NetworkNewsWire
Editorial Coverage: With legal recreational cannabis coming to
Canada later this year, companies are making the most of the last
few months to prepare for the challenge of a new and largely
brand-free market. Choom Holdings, Inc. (CSE: CHOO) (OTCQB:
CHOOF) (CHOOF
Profile) is building a brand upon retail outlets and a slice of
cannabis history, hoping to get the attention of existing and new
curious consumers. Medical cannabis company OrganiGram
Holdings, Inc. (TSX-V: OGI) (OTCQB: OGRMF) is expanding
its operations, using larger growing rooms and more staff to ensure
supplies when the law changes. Aphria, Inc. (TSX: APH)
(OTCQB: APHQF) is also pursuing a growth strategy, using
targeted investment and collaborations to reach a larger consumer
base. Hydropothecary Corp. (TSX-V: THCX) is using
the expertise of specialist companies, including Segra’s tissue
culture propagation technique and Shopify’s expertise in building
ecommerce sites. Meanwhile, The Supreme Cannabis Company,
Inc. (TSX-V: FIRE) (OTC: SPRWF) is looking beyond Canada,
with an investment deal to bring in cannabis oils from Lesotho.
Branding for a New Market
Despite potential delays in the Senate, Canada’s Cannabis Act is
on its way toward becoming law. When the legislation arrives this
summer, it will turn Canada into the first G7 nation to fully
legalize the sale and use of cannabis for recreational purposes.
It’s a change which will vastly expand the Canadian cannabis
industry, which is currently limited to the medical market. It may
also become a test bed for other nations, as attitudes towards
drugs shift around the globe.
One of the biggest challenges for the companies looking to enter
this new market is branding. For obvious reasons, there are no
established big-name brands in this sector. The closest things that
exist are medical cannabis brands, and the marketing of
pharmaceuticals is hugely different from the marketing of
recreational consumables. Following an extensive consultation,
Health Canada
has released draft rules on cannabis packaging, rules which set
strict limits on how the product is marketed. With plain packaging,
health warnings, and space for only a small logo, companies will be
limited in how they can use the packaging to sell their brand
appeal. Tight restrictions on advertising will add to the
challenge.
So how will companies make their mark with such strict limits
and a cold start?
Branding with History
One of the companies looking to compete in this new market,
Choom
Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) has found a
way to build its brand through an established part of cannabis
culture.
The word “choom” was originally Hawaiian slang for smoking
cannabis. During the 1970s, when the cultivation and use of
cannabis proliferated on the island, a group of students formed a
group calling themselves the Choom Gang. Like so many groups of
young people, their story would have disappeared without attention,
it not for the later fame of one member of the group – Barack
Obama.
Obama’s rise to the office of president of the United States
brought attention to his past. Inevitably, stories about his
youthful behavior surfaced, as opponents looked for dirt to use
against him. Obama dealt with them with the grace and political
cool that won him such global popularity.
Off the back of Obama’s presidency, the Choom Gang became known
around the world. Their story, and the relaxed Hawaiian ethos they
were associated with, has become well known among cannabis
consumers. By building a brand that connects to that existing
story, Choom Holdings is creating a brand with history and a
reputation behind it.
A Relaxed Style
The brand Choom is building is a perfect fit for the
recreational cannabis market. It’s all about fun and relaxation.
Images of Hawaiian beaches combine with a mellow color pallet to
evoke an atmosphere that’s far away from the clinical style taken
by pharmaceutical cannabis brands.
The company’s website and marketing materials emphasize the
story behind the brand and, by implication, the bigger history of
cannabis use in American and Canadian culture. Choom is showing an
awareness of the decades of recreational smoking that have come
before, that it understands that most customers aren’t just taking
up the habit now, and that they have a whole culture built around
shared interests and values. Through its branding, Choom is selling
itself as part of an ongoing history of people relaxing and
enjoying cannabis.
It might seem like a lot of effort to go to for a single
product, but there’s a lot of money at stake. Cannabis already has
a huge market in Canada, and with the change in the law, the
profits from that market will shift from criminals to legitimate
businesses. It’s estimated that the cannabis industry will quickly
be worth $10 billion by 2023, according to a recent Research report
by Pacific International Securities, more than the spirits and wine
markets respectively. That’s not counting ancillary products and
services such as security, testing, tourism, and paraphernalia. By
making a new brand feel established, Choom is marking out a strong
place within that large market.
