3 Ways For Cannabis Brands To Move Past The Borders And Grow
Partnerships or applying for and winning a new license are the only ways to expand to other states, and it requires you to have a strong sales history to strike your best deal. Below are the tree possible paths to multiple state brand distribution.
- Partner with a licensed cultivator or manufacturer to produce and distribute your product and split the costs and profits.
- Acquire a license to operate independently, which is more capital and equipment intensive.
- White label your product for an MSO and work with their vertically integrated supply chain across multiple states.
Vetting a partnership is a two-way street for brands and producers. As a brand, you want to know you have a partner capable of producing high-quality and consistent products. As a producer, you want a brand with proven sales history that will sell through on dispensary shelves. Both sides must also consider other partner agreements to ensure there are no competitor conflicts.
Finding a trusted partner in each state that shares your company mission, work style, and ethos can be daunting and challenging task. It may not be business as usual, but on the flip side, having trusted business partners entrenched in communities nationwide can build stronger ties and loyalty for your brand.
Brand competition and the push for retail shelf space will only intensify as the industry matures. This will allow prospective partners to be pickier about who they work with and why a core marketing strategy is imperative to create brand leverage in partner negotiations.
Think Before You Leap: Market Analysis And Strategic Fit
Because cannabis brands are forced to expand their business state-by-state, they must be thoughtful and strategic about the order they choose and which state has the best revenue opportunities and market fit before marching forward.
It’s important to understand the demographics and preferences of the target market in the new state by conducting market research to identify consumer behaviors, needs, and trends. And analyze the regulatory environment and legal considerations in the target state.
What is the competitive landscape? Too many similar products will increase the chance of over-saturation and fewer sales within the state. Does your product fill a market need, and can it crush the competition?
Are there business partnership opportunities with strong ties to the community that may bolster your retail relationships?
Leverage Your Brand With Marketing To Drive Sales And Partnerships
Build a unique brand identity with an appealing logo, packaging design, and product assortment that will win over the intended consumer. Create a compelling brand story and mission that sets the brand apart and establish consistent branding across all marketing channels and touchpoints.
Craft a multichannel marketing strategy that combines digital, traditional, and experiential events like in-store demos or budtender education to reach your target audience. Creating a great marketing plan isn’t a secret sauce, but how you execute it and convey the brand message makes the difference.
Because a community mindset is baked into the cannabis culture, it presents an authentic marketing opportunity to support local causes or organizations and establish relationships with local influencers to foster brand loyalty in the community.
Consider launching with a minimal SKU assortment to establish and test your products before expanding the product line as you move from state to state and grow sales.
Establishing a strong brand will give you the leverage to work with mass retailers like MSOs to help you reach sales goals faster, fast-track your operations to other states, and fulfill your quest for a cross-country expansion.
A national mass retail buyer once told me – “We’re not in the business of building brands. We are in the business of selling established brands.”
The bottom line- don’t skimp on marketing. It’s at the core of a brand’s ability to drive expansion plans. Focus on building a solid brand to give you the leverage to negotiate your best partnerships as you expand from state to state.
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