How to Start a Cannabis Brand in a Mature Market

Getting a licensed cannabis business off the ground in any market, whether just opened or deeply established, is pretty much always a major undertaking. Both types of market maturity levels come with many different challenges; in new markets, simply getting a license can be close to impossible depending on preexisting demand, so prospective operators who don’t win their respective lotteries have to purchase them or wait until later rounds to be issued one. In mature markets however where competition is entrenched and the survivors have spent years optimizing, succeeding with a new brand requires new or exciting products, well thought out marketing, and operational efficiency from day one. 

In this exclusive Lowtemp Industries blog, we’ll lay out the most important things any would-be operator needs to do to successfully launch a new brand in a mature cannabis market. 

Cannabis License Types & Direction

One of the most straightforward types of cannabis companies to launch in mature markets are those focused on concentrates or other infused products such as solventless edibles. This is because as consumers in recreational states or countries get used to smoking flower and eating the same types of edibles, they tend to want to try new things, and extract sales tend to quickly grow as markets mature. In addition to demand uplift, new labs tend to be a lot less capital intensive than grows to launch, plus they have the benefit of purchasing the right kinds of biomass for their product efforts from a large roster of established cultivators. This gives new labs many more choices of strains than they’d ever be able to provide with their own grow efforts. 

Picking the right kind of license to operate in your market requires careful planning and research based on the unique factors in each state as some allow for all types of extraction activities, and some are much more limiting. To be sure, we definitely are not suggesting it’s impossible to bring a new flower brand forward successfully, and if that’s what your leadership team is passionate about, by all means. It’s just a lot easier in most cases to do a lab as your startup business, and then grow into other areas such as cultivation if material supply and demand allow for it. Taking unnecessary risks is a surefire way to end up on the wrong side of your P&Ls, so do your homework on what consumers are after and crucially which existing competitors are already working overtime to fulfill. 

Innovation, Quality, or Both? Choosing the Right Product Lineup

Chances are if you’re planning to bring a new brand into a market that already has a lot of competition, you’re very unlikely to succeed by just putting the same SKUs out everyone else has in fancier packaging. There are essentially two key strategies that new companies can pursue that have the highest chance of succeeding: deliver a truly innovative product line that no one or very few competitors are offering, or exceeding the market’s high water mark for quality in any particular category whether it’s flower, concentrates, edibles, or vapes, etc. 

There are countless examples of this, from Dialed In… Gummies taking over a huge part of the edible game in Colorado with their unique collab-based business model and then expanding to multiple states, or Lily Extracts in New Jersey that started as a two man team and have quickly grown to steal market share from much larger, slower to react competitors. Both came to find runaway success in mature markets with something new and exciting in the product department plus sticking to a lean mantra internally. Since new cannabis brands are typically dealing with minimal early cashflow and limited resources that are largely dedicated to operationalizing, putting their dollars where it really matters begins long before their first products hit shelves. 

What this really means is that if you’re looking to boot up a new brand, doing your research at the very beginning to figure out where a niche product might succeed or where a popular product segment is underserved can be the bullseye. Then, figure out exactly what kind of license will be optimal for your selections. There are plenty of high quality data sources to choose from to harvest state-specific SKU sales information and general consumer trends, such as BDSA Analytics or Headset. Premium solventless rosin vapes and their related concentrates, infused pre-rolls, and specialty edibles are all among the fastest growing categories in many mature cannabis markets.

Invest in Your Brand’s Storytelling Like You Mean It

One of the biggest mistakes cannabis operators make in all markets is not investing enough time or resources into how their brand looks, feels, and communicates. Sales are easy during the honeymoon period, so why work any harder there than you need to? By the time they realize something is wrong and sales are slowing, the competition has already blown past them, so catching up becomes increasingly difficult. Gone are the days where businesses could get away without having a story to tell or a website for starters. This doesn’t mean you need to spend six figures with a coastal branding agency to get the right aesthetic, but working with an inspired graphic artist to create a brand style that stands apart is crucial in mature markets much more so than new ones.

