As cannabis gains wider acceptance, brands are faced with a major challenge — breaking into new markets.
TILT Holdings TLLTF president Gary Santo thinks that a key to understanding the present state of things within the industry is to look at the future and the trend of many "brands coming east" following legalization.
"Understanding how to sell in those markets, the limitations associated with the regulations, including what you can put on your products, and how you can market your brand" is a road to success, Santo said on the most recent episode of the Benzinga Cannabis Hour (see the video below).
In times where cultivation and retail are becoming commoditized, it's essential to include the authenticity factor when developing a brand.
"That's what's allowing them to command premium prices in an otherwise race to the bottom kind of market," he added.
Tilt is "leaning into wholesale" and providing for the MSO's rather than competing with them.
"It's as much about educating these brands as it is about working with them just to produce the high-quality product," he explained. "We just want to support a lot of mushrooms."
Many brands would need to "tweak their architecture a little bit to come east of the Mississippi," he disclosed, citing Allison Krongard and Laura Eisman's Her Highness NYC — the company's new partners — as an example.
Teaming Up Is Key
Fabian Monaco, president and director at Michigan-based Gage Cannabis Co., says the company remains focused on the post-production process and having "a hand in every single kind of stage of the supply chain.”
Gage, led by former CEO and Chairman of Canopy Growth Corp WEED CGC Bruce Linton, recently partnered with cannabis brand Cookies, a brand founded and led by American rapper and entrepreneur Gilbert Anthony Milam Jr. (aka Berner).
That collaboration helped Gage reach a massive medical market in Michigan as well as "refined customers."
The Detroit-based company has also secured $50 million in financing via a Regulation A offering of its shares.
Monaco confirmed they had over a thousand participants in the offering.
"Having close to 1,500 shareholders at Gage creates a phenomenal backdrop and army that's supporting the company," he explained.
Vertical Integration As A Good For Brand-Building
Mystic Holdings Inc. Chief Legal Officer Michael Cristalli elaborated on why being a vertically–integrated business in a closed market like Nevada is a good thing.
"It gives you an opportunity to have shelf space and other retail stores" and to have "wholesale distributed directly to retail."
It also allows flexibility when it comes to marketing, he added.
Over the past year, Mystic managed to increase revenue despite pandemic-related setbacks.
"We are able to really mobilize our delivery service and our drive through," Cristalli said, citing the importance of "having a community presence" as a key to staying recession-proof.
'Consumers Have To Trust The Product'
Charlotte's Web Holdings CWBHF CEO Deanie Elsner discussed the importance of transparency in CBD brands.
"We own everything from seed all over the shelf," she said. "Our products, on average, are tested 20 different times to the entire cultivation biomass manufacturing processes."
Elsner ventured into the CBD space amid the "global awakening of wellness," as well as the complexity of the lack of regulation combined with the explosive growth, and the consumer need."
Elser also criticized the 2018 hemp bill, highlighting it stranded both farmers and manufacturers while leaving consumers with "no idea what's in the product."
The Benzinga Cannabis Hour is produced every week and brings together top executives, entrepreneurs, and experts from all corners of the cannabis industry. Each show features three or more guests from a broad spectrum of expertise in cannabis.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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