As Canada moves closer towards legalization of cannabis, the country’s government has released the restrictions it plans to impose on companies planning to differentiate their products through branding strategies.
On Monday (March 19) the Canadian federal government released a report on the discussion it held with interested parties in the cannabis industry.
In the report, among a variety of topics, came the proposals on the plain packaging presented for actual marijuana products.
The intended proposal is that… the regulations would set strict requirements related to the use of branding, logos, and colours,” the report said.
“We are taking a public health approach to legalizing and regulating cannabis, and we are committed to keeping cannabis out of the hands of children and youth,” Minister of Health Ginette Petitpas Taylor said in a statement.
“Measures such as the packaging and labelling requirements announced today will help to achieve this goal.”
— Bryan Mc Govern (@McGbryan) March 19, 2018
Cannabis industry responds: “The packaging requirements proposed today will work against that goal”
Allan Rewak, acting executive director of Cannabis Canada Association said in a statement it will be vital for LPs to be allowed to differentiate their products to adult consumers. The Cannabis Canada Association is an organization for Canadian LPs.
“The packaging requirements proposed today will work against that goal,” Rewak said on Monday.
The association said the restrictions on companies’ branding and logos would “hinder” the legal industry and its development in Canada.
Jay Wilgar, CEO of Newstrike Resources (TSXV:HIP) which is a company that has focused a lot of its business into branding, told INN in a statement he understands these proposed regulations were drafted to combat the black market.
“We also think that in order to effectively transition away from the black market, LPs need to be able to educate consumers as to why their products are better and safer,” Wilgar said.
MedReleaf issued its own statement calling out the government’s proposals for failing to see the differences between cannabis and tobacco since the restrictions on marijuana are similar to those of cigarettes.
“We’re fearful that the proposed rules shared today will leave many consumers confused and as a result they may turn to what they know, which is the black market,” Neil Closner, board chair for the association and CEO of MedReleaf (TSX:LEAF) said.
MedReleaf said its preferred approach would be on similar to alcohol in which consumers can “distinguish between brands… including product types, qualities, varieties, effects, sources of origin and awards garnered.”
The company unveiled its first lifestyle brand in February, meant to appeal recreational consumers of marijuana.
In an email statement to INN, Trent Kitsch, president of HIKU Brands (CSE:HIKU), another company with a focus on cannabis brands, said he thinks the packaging proposals could have been “less restrictive” but he views this as another milestone toward legalization.
“We shouldn’t be treating cannabis as harmful on par with things like tobacco,” Kitsch said. “Ultimately the government has the balance of power on this decision.”
Branding is the future of the cannabis market
Experts agree on branding raising as a metric for investors to focus on as they make picks on which stocks to invest in.
“I don’t think investors are currently looking to see who is going to be the biggest [or] who is going to grow the most. I think they are looking at it now as a retailing business,” Steven Feldman, a cannabis investor, co-founder, and director of Liberty Leaf Holdings (CSE:LIB) told INN.
A February research note from Eight Capital analyst Daniel Pearlstein asked investors to start thinking differently about cannabis. Pearlstein said consumers will make decisions in this industry according to the brands available.
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Editorial Disclosure: HIKU Brands is a client of the Investing News Network. This article is not paid-for content.
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.