Marketing Medical Cannabis in Canada
Program: MBA FT14
Academic Year: 2014
Dissertation / Project / Internship Report: FMP
Student Name: Brendan Pogue
School Tutor / Evaluator Name: Philippe Rase
Summary: The purpose of this document is to outline the implications of marketing medical cannabis. By examining everything from Health Canada agricultural regulations and extract production to taxation and retail distribution we can better understand potential strategies for market penetration.
Cannabis has been a taboo topic ever since the beginning of its prohibition in the early 20th century. Largely operating in the black market, the farming, distribution and sales of cannabis was under strict control as its impact on the human brain was misunderstood.
Keywords: (cf Thesaurus du Management)
Table of Contents
The purpose of this document is to outline the implications of marketing medical cannabis. By examining everything from Health Canada agricultural regulations and extract production to taxation and retail distribution we can better understand potential strategies for market penetration.
Cannabis has been a taboo topic ever since the beginning of its prohibition in the early 20th century. Largely operating in the black market, the farming, distribution and sales of cannabis was under strict control as its impact on the human brain was misunderstood.
In present day the taboo surrounding cannabis is slowly falling. Our historical perceptions of the drug are being proven wrong through research done at top universities and facilities worldwide. The world around cannabis as a medical tool for treatment expands daily for ailments such as PTSD, anxiety, insomnia, eating disorders, epilepsy, multiple sclerosis, chronic pain, constipation and many more. Governments, including Canada, United States, Israel, Ukraine, India, Puerto Rico, Jamaica and Uruguay, have made bold moves to legalize and control the use of cannabis as a medicinal product.
In early 2014 the first Canadian medical cannabis company went public on the stock market a quickly rose to a $100 million market capitalization. Furthermore, the business behind cannabis farming, distribution, and retail has proven to be a highly profitable tax stream for governments. Last year Colorado State recorded $53 million in tax revenue from retail cannabis (Lobosco, 2015). An economic analysis of the price sensitivity of cannabis touches further on taxation and the risks therein of having taxes too high where the market reverts back to the black market, a place where it has comfortably operated for 80 years.
Furthermore we analyze studies on cannabis legalization and the potential impacts on competing industries such as alcohol, liquor and, as medical studies become more prominent, pharmaceutical products. The legalization creates employment, economic opportunities and health benefits as a result of the cannabis industry but could potentially harm what might be considered competing industries.
The cannabis market expands much beyond the simple vertical markets. Each vertical market has multiple horizontal markets that, in themselves, represent $100’s of millions worldwide. For example, employment markets in the United States are suggesting over 200,000 jobs will be created in the cannabis industry in 2015 (Bennet, 2015).
However, despite all the economics, public support, and health information, cannabis is still considered taboo. Developing a strategy to create, clarify, and support a cannabis brand will require creativity and diligence to break the barriers of societal norms. Analyzing other products that have broken the social constraints of marketing a taboo product helps define a number of key features.
Cannabis has long been misunderstood and I believe that there exists an opportunity to clarify common misperceptions of cannabis through branding. I want to be very clear that it is not my intention to promote cannabis use to children or those who don’t need it.
I was once of the mind that cannabis use resulted in destroyed brain cells and was associated with the stereotypical lazy and unsuccessful image portrayed by the media. It was through long discussions and a critical analysis of the subject of marijuana that I find myself today believing in the potential health benefits of the terpenes existing in the product. After immersing myself in the cannabis industry over the past year I have acquire much knowledge on not just the scientific side but the psychological element as well.
I have witnessed firsthand the positive and negative effects cannabis can have on people willing to experiment and I am of the opinion that the positives far outweigh any negatives. With that said, I firmly believe that cannabis is not for everyone. Time and time again I hear people tell me that this herb brings balance to their life, whether the imbalance is due to mental illness or physical ailments, the effects of cannabis can aid people with normalizing their lives.
Atomic Haze – This is a sativa cannabis varietal with a euphoric high that makes people happy. The overall effect is a content relaxation.
Budder – A whipped cannabis extract with a high THC content. Not as strong as shatter but contains more terpenes and thereby more flavour.
Cannabis – The modern term for marijuana which does not carry the same political and historical connotations as ‘marijuana’.
CBD – This is an abbreviation for cannabidiol which is one of the most prominent medical properties of cannabis. CBD has been linked to red blood cell counts, blood flow and neurological development.
Decarboxylation – The process of converting THCA into THC. This is desirable to achieve the psychoactive effects of THC.
Deep Purple Kush – This is a very relaxing cannabis varietal design for people with insomnia and depression.
Dispensary – A store front facility designed for either medical or recreational sales of cannabis and cannabis related products.
Edibles – Cannabis extracts created in forms as food consumption. Examples are cannabis infused cookies, pills and oils.
Extracts – A concentrated medicinal product created from cannabis through a variety of extraction methods.
FDA – The Canadian Food and Drug Act.
Hash – A cannabis extract product made from compressed trichomes. The result is a higher THC product than simply dried cannabis.
Health Canada – Canada’s governing body for health and medicine. Health Canada is federally regulated.
Hybrid – A particular variety of cannabis
Indica – Cannabis indica is typically a variety that induces relaxation and calmness when consumed.
LP – “Licensed Producer” under Health Canada’s MMPR program. LP’s are regulated by Health Canada to grow and sell medical cannabis.
Marijuana or Marihuana – the out-dated term for cannabis.
MMAR – “Medical Marijuana Access Regulations”, the MMAR program is Health Canada’s old program that still exists as a constitutional right for medical patients to grow their own medicine.
MMPR – “Marijuana for Medical Purposes Regulation”,
NCR – The Canadian Narcotic Control Regulations
Oil – An oil product, whether infused or extracted, that can be consumed in a variety of methods.
Sativa – Cannabis sativa is a varietal commonly attributed with an uplifting and euphoric feeling. Sativa varieties can offer energy and focus, similar to caffeine.
Shatter – A hash oil that goes through another level of extraction. Considered one of the more pure types of cannabis extracts, shatter is high in medicinal value.
Strain – An out-dated term for variety. See variety.
Terpenes – Organic compounds found in cannabis. The particular combination of terpenes in any given variety distinguishes its medicinal effects.
