One year after the legalization of recreational marijuana, Oregon’s pot industry is booming with more than $400 million in projected sales in 2016.
But like any new industry, pot entrepreneurs are faced with the challenge of building a strong brand and developing new products to attract underserved customers.
The industry has to work fast to establish itself as a leading manufacturer and retailer of marijuana products because cannabis will probably be legal in the United States in a few decades, predicted Renee Spears, creator of Smuggle, a cannabis products retailer.
“We have a slim window to brand Oregon as the cannabis capital of the world,” said Spears, who spoke as a panelist at an Oregon Business Hot Topics Cool Talks breakfast event on Tuesday. “This is Oregon’s moment.”
One advantage Oregon marijuana growers have over other jurisdictions is access to the plant’s diverse genomes, said Jeremy Plumb, founder of Newcleus Nurseries, a commercial cannabis cultivator. The diverse strains of the cannabis plant that are cultivated here make it possible for Oregon retailers to sell a variety of cannabis products.
“We are sitting on a treasure trove,” said Plumb. “There is no limit to the products and categories.”
In some ways the state’s pot industry mirrors the emergence of Oregon’s craft brewers, which have evolved as leading creators of artisanal, unique-tasting beers. But Plumb sees the potential for cannabis to also be branded as a wellness product because of its use in pain management.
“People are comparing (the cannabis) sector to beer and wine,” said Plumb. “But it has a social, therapeutic outcome.”
The state’s pot sector also has the potential to bridge the state’s urban-rural economic divide.
Agricultural companies, in particular, stand to benefit from the growth of the cannabis industry by employing sophisticated growing techniques to help cultivate the plant. Cannabis production is known for its intense energy and water use, making it an ideal sector for more efficient farming methods.
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As the cannabis industry matures, it will be increasingly important for businesses to build their brand to distinguish themselves from the competition, said Spears. Her company, Smuggle, specifically targets women and baby boomers, which she says is an underrepresented market.
“If you want to stand out, you need to build a brand right now,” said Spears.
Claire Kaufmann, northwest regional director of BDS Analytics, a cannabis industry research firm, said she does not see a lot of smart branding of cannabis products.
“When it comes to branding, sometimes (companies) can get ahead of themselves. Brand expression needs to resonate with customers,” she said.
As the pot industry grows it is inevitable that big businesses will move in and aggressively compete with the state’s craft growers and merchandisers.
Scotts Miracle Gro, the maker of garden maintenance products, is one multi-national corporation that has entered the pot market nationally by selling fertilizers and soils to cannabis growers, as well as lighting and hydroponics equipment.
Kauffman predicts large businesses will make a big move into edibles and cannabis concentrates in particular.
A lot big money is already considering investment in the state’s pot business, said Vince Silwoski, an attorney at Harris Moure.
He does not see big money directed at the pot growers market yet.
Silwoski expects pot companies’ access to traditional banking services will expand as more states legalize recreational marijuana use. Marijuana businesses have to deal in cash because most banks deny credit card processing.
“We are close to a tipping point,” said Silwoski. “We will see the banking thing change in the next couple of years.”
Check out this clip from panelist Claire Kaufmann below.