Beyond Packaging
With the limits on packaging, cannabis companies will need other
ways to mark their brands upon the public consciousness. As in so
much about cannabis branding, Choom is already a step ahead on
this.
The company’s business plan includes a complete supply chain,
from production through to sales. As part of this, it has developed
a design for distinct Choom branded dispensaries to sell its
products. Sitting on Canadian high streets, these will provide a
welcoming place for consumers to buy their cannabis. The style of
the shops combines elements of the relaxed, choom gang aesthetic
with others drawn from high impact modern brands. Comfortable sofas
and wood panels sit alongside clean white shelves full of neatly
ordered products. There are even touches of Hawaiian greenery to
evoke the great outdoors.
These shops will let Choom establish its brand identity despite
the limits on packaging and advertising. It’s a smart approach to
branding that should help it take a leading place in the new
cannabis market.
The Substance Behind the Sizzle
This isn’t to say that Choom is nothing more than a collection
of flashy branding techniques. Far from it.
The company has been working for several years to establish two
licensed facilities to grow cannabis, making use of the existing
medical regulations. The buildings at Vernon and Chemainus are both
undergoing a refit to bring them into prime condition. Between
them, they will be able to grow $11.1 million worth of cannabis
each year. Phase two of their development, scheduled to be complete
early next year, will more than double this capacity to $24
million.
Choom continues to expand its portfolio of late-stage ACMPR
applicants to include brands that are strategically focused on
cultivating a consumer cannabis experience. The company has
obtained substantial funding to support it through establishing its
presence. With its growing facilities in place, its shops designed,
and capital ready for a first big push, Choom looks set to become
an important brand.
Companies Getting into Cannabis
Of course, Choom isn’t the only company preparing to take a
share of the recreational cannabis market.
Medical cannabis company OrganiGram Holdings (TSX-V:
OGI) (OTCQB: OGRMF) is going through a period of
expansion. The company is looking not just to cater to the existing
medical market but to add recreational users to its consumer base.
The company has received approval from the Canadian government to
expand its existing growing rooms, increasing not only its capacity
but also the efficiency of its operations. Automated systems in its
second phase of growing rooms will save costs and increase crop
yields. At the same time, the company is expanding its staff, with
a recruitment fair to find new employees for posts across the
business.
Aphria (TSX: APH) (OTCQB: APHQF), another
medical cultivator, is also pursuing a growth strategy. Targeted
investment and collaboration with other companies have given it
more resources and opportunities, including a route into the
American medical cannabis market. Having recently acquired Broken
Coast Cannabis, and with a distribution deal in place with Shoppers
Drug Mart, the company is taking a larger place in the medical
market, strengthening its position to reach recreational
smokers.
Hydropothecary (TSX-V: THCX) is also using
collaborations with other companies to develop its processes. It
recently announced an agreement with Segra International Corp. to
incorporate plant tissue culture propagation into the cannabis
plant production process. By using Segra’s tissue culture
technique, Hydropothecary aims to increase its yield to serve both
the medical and the recreational cannabis markets. To better reach
those markets, it has struck a deal with online commerce company
Shopify. Shopify will build a bilingual ecommerce platform serving
Hydropothecary’s customers in both English and French speaking
Canada. Like Choom’s chain of dispensaries, this will give
Hydropothecary a complete supply chain from production to retail,
for vertically integrated cannabis production and sales.
The Supreme Cannabis Company (TSX-V: FIRE) (OTC:
SPRWF) is developing its 7ACRES subsidiary as a cultivator
of premium cannabis, ready to expand beyond the medical market and
reach recreational users. Its supply chain has been further assured
through a $3 million investment in BlissCo, a company about to
complete its application for a cannabis license. But Supreme is not
just concerned with Canada - it is looking at the global cannabis
market. A $10 million investment in Medigrow Lesotho gives the
company a position within that country’s medical cannabis industry,
which will support the export of cannabis oils and so let Supreme
start building a global supply chain and brand.
With legal recreational cannabis on the way to Canada, companies
are finding many ways to prepare for the change. Strong brands
backed by efficient production facilities will surely shape the
future of the Canadian market.
For more information about Choom Holdings, visit Choom
Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF)
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