THC – Tetrahydrocannabinol is the primary psychoactive ingredient in cannabis. People seeking cannabis for the psychoactive effects will seek out varieties with high THC.
THCA – Tetrahydrocannabinolic acid is found in live and dried plants and is non-psychoactive. Over time THCA converts to THC, this process can be expedited through heat.
Trichomes – Microscopic, crystal-like structures in cannabis that contain the various terpenes such as THC, CBD, etc. This resin is the most valuable medicinal property in cannabis.
Variety – The type of cannabis; varieties are sativa, indica and hybrids and influence the effects cannabis has on one’s body and/or mind.
Cannabis use dates back over 6000 years (Zuardi, 2006). The first evidence of this is 4000 BC in China where the plant was farmed for the strong fibres which were used in the manufacturing of rope and textiles. The earliest reported use for cannabis as a medicinal product was found in a Chinese pharmacopeia in 2600 BC to treat ailments such as pain, constipation and malaria (M., 1981). In India, cannabis use began around 1000 B.C. for a number of religious and medical uses such as: analgesic, anticonvulsant, anxiety treatment, anti-inflammatory, antibiotic, anti-parasite, antispasmodic, digestive, appetite stimulant, etc. (TH., 1969). Making its way west, various historical and archaeological sites suggest cannabis landed in Europe before the Christian Era, around 450 B.C., and was brought in by invaders who used the plant for ritualistic purposes.
During the first millennia A.D. medical use of cannabis was well-known in India, the Middle East and Africa. It is noted that Muslim texts mention the use of cannabis as a “diuretic, digestive, anti-flatulent and to soothe pain” (Fankhauser, 2002). A common alternative treatment in today’s age, cannabis resins were reportedly used in the 1400’s for epilepsy treatment.
“In 1464, Ibn al-Badri reported that the epileptic son of the caliph’s chamberlain was treated with the plant’s resin, and stated: it (cannabis) cured him completely…” (Aldrich, 1997).
In Europe during this period cannabis was farmed primarily for fibres for rope, textiles and paper (Aldrich, 1997). The use of cannabis as a medicinal product was limited in Europe whereas in the Americas during this same time it was popular for religious rituals, treatment of aches and pains and menstrual cramps (Pinho, 1975).
19th & 20th Century Cannabis
It wasn’t until the 19th century that the medical uses of cannabis began to proliferate and be well documented. Through the words of Willian B. O’Shaughnessy, an Irish physician, and by Jacques-Joseph Moreau, a French psychiatrist, cannabis use as a medicine began to take foothold in modern times.
While in India, O’Shaughnessy writes, “The narcotic effects of Hemp are popularly known in the south of Africa, South America, Turkey, Egypt, Middle East Asia, India, and the adjacent territories of the Malays, Burmese, and Siamese. In all these countries, Hemp is used in various forms, by the dissipated and depraved, as the ready agent of a pleasing intoxication. In the popular medicine of these nations, we find it extensively employed for a multitude of affections. But in Western Europe, its use either as a stimulant or as a remedy is equally unknown” (Fankhauser, 2002).
Meanwhile in France, Moreau investigated the uses of cannabis from a different perspective, to treat mental illness. In his 1845 book, Du Hachisch et de l’Alienation Mentale: Etudes Psychologique, Moreau acutely details the effects of cannabis. “…I saw in hashish, more specifically in its effects on mental abilities, a powerful and unique method to investigate the genesis of mental illness” (Moreau, 1845, translated 1972).
The contributions of these two researchers, Moreau and O’Shaughnessy, had a great impact on the Western medicinal use of cannabis. From 1850 – 1900 over 100 articles on the science of the therapeutic benefits of cannabis were published throughout Europe and the United States (Aldrich, 1997). In the early 20th century cannabis the medical use of cannabis reached its peak as various companies were marketing cannabis extracts and tinctures.
A record of the medical value of cannabis was outlined in the 1918 as the following (Sanjous, 1918):
- “Sedative or Hypnotic: in insomnia, senile insomnia, melancholia, mania, delirium tremens, chorea, tetanus, rabies, hay fever, bronchitis, pulmonary tuberculosis, coughs, paralysis agitans, exophthalmic goiter, spasm of the bladder, and gonorrhoea.
- Analgesic: in headaches, migraine, eye-strain, menopause, brain tumours, tic douloureux, neuralgia, gastric ulcer, gastralgia (indigestion), tabes, multiple neuritis, pain not due to lesions, uterine disturbances, dysmenorrhea, chronic inflammation, menorrhagia, impending abortion, postpartum haemorrhage, acute rheumatism, eczema, senile pruritus, tingling, formication and numbness of gout, and for relief of dental pain.
- Other uses: to improve appetite and digestion, for the ‘pronounced anorexia following exhausting diseases’, gastric neuroses, dyspepsia, diarrhea, dysentery, cholera, nephritis, hematuria, diabetes mellitus, cardiac palpitation, vertigo, sexual atony in the female, and impotence in the male”(Zuardi, 2006).
Decline of Cannabis in the 20th Century
In the early 20th century the development of modern medicines such as vaccines, analgesics (asprin), and sedatives began to compete with cannabis extracts for treatment. Furthermore cannabis extracts were difficult to standardize. Results varied widely based on growing conditions, strains, age and preparation methods and the use of cannabis to treat ailments was inconsistent and unreliable as a medicine in comparison to other modern medicines (Fankhauser, 2002).
In 1937 the United States passed laws that heavily taxed cannabis for medical and recreational purposes. The restrictions, excessive paperwork and threat of punishment made cannabis unattractive to study. Shortly thereafter a Supreme Court ruling banned the use of cannabis in all of the United States. In 1941 cannabis was removed from the American pharmacopoeia (L Grinspoon, 1993).
Beyond the 1950`s cannabis use proliferated as consumption for recreation purposes. “In Europe, groups of intellectuals gathered to use the drug. Descriptions of this use may be found in novels by 20th century French writers, such as Gautier and Boudelaire” (Zuardi, 2006).
