While cannabis sales continue to grow in states where it is legal, a significant number of executives at plant-touching and ancillary businesses – due to coronavirus-infused social restrictions and economic contraction – are cutting year-end revenue forecasts, reducing headcount, and reallocating their marketing budgets.
The Cannabis & Covid 19 whitepaper, put together by Chicago-based market research firm High Yield Insights and national industry publication Cannabis Business Executive, surveyed more than 700 executives across the United States who started the year with bullish expectations. Months later, approximately half of those surveyed projected less revenue, 39 percent anticipated layoffs, and almost all surveyed sent advertising expenditures back to the digital drawing board.
“From a marketing perspective,” explains High Yield co-founder Mike Luce, “the default reaction in business downturns is typically to reduce expenses and figure out how to do more with less. As marketing is not a capital expenditure, it is seen as a lever that can be adjusted rather quickly.”
With trade shows unlikely for the foreseeable future and glossy periodicals going the way of the dime bag, the focus is increasingly on finding, captivating and retaining cannabis consumers wherever they digitally dwell. This includes developing distribution partnerships with ordering apps, maintaining better texting relations with their clientele, and hosting digital stoner celebrations with live music, art and comedy.
This first big digital test arrived on April 20 as brands, retailers and others within the cannabis ecosystem rushed to recreate real-life parties and industry mixers within potpourri of Zooms, Skypes, Slacks, and stilted videos.
Nancy Whiteman, CEO of Boulder-based edible company Wana Brands, explains in the report that while the online events are no match for the real thing, they were great opportunities to “virtually participate in the community… and be accessible to consumers, some of which may be trying cannabis products for the first time.”
Whether used as medicine, a party drug or a chill pill, cannabis products mean a lot of different things to a lot of different consumers. Individuals in states like Illinois, which was just acclimating to recreational sales and evolving social mores when Covid hit, no longer have the opportunity to learn from a budtender or old friend they can share a joint with.
In aggregate, industry marketing executives are figuring out in real time how to best deliver friendly advice and product messaging to a novel audience. Luce, who also chairs the Big Data and Analytics Roundtable at the University of Chicago Booth School of Business, plans to check in with them again to see how actions track with projections.
“If you think of it from a necessity perspective, he said, “brands still need to find ways to connect with consumers. That hasn’t gone away, but the lifestyles of their consumers have changed.”