When Carlos Santana decided to launch a brand of premium cannabis products, the 10-time Grammy Award winner said he and his partners worked to ensure the products reflected the image the guitar icon spent decades cultivating within the music industry.
Santana, during a panel discussion presented Tuesday as part of the National Cannabis Industry Association’s Business Cyber Summit, talked about how the Mirayo brand – its name combines the Spanish words for “my” and “ray” – honors his mother and aims to uplift users by helping to bring out their own personal rays of light.
“Once you recognize your light, you’re able to create miracles and blessings,” he said, describing some of his own spiritual beliefs and experiences.
While Santana and his partners at Left Coast Ventures -- now owned by TPCO Holding Corp GRAMF, an investment firm heavily involved in developing and acquiring cannabis brands, are confident the musician’s product line, released in October, will resonate with consumers, not everyone is as sold on the power of celebrity branding in cannabis.
Santana and Left Coast Ventures CEO Brett Cummings spent a portion of Tuesday’s discussion outlining the tremendous effort they put in to ensure the Mirayo brand would be seen as authentic and connect with Santana fans and others.
While some industry analysts agreed that a celebrity can provide a major boost to a brand, others in and around the industry are more skeptical about celebrity pot brands. Those same analysts were also divided on how celebrities will be involved in the industry going forward: Some predicted they would shift into more of an endorsement model similar to most mainstream industries, while others envision a future when the vast majority of celebrities in the space will be intimately involved in their own brands, like Santana.
“Having a celebrity brand may help get you to first base quicker than other start-ups, but in the long run, I would advise building a great brand with a high-quality product,” said Randall Huft, CEO of Innovation Agency, a public relations firm that builds brands. He recommends that brands consider using celebrity endorsements rather than building an entire brand around one celebrity,
Greg Huffaker, a director at Canna Advisors, a consulting firm for cannabis businesses, said celebrities in the cannabis industry typically fall into three camps: Silent investors whose personal brands don’t mesh with cannabis, celebrities who license their names for products but are otherwise uninvolved, and those who are passionate about the product and are heavily involved.
Huffaker said that first group has seen a precipitous drop, while most celebrities are currently in that second group. He projects the third camp to soon take over and become the majority.
He anticipates professional athletes will comprise the next wave of celebrity branders, particularly as many of them have already embraced CBD for therapeutic purposes.
“There are a lot of professional athletes that use cannabinoids regularly for recovery,” he said. “I think as we continue to see the products differentiate, you could see how somebody at a golf club might buy something like a Phil Mickelson CBD bomb.”
Mixed martial arts is another area ripe for cannabis partnerships, he said, both due to its high penchant for injury and its rising popularity.
Huffaker predicted that 10 years from now we may see MMA-themed dispensaries with products branded by all the top fighters.
“Ultimately, I think you’re just going to see it as more common because cannabis is just becoming that more mainstream, common thing,” he said.
There are several potential pitfalls that can turn a celebrity partnership sideways, analysts say.
Huft, with Innovation Agency, worked in mainstream advertising for 20 years before transitioning into cannabis. He said one key difference with mainstream celebrity brands is that, unlike with cannabis, the celebrity is rarely in danger of becoming the brand.
For example, Michael Jordan helped build Nike into an international powerhouse, Huft noted, but the brand will still exist without him.
“However, in the cannabis industry, the celebrity connections are not just an endorsement, but they are the brand,” he said. “That can present a huge problem because the brand lives and dies based on the popularity of the celebrity.”
That can have widespread implications, said Huffaker, with Canna Advisors.
He noted that having a celebrity brand is essentially signaling to the marketplace that you stand behind that celebrity’s ideals and values.
“That is inherently cutting some of your customer base out, while at the same time bringing some in,” he said. “It’s hard to think of universally loved celebrities, and it’s far more common to think of them as divisive.”
Huffaker noted that celebrities aren’t typically experienced in navigating heavily regulated industries and suggested that companies work closely with celebrities’ public relations teams to ensure everyone is on the same page.
If a celebrity says something misleading or encourages illegal behavior, for example, they could face criminal prosecution and deflate their brand.
He noted that celebrities also face potential hazards by involving themselves with companies that aren’t up to code. A celebrity strain that tests positive for mold or is the subject of a recall, as examples, could spell trouble for that celebrity’s personal image.
“That’s coming,” Huffaker said. “Some celebrity who licensed their name out is going to get a bunch of bad headlines.”
Are celebrity pot brands not worth the effort?
Others in the industry feel that celebrity brands just aren’t worth the time and effort.
Jason Sturtsman, CEO of Nevada-based cannabis advisory firm Sturtsman Consulting, said the contract details with celebrity partners are key, as marijuana businesses already operate at razor-thin margins due to high taxes and regulatory costs.
Because celebrity-backed brands are often sold at a premium, he said a lopsided licensing agreement can stifle a business.
“Consumers want high quality products at a low price,” he said. “They may try a celebrity product, but I would not be surprised if they are not repeat customers.”
Paul Schloss, the president and CEO of Nevada-based Redwood Cultivation, is no stranger to celebrity partnerships. His company has developed strains for Mike Tyson, Willie Nelson, Cheech & Chong, and Coolio, among others.
He said he’s seen some businesses seek out celebrities just for meet-and-greets, only to have it backfire when the celebrity draws a crowd of people uninterested in making purchases, while actual customers are squeezed out by the celebrity’s fans.
“To make matters worse, the dispensary actually paid an appearance fee to have the celebrity show up,” he said. “They actually lost tens of thousands of dollars and it appeared to be super successful to outsiders.”
Everyone seems to agree that a powerful celebrity brand can bring at least a temporary boost in business – if done correctly.
Left Coast Ventures CEO Cummings, whose company has partnered with several celebrities, said his team worked exhaustively to learn all about Santana and his worldview so they could create the strongest brand possible.
“I think pulling all that together just creates the most authentic story and it creates a feeling inside of you, as opposed to just getting high,” he said. “Anybody can go do that.”
Schloss, with Redwood Cultivation, said that connection can be aided by having knowledgeable employees. Most budtenders, he said, are likely too young to really know about someone like Willie Nelson, but he ensures his employees are up to speed on celebrities whose brands his company carries.
“We do a lot of education,” he said.
Sturtsman, the consultant, said he expects the industry to move much like the alcohol industry, in which several celebrities are equity partners in brands they push, rather than simply serving as endorsers. Rapper Rick Ross and actor George Clooney are among those with a stake in spirits.
“I believe this will be where things head in the future – a celebrity endorsing an existing product and maybe taking an equity stake or making an investment for an equity stake,” he said.
Huffaker, with Canna Advisors, said he expects that 10 years from now dispensaries will be filled with celebrity-backed products.
“More celebrities are publicly going to get into it,” he said, stressing the decrease in silent investors. “Right now, they don’t want their name on it, so it’s almost like there are more celebrities than you even know, because it’s a popular investment tool.”
Read the original Article on WeedWeek.
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