The 1960’s and Beyond
Recreational cannabis use among young adults exploded in the following decades, from 5% in 1967 to 68% in 1980 (Kandel, 1984). The massive increase in cannabis use was not just a matter of social importance but was also due to an increased understanding in the chemical composition of the plant.
|Young adults who used cannabis (USA)||5%||44%||49%||68%||64%|
It wasn’t until 1964 that the chemical structure of D9-THC (Delta 9 Tetrahydrocannabinol) was identified (Y. Gaoni, 1964). As a result this started a wave of research on the subject for the following decade (Mechoulam, 1973) and once again in the 90’s with the discovery of cannabinoid isolation and their relationship with the nervous system.
Needless to say, the interest in cannabis has rebounded and with that the therapeutic benefits are once again under examination. A wide variety of studies are taking place on potential cannabis treatments for insomnia, spasms, glaucoma, asthma, loss of appetite, epilepsy, chronic pain, Multiple Sclerosis and others (Carlini, 2004). Furthermore, significant development in the research of CBD (Canabidiol) and the body’s natural endocannabinoid system have pointed to the therapeutic benefits towards epilepsy, brain damage, psychoses, anxiety and others (R. Mechoulam, 2002).
What suppressed cannabis use in the early 20th century, government policy and the introduction of stable pharmaceuticals, is now clearing the way. Governments worldwide are choosing to soften regulations on cannabis use for its recognized health benefits as a medicinal product (not to mention economic benefits). Furthermore cannabis cultivation is becoming more consistent and reliable making it a viable medical product.
As the economics of cannabis begin to launch there are more and more people warming up to the idea of cannabis as an investment. However this rush of investment, management and medical oversight from the likes of high society is creating a conflict with the grassroots activists who originally fought for the legalization of cannabis.
The cannabis culture of deviancy has been around ever since it was deemed a schedule 1 drug in the United States. The representation of the classic individual who disregards cultural norms is the same person who fought for cannabis legalization and brought the business to where it is today. When entering into the business of cannabis, it is important to remember to have respect for the tradition and culture; without this culture, cannabis would not have achieved legalization.
At the turn of the millennia, the Canadian Federal government created a system to help patient’s access medical cannabis called MMAR (Medical Marijuana Access Regulations). This program was designed to help those in need grow their own medicine or assign a designated grower to grow on their behalf. Typical patients were those suffering from multiple sclerosis, cancer, severe arthritis and chronic pain.
In the spring of 2014 Health Canada overhauled the system and introduced MMPR (Marijuana for Medical Purposes Regulations). Under the new system people were to halt their old MMAR licenses and seek out Licensed Producers (LP) under the new MMPR regulations. However, at the time Health Canada had only authorized a handful of LP’s for the sale and production of medical cannabis. In order to obtain product from an LP, medical patients must order their cannabis online and they receive it through the mail. Cannabis has a wide variety of flavours and this is not easily understood through mail order. On top of this the cannabis was considered inferior and distasteful to many who experienced the MMAR program and had been growing medicine for themselves. Riddled with multiple law suits against Health Canada for destroying the old MMAR system, the Supreme Court of Canada ruled on March 21st, 2014 that “individuals who were previously authorized to possess and produce marijuana under the MMAR, and who meet the terms of the Federal Court order, will be able to continue to do so on an interim basis until the Court reaches a final decision” (Health Canada, 2015).
Because of the distaste for mail order cannabis products from the LP’s there has been an increased demand for local product and as a response store front cannabis dispensaries have begun leasing store front locations and offering cannabis for sale to members with Health Canada permits. Dispensaries are a place where people can see, touch and smell the products before they purchase similar to a grocery store. By comparing cannabis to wine, we can understand there are high quality products with a wide range of cannabis varietals that produce an even wider range of flavours. Each medical user requires a certain variety for their specific ailment. Would you mail order you wine before trying it?
Dispensaries themselves are in a legal grey area. The federal government has deemed them illegal but they continue to operate privately under municipal bylaws. In June, 2015 Vancouver City Council was the first city to enact a dispensary specific bylaw. City of Vancouver mayor Gregor Robertson defended this decision by saying, “We are faced with a tough situation, a complicated situation, because the federal government has failed to act on regulating medical marijuana appropriately. We will be looking forward to some more sane policy out of Ottawa to deal with the gaps that currently exist” (Lee J. , 2015). Furthermore the structures of these policies are brand new in Canada. As the first city in Canada to create these bylaws Vancouver did not have much information to help form the regulations.
“We are treating these shops with the same rules and regulations pretty much as any other shop in our city. We are putting in structure where no structure exists” (Lee J. , 2015) – Vancouver Mayor Gregor Robertson.
The city bylaws specify the following key points (Hager, 2015):
- $30,000 annual licensing fee for commercial dispensaries and $1000 for non-profit dispensaries.
- Minimum 300 meters from another dispensary.
- Minimum 300 meters from schools or community centers.
These regulations are designed to control the expansion and proliferation of cannabis dispensaries. Clearly there is demand for high quality prices and regulated quality and unfortunately the federal government is leaving municipalities to regulate it themselves.
The internal workings of dispensaries are equally unregulated. In general, law enforcement looks to ensure dispensaries are selling product to medically authorized patients. Typical membership requires: (1) Government identification over the age of 18, (2) Medical prescription for cannabis and (3) Internal membership forms and liability waivers. This process is inconsistent from one dispensary to the next and is generally accepted by law enforcement agencies (Weeds Kelowna).
The United States experienced alcohol prohibition from 1920 – 1933. It was a time very similar to present day cannabis where, regardless of the legal regulations, people continue to consume. Ultimately prohibition came to an abrupt end due to the unpopularity of the policy and the need for increased tax revenue during the great depression (Hall, 2010).
In its most basic form, there are two main varieties of medical marijuana varieties. They are widely known as the cannabis sativa and cannabis indica. The hybrid variety was used later on as growers started blending together genetics from diverse geographic areas.
The sativa variety originated in the equatorial countries of Columbia, Mexico, Thailand, and South East Asia and it thrives in warmer weather. Sativa leaves are a lot narrower compared to those of Indica and are usually a light green of in color. Sativa flowers are thinner when compared with indica and they also grow taller. Sativa plants are really known to have an extremely pungent odour, with sweet and fruity scent.
These strains often provide an uplifting and cerebral high that is characteristically very invigorating and stimulating. Sativa’s are known to make you laugh uncontrollably or embark on in-depth discussions. These types of varieties basically make you examine the human experience and ponder wonderfully making Cannabis Sativa widely accepted among philosophers, designers and also music artists. Certain Sativa have been recently identified to boost lights and sounds, producing music, movies, making the environment a lot more energetic than usual. Cannabis Sativa’s are becoming reliable in dealing with mental and behavioural problems such as anxiety, stress, depressive disorders, and ADHD.
