The past few years have seen an explosion of Washington cannabis brands hitting the scene in North America.
So far plenty of these brands are connecting with cannabis consumers and taking hold in their local markets, but we have yet to see a truly national cannabis brand. As new entrants into the market merge with one another to form major corporations, it seems only a matter of time before North America sees a cannabis brand with a clear national presence. Companies with national aspirations still have to start small, building their brand in a single market before taking what works and scaling it across new markets. Under this expansion model, the attributes of a company’s initial marketplace can significantly influence further expansion.
In a business like the cannabis industry where product differentiation is difficult to establish, effective branding can become all the more critical.
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“The belief of our company is that brands are going to win the day in the long run, and putting really sustainable foundations into the development and distribution and interactions in terms of relationships with budtenders and consumers is critical towards differentiating a brand, and so we see Washington State as a fantastic place to do that,” Chris Backus, President and CEO of recreational cannabis company Weekend Unlimited (CSE:POT, FSE:0OS1) told INN. “It comes back to that focus on brand as a critical driver for the company.”
For a budding lifestyle cannabis brand, Washington offers nearly ideal starting conditions, with an established and stable regulatory scheme and a consumer base that can act as an experimental playground for the national market. For these reasons, many cannabis companies see Washington State as the ideal launchpad for a national marketplace.
Washington’s marijuana market
Washington consumers spent US$1.49 billion on marijuana-related products in 2017. By 2020, the Washington cannabis market is expected to reach US$2.28 billion, according to data by New Frontier Data. Growth in this market is being fueled by high-quality local product, low prices and the gradual decline of the black market.
Due to the size of its marijuana market, Washington State can be effectively used as an incubator for developing new brands before expanding into Oregon, California and beyond. With a population of 7.53 million and a high proportion of adult marijuana users, Washington offers a unique opportunity to test products and brands on cannabis-hungry consumers. As of 2016, more than 19.5 percent of adult Washingtonians had used cannabis within the past year, giving companies operating in the state a broad representation of consumers.
Like its neighbor to the north, British Columbia, Washington State has been a cultural hub of the pro-cannabis movement for decades. Since 1991, Seattle has been the host of Hempfest, one of the country’s longest-running and largest yearly cannabis festivals and protests. Washington was the second state in the US to legalize and regulate cannabis. The result of Washington’s well-established cannabis culture is a strong base of experienced and savvy cannabis consumers with developed tastes and preferences, a solid starting point for companies looking to fine-tune their products and branding for the American cannabis consumer.
Differences in regulatory standards can be challenging to new cannabis companies working to establish a business model. As one of the first US states to legalize cannabis, Washington has a well-established regulatory scheme that enables companies to make informed decisions regarding their business operations. Without concerns regarding future regulatory changes, Washington’s legal framework allows cannabis companies to focus their resources on building their brands and internal operations.
“Washington is a mature legal recreational market. Its systems are well established, from product development, sales, distribution and retail operations. That means that Weekend can focus on the development of branded products, benefit from responses from retailers and consumers to refine product attributes and positioning in order to scale within Washington and take proven models to other states with confidence and expedience,” said Backus.
Washington-based cannabis companies
Weekend Unlimited is one of many US cannabis companies targeting international expansion. The company has selected Washington as a US cannabis brand launchpad in order to launch its flagship brand wknd! in June 2019. The recreational lifestyle brand is designed to appeal to a range of demographics and lifestyles associated with the cannabis consumer. The brand, which includes products with names like Escape, Bliss and Now, is designed to create unique experiences in order to connect with cannabis consumers across the country. Weekend Unlimited is expected to focus on optimizing and tailoring the brand to achieve that connection, with Washington State serving as the test market to establish itself.
Other successful cannabis brands have had their beginnings in Washington before taking their experience and proven branding into other markets. Chemistree Technology (CSE:CHM,OTCQB:CHMJF) debuted its Sugarleaf brand in the state before moving into California. In the extracts sector, IONIC Brands (CSE:IONC,FRA:1B3) built a successful cannabis vaporizer brand in Washington and the company is now expanding across the west coast into Oregon and California.
Cannabis companies looking to build successful recreational brands that resonate with consumers could find an ideal starting point in Washington State. The state offers one of the most established and stable legal cannabis markets in the world and one of the largest cannabis consumer bases, allowing companies to focus their efforts on designing their brands for the broader American market after establishing operations.
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