The Cannabis Industry Has Come a Long Way
Legal cannabis had its humble beginnings a little over 20 years ago when it became legal for medical use in California. To this day, through many court battles, it has reached a legal status in 33 states, and we can expect that more states will adopt it as time goes on. There are 10 states that took a further step forward by legalizing it for recreational use. Many more states are expected to follow as well and legalize it, at least medicinally, within a couple of years.
Cannabis has Immense Public Support
Such a strong push for legal cannabis is backed by public support. A lot of independent research is being done on this, and the latest poll from Pew Research brings a surprising support figure. Almost two-thirds of Americans support legalization, much more than in the previous decades. Of course, opinions differ on whether it should be allowed only for medical treatment or recreational use as well. If we look exclusively at those who entirely oppose any form of legalization, they are in the extreme minority at 9%.
What often gets overlooked is that also, CBD has been legalized with the Hemp Bill just over a year ago and is completely taking multiple markets by storm. Hemp as well is becoming more popular as the stigma around it is dissipating.
It’s clear we are moving into an age of readily available hemp and cannabis products, so we would like to raise a few points on what to expect in the next year, and what this growth means for the industry and new job opportunities. Most importantly, we would like to talk about how an entrepreneur or a small business can get out there and market their ideas.
Market Growth
In 2018, the cannabis market in the United States was observed at 10 billion USD and was expected to triple by 2023. The market has since grown as was projected. It’s gradually increasing at a compound yearly growth rate of around 30%. The market is split into 2 core areas, the medical and recreational cannabis products, most common of which are cannabis flowers and CBD concentrates, but also topicals, edibles, and beverages. The industry is mainly divided into healthcare, skincare, and food products. There are a little over 200,000 jobs in the field, and many skills required in the industry are easy to transition to, meaning employers shouldn’t have a hard time finding skilled cannabis enthusiasts to work in their company.
Business Forecast
2020 Is going to be a unique timing for many businesses to successfully establish themselves within their local area before expanding into new places in the near future. As legal cannabis is slowly going global, brands with a reputation will have a considerable head start in capturing new markets, be it over state, country, or continental borders.
So far, we have seen Uruguay, Canada, New Zealand, South African Republic and The United States (on the state level) legalize cannabis. Many countries have put legal wheels in motion to relax cannabis laws or even fully legalize it, and we expect to see many countries legalizing it within the decade, especially in Europe and South America, but also Africa. Currently, Africa may be on the fastest track of cannabis reform worldwide.
What does this mean for your business idea?
If you think that the market growth will bring in too much competition, you would be somewhat wrong. Yes, there will be more and more competition with time, and those competitors will be much better in all areas of the cannabis business as they gain experience. At the same time, the demand for cannabis products is growing rapidly. An increasing number of people want tailored products with all the benefits cannabis products can introduce into their lives. At this stage, a brand with the right awareness of their customers is unlikely to mind competition, especially as it can be a way to learn more about which strategies work, and with which consumer groups.
The Consumer Base
Did you know that the majority of consumers in the CBD and cannabis industry aren’t necessarily young? In fact, there are equally many older people in the consumer base, even members of the senior population, and it’s expected that many more will be introduced to cannabis in the coming years. It’s likely that the older population of consumers will significantly grow in the area of recreational cannabis as well. All of this plays a crucial part in setting up your business plan and, more importantly, your marketing strategy, which we will also cover below.
Starting a cannabis business in 2020
If you’re planning to start a business in the industry, there’s a few things you should know. The path to a successful cannabis business is not smooth and involves many legal boundaries. On the upside, this is an industry in its infancy, meaning there is a ton of room for experimentation. Also, as we mentioned, the market is expanding, meaning that the sooner you get the core values of your brand set in stone, the faster you will be on track to reach newcomers to cannabis and capture their interest.
The Legal Side of Things
If you think your skills and ideas are up to the task, you should start by getting familiar with laws and regulations surrounding the industry. This can be downright the hardest part for newcomers, as the rules are not yet set in stone and are subject to change. Just for 2020 alone, the United State’s judicial system has over 900 bills to go through, all closely related to cannabis, and set the ground rules in the booming industry.
There are also specific regulations about running a dispensary business, FDA regulations for edible products, lab testing for cosmetic or healthcare products, and the list goes on. On top of this, any hemp or cannabis used in manufacturing must be sourced under further rules, so a more straightforward approach is to go with white-label branding, the method most companies take.
Cannabis Marketing – Things you must know
Getting started with a cannabis business is still pretty restrictive, and the marketing side of things doesn’t offer much more freedom, either. To succeed, a company must know how to put in place and successfully execute a marketing plan for the startup idea that will abide by laws, terms and conditions of various marketing platforms, and bring in good results at the same time. Offline marketing options vary incredibly on a state basis, while digital marketing depends on the platform.
The terms and conditions of most platforms still don’t allow recreational cannabis products or those of a high THC content. Also, while many products are entirely federally legal, like CBD oils with less than 0.3% THC, platforms still reserve the right to forbid them, as Facebook does.
Google, on the other hand, is more open to the idea, starting with CBD advertising, which currently has a test program. Search Engine Optimization doesn’t discriminate against cannabis, though, and is one of the most potent marketing options at the moment, albeit it takes time before results can be observed.
About Growhouse Marketing
Growhouse Marketing is a marketing agency specialized in cannabis, hemp and CBD advertising based out of San Francisco, California. Our clients include both big companies and small businesses, such as dispensaries or cosmetic brands, but also entrepreneurs who are jumping on the opportunities brought on by cannabis. We regularly publish articles with the latest information about the industry and marketing, so stay tuned if you want to know more.
If you’re looking for a specialized marketing agency passionate about cannabis, get in touch with us and let us assist you with finding the right audience for your ideas. You can find more information about our marketing and SEO practices on the following pages.
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