The Indica Variety is short in nature and the plants are said to have originated in Pakistan and Afghanistan, this variety blossom in cooler atmospheres. Indica strains are often dark green in color with short and fatter leaves. Also they are known to have got a sweet and sugary fruit flavor with a pungent, pine, earth and hash aroma.
The effects derived from Indica strains are particularly soothing and narcotic-like, basically giving you a “couch-locked” effect. Indica are ideal for those times we spend curled up on the couch watching TV, or maybe surfing the internet. However, a lot of people take Cannabis Indica after a tedious day in the office to relieve stress, provide full-body pain relief, and also enable them to fall asleep at night.
Indica strains are perfect for persistent discomfort, muscle spasms, anxiety, dizziness, appetite stimulation, and also insomnia. People who are affected by diseases like lupus, multiple sclerosis, sleep apnea, fibromyalgia and sleeping disorders are likely to benefit from the effects of Cannabis Indica.
The hybrid strain was formed from the crossing of sativa and indica variety. The crossing of the sativa and indica variety allows users to achieve a more desired effect.
For instance, the sativa dominant hybrid is good for high energy and activity levels with the indica component helping to relieve body pain and increase relaxation. Examples are Neptune OG, headband, juicy fruit etc. While the indica dominant hybrid is good for reduce body pain and increasing relaxation with the sativa component helping to heighten the cerebral level and building up energy. Examples are blackberry Kush, kosher Kush, SFV OG, etc.
There is also a hybrid variety where the sativa and indica are equally dominant. It is perfect for individuals looking for a balanced effect of head and body .Examples are purple diesel, blue widow, blue dream etc.
There are different types of cannabis extracts or concentrates. In this article, the major cannabis concentrates will be discussed.
Hash is a cannabis extract derived from compressed or purified solutions of stalked resin glands, called trichomes. It is composed of the same active ingredients such as tetrahydrocannabinol (THC) and other cannabinoids and in higher amounts than unsifted buds. In some regions it is often called finger or scissor hash when the flowers are trimmed after curing and also they trickle down trichomes. Growers usually trim over a silk screen, but the sieved product is what is generally known as kief. It is also gathered in grinders with screens inside, though filtering without using an appropriate silk screen it’s certainly not a hash. Some other typical extraction process utilizes a number of silk screen bags and also ice water to distinguish the trichomes from the cannabis plant matter and then filter them using the screen.
Shatter is sleek, clear and strong. It happens to be the purest and most beneficial type mainly because it covers an alternate extraction procedure that eliminates body fats, lipids and waxes. This could generate over 80 % THC. Nevertheless, this also signifies that terpenes are forfeited in the process. Shatter is the product of a butane hash oil extraction. It is obtained with the use of expert purging of the butane and cannabis solution, usually implementing the utilization of a vacuum. The product is usually yellow or orange in color and it is malleable.
Budder is the product of butane hash oil extraction. It is obtained using specific techniques, in most cases whipping the oil into a more stable consistency. It has yellow hue and crumbly texture. Budder retains more of the terpenes so it is considered to be tastier but less effective with THC of about 70%. It has got a creamy consistency from after being whipped.
Cannabis Oil is the product of butter or Oil extraction. It is probably the most natural and most dependable concentrates out there. Cannabutter is usually eaten or baked into a variety of foods. It is an effective way to preserve cannabis, and improve the experience. Though if taken orally, cannabis is 4 times stronger mainly because the THC becomes converted to a more psychedelic shape in the liver. Oil happens to be the least processed. It is a gooey, sticky fluid that may be difficult to handle. Also referred to as honey oil or butane hash oil are able to retain a full flavored profile and the THC levels are often less consistent.
|The most common method of consuming cannabis, smoking is one of the quickest methods to ingest the medicine. Reactions can occur within five minutes. This is mostly beneficial for those looking for the immediate benefit.|
|Vaporizing cannabis using a “vape pen” heats the flower or concentrate to release the THC and CBD and in the process does not burn therefore does not smoke.|
|Quickly becoming one of the most common methods of consuming cannabis, primarily due to the ease of ingestion, edibles take travel through your digestion system in the form of baked goods, candies, pills, etc.|
|The most compact method of carrying cannabis, concentrates can contain the highest levels of THC.|
Lotions and Salves
|For arthritis, bone and general muscle pain, lotions and salves are infused with cannabis and applied locally to the area of need.|
Terpenes are the molecules for aroma that happen to be present in the essential oils of plants (Rahn, 2014). Most of these essential oils are widely-used in aromatherapy simply because they are found to modulate brain operations and state of mind. Experts today are giving credence to the fact that terpenes have an effect on how marijuana functions on the human body. Supposing it happens to be a fact; this implies that knowing precisely what a variety smells like might be able to tell how it’s going to influence the body.
Types of Terpenes
A 2011 report by Dr. Ethan Russo in the British Journal of Pharmacology details the medicinal value of terpenes and why they are beneficial for medical use (Russo, 2011). One report states that there are around 200 terpenes that have been found in cannabis and science has just begun identifying their benefits (Lee M. A., 2013).
Dr. Russo explains that the most typical terpene present in marijuana is Myrcene. This terpene is a highly effective antibiotic, anti-inflammatory, and pain reliever. It is actually believed to work in combination with THC, reducing depression, boosting moodiness, and also making it possible for more THC to enter the brain. “Myrcene, another terpene present in numerous cannabis varietals, is a sedative, a muscle relaxant, a hypnotic, an analgesic (painkiller) and an anti-inflammatory compound. This musky terpene contributes mightily to the infamous “couch-lock” experience” (Russo, 2011).
Beta-caryophyllene is another terpene that has a peppery smell. It has pain relief benefits and lacks a psychological effect. Therefore it is deemed non-psychoactive. Pinene is yet another terpene which is a primary component of turpentine. It bears a piney aroma and it has proven to strengthen focus, self-satisfaction, and memory. Terpenol has a flowery smell with details of orange blossom. It features a significant sedative influence which is ideal for insomnia.