Your packaging will also play a large role in how your products are received amongst a sea of competitors on dispensary shelves, so carefully evaluating what other brands have already done to avoid being the same is important. More than anything, meaningful differentiation or lack thereof can make or break a new brand when consumers have so many options to choose from. Just make sure to not go overboard on expensive touches and finishes for your boxes and jars as those extra costs can eat your bottomline alive. The branding checklist for any new operator should include:

1. Unique brand aesthetic that is consistently replicated everywhere (packaging, online, merch, flyers, etc).

2. Functioning, modern website that is optimized for mobile that highlights your products, helps consumers find them, and conveys your brand’s story.

3. Branded point of purchase marketing displays, depending on what your retailers are willing to give you space-wise (make sure to double check before assuming your in-store display will work for each store). 

4. Social media presence, most importantly on Instagram, that highlights your products professionally.

5. High quality stickers and soft goods to giveaway to budtenders, at events, and to customers.

6. Branded pop up booth plus table setup for local events and dispensary appearances

The list goes on from here, but at least dialing in these six elements will put you ahead of the game from day one. Just know that overinvesting in marketing and brand building early can also be detrimental, so getting a clear picture of who you’ll be up against and how you can present your brand authentically is critical. The point of doing your brand building and marketing right is that their cumulative effect is one of the strongest messaging signals to your market that your brand is worth taking seriously. 

Keeping Operations Lean and Mean

Although many of the larger, more well known labs and grows tend to attract the most attention on sheer volume alone, these massive scale operations tend to move a lot slower internally than most would expect. When you’re putting your business plan together and refining your new brand’s operations right after launching, keeping every aspect of your business lean can give you a surprising advantage over your larger, unwieldy competitors who are most likely running on razor thin margins.

What does “lean and mean” actually mean? For the upstart operator, it means keeping headcount to a minimum, investing early in technology that has capacity to scale up production through automation, pivoting quickly when certain products aren’t popular, and increasing production as fast as you can when you hit a home run. By focusing on hiring only must-have, high talent staff in key roles and compensating them adequately, you can get significantly more production out of your team than simply hiring average or below average talent at bargain prices. When every set of hands matters, giving them the right equipment from day one is also an underrated advantage that’s easy to capture for your company. 

The Secret Super Power of Networking

Ask any operator that’s been in business long enough and they’ll pretty much all say the same thing when it comes to networking – it’s one of the biggest reasons they’re where they are today. What networking really means though is making nice with as many other operators as possible, and especially with retail stores. You never know when you might need some extra material to get through a big order, or to ask for a favor if you have excess inventory that needs to get sold quickly. It pays to build bridges in this business, not to burn them. 

In many cases, it’s the budtenders themselves that need to be wooed more than anyone to recommend your products to their customers. They’re the front line of communication with your buyers, so making them happy should be at the top of your priority list. Many successful companies include free samples for budtenders in just about every order, offer them apparel, or other incentives like major discounts to purchase your products for personal use. Perhaps equally important is finding out which retail stores or chains have the most volume and getting in with them as early as possible. Word travels quickly when a new brand has knocked X, Y, or Z SKU out of the park. If you can win over the budtenders and the managers at key dispensaries, that’s already half the battle. 

Dream, Plan, Execute

Many of the folks that make cannabis such a great industry to work in are extremely passionate about the plant itself. This passion needs to be honed with intelligent business practices, so to make your dream a reality, especially if you’ve been mulling over getting a license in your state for some time, start with the fundamentals. Here are the most important questions to ask yourself as you start building your business plan for mature market entry:

• What SKUs are underserved or non-existent in your market? 

• What competitive advantages can you secure by being a latecomer, or put another way, what mistakes have other operators made that you can learn from and avoid?

• What is the ideal license type or combination of types you need to secure to execute your business’s goals?

• By the time you’re operational, what do you think the market will look like? 

• What are the most successful brands in your market doing consistently? 

If you need help getting your new extraction or infused product brand off the ground, we’re here to help with all of the tools and equipment you need at Lowtemp Industries. We’ve been in the game long enough to help you navigate your equipment purchasing so you can get exactly what you need. Contact one of our experts today to get started.