High times

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Canada’s robust experience with legal cannabis – it first permitted regulated medical marijuana in 2001 – is poised to expand in October 2018, when sales of cannabis to adults will be allowed. The legal pivot has implications far beyond boosting sales and tax collections, and will transform the Canadian marijuana marketplace into something familiar in certain US states: a brand bonanza.

First, the caveat. The Cannabis Act includes restrictions for on-pack branding – from logo sizes and colours, to rules against promoting ‘glamour, recreation, excitement, vitality, risk or daring’. While the rules limit creativity, brands are expected to dominate in edibles, concentrates and topicals (medications).

Despite Canada’s long involvement with legal cannabis, the consumer market resembles US states with medical-only regulatory regimes – where talk about cannabis remains hush-hush, outdated stigmas persist, education about the plant is minimal, and product evolution cannot compare with that of states with strong adult-use markets, such as Colorado and California. However, both states used to be in the same boat as Canada – so what happened?

First, cannabis became more mainstream. Before adult-use legalisation, the market was on the fringes, but – post-legalisation – more people began visiting dispensaries and trying different products. In California in 2018, around 60% of consumers who had used cannabis in the past six months bought marijuana or products containing it from
a dispensary.

In Colorado, the number of past-six-month cannabis consumers rose from 25% in 2017 to 35% in 2018, according to our data. On average, these people are in their forties, educated, and working full-time, and about half are parents. They have begun to look like everybody else in their community.

Messaging has also grown increasingly sophisticated and targeted. Brands no longer uniformly project variations of hippy or stoner themes, with messaging shaped around effects – such as energy or sleep. Some focus on ‘wellness’, and champion cannabis as part of a healthy lifestyle. According to BDS Analytics, 47% of past-six-month consumers in US legal states, and 45% in Canada, wish more products were labelled with information about what mood or effect to expect. 

As the marketplace matures, brands are more explicit about potential medical applications, and higher-end dispensaries invest in extensive employee training regarding marijuana’s myriad uses. 

Legalisation also brings increased sales, profits and capital investments, leading to more product development. Markets in medical-only states often revolve around cannabis flower sales, with a smattering of offerings such as concentrates, edibles and topicals. But in adult-use markets, the category is much broader, with high-cannabidiol (CBD) gummies, single-serving lavender kombucha (a fermented tea drink), vape pens and salves. In Colorado, edibles and concentrates accounted for 45% of the market share in Q4 2017, up from 24% three years earlier.

Canadian authorities are keeping edibles out of the market for the next year, but the transition to a pastoral landscape is at hand. The nation is marching towards a different relationship with cannabis, one that’s familiar to places with legal adult-use sales: users look like neighbours, messaging hinges more on ‘wellness’, and brands proliferate – with some emerging as trusted partners and market leaders.

Linda Gilbert is managing director of consumer insights at BDS Analytics

• The legal cannabis market has resulted in an explosion of high-end brands and products, such as fashion-conscious smoking accessories from Tetra (pictured above), Beboe’s beautifully packaged upscale cannabis pastilles and vaporiser pens, and cannabis-infused skincare from Herb Essentials.
• Consumer spending on cannabis products is on the rise, according to a SoapBoxSample poll of US users. Those with an income of more than $100,000 are more likely to purchase through a dispensary and choose edibles or vaporisers.
• However, 70% of female cannabis users feel there is still a stigma around consumption, according to a survey from Van der Pop and Canadian Viewpoint.

This article was first published in Issue 23 of Impact.

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Photo by Bethany Vargas.