There are more terpenes that really helps with enhancing memory, and that is something that is usually considered to be unfavourably influenced with existing marijuana strains. One of them is Pulgone, which impedes the destruction of memory transfer proteins. Its function is to keep people alert.
|Terpene||Potential Effects||Also found in…|
|Myrcene||Muscle relaxant, analgesic, anti-inflamatory||Lemon grass|
|Beta-caryophyllene||Pain relief||Black pepper|
|Limonene||Antidepressant, immune stimulant, anti-bacterial||Garlic|
|Linalool||Anxiety, stress relief, insomnia||Lavender|
Another fascinating terpene is phytol and it is completely different from many other types, then again presenting additional medicinal options to a patient. Phytol is amongst the end products of decomposed chlorophyll. It has a floral scent and it is balsamic in nature. It is also an immunosuppressant, and it impedes the activity of Aflatoxin (a mycotoxin) in the body. It is actually applied as a topical to lower itching thus lessening the need to scratch as well as to deal with slow-healing tissue wounds. Phytol is a non-toxic yellowish or golden-tinged pigment well suited for dying food items.
Limonene is also rich in cannabis, second only to Myrcene (Lee M. A., 2013). Limonene can be obtained in the peel of citrus fruit, in some other fruits and in several flowers. It has got a sweet, crisp fruity aroma as well as the noticeable citrus aroma. Limonene feature antidepressant, anxiety-relief, immune-stimulant (much like garlic), anti-tumour, and anti-fungal/bacterial benefits, as well as help out with treating gastric reflux along with cure for oesophageal ulcers. Limonene can be employed topically as an antiseptic agent and it is also used to get rid of bugs: the leaves of the lemon or grapefruit plant can be used for this purpose.
Generally, people seeking help for their insomnia disorder need to look for a floral sweet variety of marijuana with Linalool in it. Given that more studies are being conducted, the diverse types of terpene and its influence on the body will possibly be more noticeable. This will help affected individuals positively in getting remedy for their health problems.
Because of its unique history, medical studies on the effects of cannabis have been highly regulated and difficult to obtain. Universities and research institutions are hungry for new projects but unfortunately have had little experience with medical cannabis. For this reason there are relatively few scholarly research articles available on the health benefits of medical cannabis and the primary source of research is coming from personal testimonials. The following is a typical personal testimony from a customer who suffers from PTSD (Post-Traumatic Stress Disorder):
Tried the Atomic Haze last night – it is a smooth smoke, burns nice with a white ash. It was like a cloak of comfort and peace. Gives me intense concentration on whatever I’m doing – Overall really relaxing. Tried again after my coffee this morning thinking I was too tired when I tried it last night. Same calming effect. Thanks so much for recommending Atomic Haze.
The Deep Purple Kush is the bomb! I had a terrific sleep. Haven’t tried the others yet. Thanks so much for your welcome and valuable information. You will see plenty of me. Keep cool this weekend” (Anonymous, 2015).
Using testimonials such as this are instrumental to the industry. People with common ailments, such as anxiety and insomnia in this example, can find comfort and empathy.
Medical studies have showed us that the active ingredient in marijuana, delta-9-tetrahydrocannabinol (THC), provides medical benefits in many patients. Under the impression that these benefits were substantial, people approved initiatives allowing the use of “medical” marijuana by some patients under certain circumstances. Medical marijuana is available in several different forms. It can be smoked, vaporized, ingested in a pill form or an edible version can be added to foods such as brownies, cookies and chocolate bars.
THC is effective for some patients who suffered nausea from cancer chemotherapy treatments. However, the narrow window between the anti-emetic dose and that which caused unwanted psychic effects made THC difficult to use. The advent of serotonin 5-HT3 receptor antagonists as new and more powerful anti-emetic drugs that were free of unwanted psychic effects has made cannabinoid use less attractive. For this reason, physicians virtually never prescribe marijuana or THC as an antiemetic for use by chemotherapy patients.
Cannabis can relieve muscle pain and spasticity in patients suffering from multiple sclerosis and can also control tremors in multiple sclerosis animal models. Smoking marijuana can also impair posture and balance in patients. Multiple Sclerosis patients who used marijuana had a greater number of psychiatric diagnoses and a slower mean performance time on standard neurological tests. Some randomized, double-blind, placebo-controlled, parallel group crossover trials have found no significant improvement of MS symptoms during cannabis plant extract use. However, in some trials patients did show an increase in aggressive behaviour and paranoiac tendencies in a standard psychological test. Another placebo-controlled study, examining the effect of a cannabis extract on spasticity in Multiple Sclerosis, found a positive partial relief of symptoms in patients.
Analgesia (pain relief)
Studies have indicated that THC has some analgesic activity in patients with cancer. However, there is a narrow therapeutic window between doses that produce useful analgesia and those that produce unacceptable central nervous system effects. Several studies have shown improvement of pain at higher doses, while others have shown no effect or a negative effect at higher doses compared with placebo.
THC has been shown to reduce intraocular pressure in laboratory animals and humans who have glaucoma. However, it was found that intraocular pressure was reduced only when patients stayed under the effects of THC almost continuously. Since the early studies, more effective medications have been developed to control intraocular pressure. Obviously, glaucoma medications that don’t require one to be continuously high are preferable to those that have unwanted side effects.
Regular marijuana users are aware of the phenomenon known as the “munchies.” Laboratory studies have shown that THC does increase the appetite (not a good thing for most of us). However, for those suffering from debilitating diseases, such as AIDS-related wasting syndrome, THC has been shown to be effective in maintaining body weight.
Medical marijuana user’s claim that the drug helps relieve pain and suppress nausea — the two main reasons it’s often used to relieve the side effects of chemotherapy. In 2010, researchers at Harvard Medical School suggested that that these benefits may actually be from reduced anxiety, which would improve the smoker’s mood and act as a sedative in low doses. Beware, though, higher doses may increase anxiety and make you paranoid.
Cannabis, also known as Marijuana, has actually been in use by man for decades. Dating back to 2000BC, the Chinese have employed cannabis as an anti-inflammatory to reduce rheumatoid arthritis. In western medicine, as early as the 1700’s, it had been used in order to cure muscle-skeletal pain and in folk treatments, it had been used as a cure for cancerous ulcers and tumours.
As outlined by the Substance Abuse and Mental Health Services Administration (SAMHSA), from 2002-2008, the number of those benefiting from marijuana tripled amongst those aged 55 to 59 years old. You will find a lot elderly that are consuming prescribed drugs with the resulting adverse reactions such as Doctor and Patient dizziness, seizures, and emotional problems. Certain older people are overmedicated because of their physicians prescribing them alternative drugs to deal with the complications of their initial prescriptions. However right now, physicians, advocates, and the elderly themselves have realized the wonders of cannabis and what it can do. They are no longer ill and tired and have discovered that they can survive with minimal medications or even without having narcotics used in any way. Cannabis is helping older folks to tackle ailments which include; insomnia, low energy mental confusion, low appetite, Pain associated with inflammation of joints and stiffness of limbs, Agitation from degenerative and/or dementia related diseases, Glaucoma and the dreaded Alzheimer’s disease.
The increasingly severe and deadly Alzheimer’s disease kills brain cells, which leads to memory loss, dementia, and also disrupted motor skills coupled with diminished intellect and social skills. Alzheimer’s disease is among the top ten causes of death in the elderly in the USA. Study points out that medical cannabis signifies a reliable medical treatment for Alzheimer’s disease and some of its symptoms.
Recent medical research implies that the use of medical marijuana can also play an important part in alleviating the growth of the horrible Alzheimer’s disease. Tetrahydrocannabinol or THC which is the key component minimizes and hinders the formation of neural protein deposits deep within the brain. Most of these deposits are largely the cause of this degenerative neural condition. Medical cannabis which is provided by medical marijuana dispensaries manage the formation of these protein deposits or sticky amyloid plaques that trigger neuronal damage , hinders memory and cognition , induce abrupt memory loss , and bring about confusion , discomfort , mood swings , spatial disorientation , and also speech problems .
Dr. Robert Melamede, an associate professor at the University of Colorado, testified as a specialist witness in a Canadian court that the cannabinoids in marijuana “staves off inflammation and delays the advent of auto-immune ailments, hinders the formation of Alzheimer’s disease and can aid in the treatment of cancer or possibly cure certain kinds of cancer. Cannabinoids feature healing or at least palliative benefits” (Melamede, 2008). He additionally stated that cannabis is better when compared with aspirin and it re-establishes balance in our bodies to help battle illnesses .In summary, cannabis is definitely beneficial and very effective for the older people.
Numerous studies have shown that medical cannabis has great therapeutic value. In fact, getting cannabis from a dispensary and using it can actually help a lot when it comes to relieving stress and pressure for the human body, while also helping people suffering from various conditions to ease the pain. In fact, consuming medical marijuana has managed to help people fight some conditions back with great success.
However, in order to achieve some positive results after consuming marijuana, people need to make sure that they talk with their doctors or at least someone that is knowledgeable, especially when it comes to choosing the dosage.
What therapeutic benefits come from cannabis?
One of the main therapeutic benefits for cannabis is definitely the fact that medical marijuana manages to alleviate the issues that come with HIV/AIDS generated weight loss. This particular issue can be treated with the help of cannabis and marijuana, because it allows the patients to focus on their wellbeing instead of fearing the negative outcomes.
At the same time, AIDS can also generate mood changes and insomnia, yet with the help of medical marijuana patients can calm down and instead get the sleep they need so much.
Another condition that cannabis and marijuana can treat or at least alleviate is multiple sclerosis. This condition is known to bring pain and spasticity, yet with the use of cannabis these can be placed on the backburner, allowing the people to feel better and stronger as time passes.
Chronic neuropathic pain is another issue that can be treated with the help of medical marijuana acquired from the dispensary. It can be hard to determine this particular condition, but once found, cannabis can help in treating it efficiently. The same happens in the case of chronic neuropathic pain that appears from the HIV associated sensory neuropathy, and at the same time with most chronic conditions that are related to the brain activity in general.
With the help of medical marijuana and cannabis that you get from the dispensary you can also remove or at least counter the effects of chronic neuropathic pain that appears when you use other medications alongside the normal HIV treatments.
Even the chronic pain that appears in muscles, or which is generated by multiple sclerosis, arthritis and post traumatic pain can be treated with the help of cannabis. Of course, a certain dosage is needed for each condition, so because of that it’s important to contact a professional before using these on your own.
Ten years ago I broke my collarbone playing rugby. The bone never healed correctly and causes tightened muscles and tense neck pain. I’m extremely active in skiing, sailing, and hiking to hot springs. Instead of taking Tylenol or Advil to soothe the pain, I have opted for natural products.
Legality around medical marijuana in Canada has changed dramatically over the past 12 months. Never before has there been a publicly documented approach to branding medicinal cannabis products. Marketing a previously illicit product has many challenges. Identifying and developing a strategy for overcoming these areas will aid in establishing medical marijuana as a reputable and professional business no longer operated underground.
On April 4th, 2014 Tweed, a Canadian LP (licensed producer) of medical marijuana, went public (CVE:TWD). The shares started trading at $0.89 and ended that same day at $2.59. Eight months later the stock is trading at $2 and has a market cap of $81 million; this is not a backyard business. The approval process is slow, stringent and expensive (often requiring upwards of $5 million) forcing small players to withdraw their applications, or be likely denied. Due to the detailed application process to become a licensed producer, Health Canada is inevitably pushing this business towards pharmaceutical and a large agriculture consistency by taking the opportunity away from small market players.
Documenting marketing and branding strategies around medical marijuana has never been done before. Establishing a brand strategy is essential for any growing (pardon the pun) business despite their history. This industry is particularly in need of branding strategies because, under Canadian law, advertising cannabis directly is prohibited. This presents a special case where traditional marketing is completely out of the picture and brand presentation is everything. Furthermore, the illicit history of the product has resulted in limited medical testing and documentation. Health Canada has made it clear: the medicinal benefits of cannabis products are unverified and not to be speculated.
The demographics for what is traditionally considered a cannabis user are considerably different than the public image for that same person. Research has shown that the traditional user has a post-secondary education, is, on average, 41.5 years old and claims to use medical marijuana for pain relief (Ilgen MA, 2013). Understanding the end user is the first step to outlining a brand strategy. Medicinal marijuana is no longer defined by Rastafarian hats and dreadlocks, but instead defined by business suits and IPO’s.
Cannabis legalization has been fought over for decades. Respecting this fight is a part of the bigger picture behind the branding. Although the legalization of cannabis is new, users have been consuming it for a while. Choosing a strategy that is tailored to the customer and those who have fought for the medicinal product is not only respectful, but wise. The consumers aren’t fools; the majority have been smoking for a while and know the price of a gram on the black market.
The end users are not potheads. Studies show that those who are registering for medical marijuana are not unemployed high school dropouts. We’re talking about a broad range of consumers, ranging from grandparents with acute arthritis to children going through chemotherapy. Once medical marijuana moves into a broader spectrum of legality brands will latch onto every demographic.
“… you’re going to see all kinds of branding…towards women, towards the health conscious, and towards the people who associate it with being an outlaw herb used for partying” (LaBarre, 2014).
With the legal development of marijuana extracts coming into light (including arthritis creams, vaporizers, and baked goods) there has been movement with the high end market for suit-wearing smokers. Similar to tobacco vaporizers, marijuana vaporizers emit a limited scent and do not create smoke. This allows the user to be discrete. Furthermore, certain celebrity endorsed products are pushing vaporizers beyond $100 per unit at a 500% mark-up.
Education & Storytelling
Many consumers, particularly those new to the industry might not understand the various properties of medical marijuana. For example, the difference between THC and CBD, Tetrahydrocannabinol (THC) and Cannabidiol (CBD): THC has psychoactive characteristics while CBD has no psychoactive characteristics and research has shown that CBD has powerful medicinal benefits. One Oxford professor has dedicated his career to expressing the medicinal benefits of CBD in his 750 page textbook, Handbook of Cannabis (Pertwee, 2014).
Apothecanna, an American cannabis brand (www.apothecanna.com), has taken to a simple approach similar to what you would find with medical products. The labels contain information pertaining to the benefits of the various products in a familiar fashion to traditional over-the-counter medicines.
Medical marijuana is changing faces. The days of black trench coats and underground dealers are gone. Modern design that is open and welcoming is an area to be explored. Embracing an open, pharmacy-style business will improve not only trust with customers and the public, but also governing bodies.
Focus on Wellness
The medical marijuana industry will be focused on health and wellness.
“It’s not about getting high or stoned or intoxicated–it’s about an overall sense of wellness, healing, and proper nutrition. If we discovered cannabis or hemp in the Amazon jungle today, it would be heralded as the new superfood” (LaBarre, 2014).
Successful brands to explore in the area of wellness market are the American grocery chains, Whole Foods and Trader Joe’s.
Although Health Canada has forced LP’s to market under pharmaceutical regulations, the branding opportunities have resonance with other markets. There are several taboo markets that have successfully branded themselves: Playboy, post-prohibition alcohol, gambling, tobacco, etc. Marijuana could piggyback this style of marketing that strictly demonstrates the happiness related to product benefits and quietly mumbled the negative side effects.
However, there are other industries, such as fast food and credit cards, which have successfully branded themselves against the negative public image. Exploring these successful branding strategies will be resourceful to the medical marijuana industry. Studies show that those who are registering for medical marijuana are not unemployed, high school dropouts. Once medical marijuana moves into a broader spectrum of legality, you can be sure certain brands will latch onto every demographic.
An Ingenious Way to Understand Why People around the World Live and Buy as They Do, by Clotaire Rapaille (Rapaille, 2006)
Culture Code offers a number of insights into understanding purchasing behavior. The French author, Clotaire Rapaille, brings forward a unique anthropological perspective on marketing and products designed specifically for customers most inner desires.
The notion therein is that we have a system of codes ingrained in ourselves through our experiences and upbringing within our culture. Whether Canadian, French, American or German, we all have a wide variety of cultural influences that dictate what is culturally significant.
The impact for this book on the cannabis industry is its application for analyzing taboo culture. Understanding the culture and upbringing behind each and every one of us, not just from the perspective of stereotypes but from deep meaning and understand can potentially aid successful cannabis branding.
Third Edition, by Alina Wheeler (Wheeler A. , 2009)
An in-depth look at what defines a brand, Desigining Brand Identity uses a five-phase process for creating and implementing brand identity. Controlling brand development from concept to launch to governance is essential to Wheeler’s program. The book enhances our understanding of creating brand packaging for the entirety of a branding project.
Needless to say there is much overlap in the concepts therein, however on a basic level the applied information provides more than enough insight to create a whole brand package to suit the most detailed business. A variety of positive and negative marketing examples are provided to offer a baseline for building cannabis brand.
Consumption, Pricing and Legalization, by Kenneth W. Clements and Xueyan Zhao (Clements, 2014)
This book contains some of the most significant research findings for marijuana uses over the past century. Designed to quantify purchasing behavior and medical use, Economics and Marijuana examines consumption, pricing and the economics of legalization. The results are powerful information on cannabis to help a wide range of readers from economists, policy makers, health professionals and those engaged in the business.
Branding Intelligence Made Visible, by Alina Wheeler and Joel Katz (Wheeler A. , 2011)
A simplified method for analyzing both internal and external brand qualities, Designing Brand Identity examines all aspect of brand creation, impact and responsiveness. The idea is to bring big picture thinking to minute brand details in the form of various illustrations on concept design, processes and tools for creating an inclusive brand portfolio. Essentially a more simplified version of Designing Brand Identity, Brand Atlas creates an image for quick potential in branding projects.
Sabri, Ouidade; Manceau, Delphine; Pras, Bernard (Ouidade Sabri, 2010)
This paper, from 2010, explores numerous taboo topics and their importance in contemporary societies. By analyzing five defining characteristics of taboos the authors shed light on historical marketing of taboo topics such as prohibition, sex and religion. With excepts from literature in anthropology, sociology and psychoanalysis, and previous research related to taboos in marketing the authors explore “the conceptual and methodological issues related to taboos in marketing” (Ouidade Sabri, 2010).
Most influential was the section on the destruction of taboo concepts and what made the idea of taboo disappear over time. It was suggested that public discussion and media debate would accelerate the process of breaking down a taboo. This reinforces the importance of cannabis education and informing the public.
The traditional PESTLE analysis covers a wide range of topics to help define the framework of the external environment. The results of this analysis are to define strengths and weaknesses when moving forward with an organization.
This is a major hurdle for the cannabis marketplace. Political influences range from internal laws and policies, taxation, labor laws, environmental restrictions, import/export, etc. Government intervention in the cannabis industry is one of the largest factors into the opportunities that currently exist.
Economic factors impact the profitability of any organization. These factors include interest rates, economic growth, currency exchange rates, inflation, consumer income, etc.
Economics can further be understood from a micro or macro level based on the scalability and influence of the organization. Macroeconomics is influenced on a country wide scale and cannot be manipulated by the firm. Microeconomic conditions can be influced by the firm in such levels as pricing, supply and marketing conditions.
Influenced by the likes of demographics, the social factors include age, location, attitudes, etc. Social factors are influencial in understanding market purchase behavior and follow patterns on successful branding. These are particular interesting for cannabis as we move away from the cultural stereotypes of historical cannabis users.
Examining the technological landscape aids organizations to define existing and future opportunities for production, distribution and communication. The future of cannabis technology is expanding quickly with particular developments in agriculture, extracts, laboratory testing, distribution and communication.
Exceedingly higher levels of importance every year, environmental conditions dictate organizational targets, government policies and market conditions. Trends are showing that each year, more and more consumers are demanding products that consider the environment. This includes both the sustainability and the ethical sourcing of goods and services.
Numerous legal factors include: employment, advertising, consumer rights, labeling, safety and policy. This is, arguably, one of the most import factors when considering movement in the area of medical cannabis. Quick analyses on legal conditions surround marijuana make medical cannabis a high risk business.
Written by two professors from INSEAD in 2005, Blue Ocean Strategy outlines what it takes to create uncontested market space away from the “red ocean” of competition. As opposed to a traditional SWOT or Porter’s Five Forces analyses of staying competitive in the marketplace, Blue Ocean strategy attempts to pluck the firm away from the competition, setting itself into an entirely new market altogether. An example taken from the book (Kim, 2005) is Cirque du Soleil. By blending singing and ballet with circus, they were able to create a new, interesting market space while eliminating reliance on star performers and animals.
The concept of moving away from the red ocean brings forward creative opportunities to drive new profits. Whereas the red ocean is a place of rampant competition and the result of zero-sum because of a saturated market, blue ocean principles examine untapped markets with growth potential through value innovation. This, according to Blue Ocean Strategy, is achieved through differentiation and low-cost.
Which factors should be created that have never been offered?
Which factors should be reduced below industry standards?
Which factors should be eliminated to avoid long-term competition?
Which factors should be raised above industry standards?
The market for medical cannabis in Canada has the potential of becoming one of the highest growth industries in Canada over the next decade. The history of cannabis as a result of the 1961 UN worldwide ban has made it extremely taboo. As a result the likes of research, funding, information and business around cannabis is rampant with issues in investment, education and information.
The first objective is to develop the necessary tools to analyze the current and future market conditions for cannabis in Canada. Topics studied are price elasticity, market size, market potential, vertical and horizontal markets, and competing markets. Furthermore, by using methodology from Blue Ocean and PESTLE analyses the paper examines the risks and potential for the future of the cannabis industry.
Developing a variety of brand strategies is the second objective. Through an examination of existing marketing campaigns on taboo subjects the paper discovers methods that have potential branding applications for cannabis products and the industry as a whole.
Founded in March 2015, Weeds Kelowna is part of the “Weeds” franchise. The franchise was founded by Don Briere and offers a wealth of information, inventory, point-of-sale systems (Visa/Mastercard), legal security and accounting. With a total of 18 locations, Weeds is the largest cannabis franchise in Canada.
Although compassion clubs and cannabis dispensaries are considered illegal by Health Canada, the source of product is obtained through production programs sanctioned by Health Canada. Compassion clubs are regulated not by federal or provincial programs but through municipal bylaws that were manufactured to control the growth, location and taxation of dispensaries.
Understanding the Customer
Each medical cannabis user is required to fill out medical documentation in order to gain membership to medical cannabis dispensaries to purchase their medicine. This data has been analyzed to better understand consumption behavior.
The average age from a certain Compassion Society on June 1st, 2015 was found to be 36.23 for males and 40.79 for females. This represents a discrepancy away from the Rastafarian teenager stereotype commonly associated with cannabis users. The information was collected anonymously from the 135 membership records of the Compassion Society.
|Average Age, Compassion Club Membership (Pogue, 2015)|
|Male (96 male members)||Female (39 female members)|
Furthermore an analysis of the members’ medical ailments tells us that the majority suffer from chronic pain, anxiety, insomnia, arthritis, depression and migraines. These illnesses are very much treated through medical cannabis.
Figure 1 – See Appendix A for Details
Using this data and comparing it to alternative markets, our image of the tradition cannabis user is quickly changed. These are not teenagers looking for a quick ‘high’, the members are well respected members of their communities, ranging from doctors and lawyers to teachers and stay-at-home parents . In this industry it is extremely important to keep a balanced view and not judge one person for their decisions. The 45 year old teacher might have just lost one of their parents to a heart attack and is using cannabis instead of alcohol to medicate their stress and anxiety.
This data can be further used to our benefit to understand the state of mind and purchasing behaviour behind medical cannabis. With the average female member at 41 years old, we can understand they were born in 1970’s and grew up in an era that was extremely tough on drugs. In the United States, President Richard Nixon began coining the phrase, “War on Drugs” and took a hard stance against drugs and implemented heavy drug policies. This era at the end of the Vietnam War represented a time where anti-government views were popularized through peace symbols are disobedience
Understanding the psyche of cannabis dispensary customers is instrumental to an appropriate marketing campaign. Perhaps this average consumer, who was born in the 70’s, has an appetite for rebellion and products marketed in that manner.
As numerous US States make the move under the nose of the Federal Government to legalize recreational marijuana these same states are also witnessing a dip in beer sales. Data correlating to legalizing recreational cannabis and monthly beer sales in certain US States suggests that beer and cannabis are substitutes. This means that people choosing between beer or cannabis, one or the other.
Now there are exceptions. Some reports are showing fluctuations between markets such as Colorado where beer and cannabis have been competing on a casual basis through the black market long before official legalization. This may suggest that the impact of cannabis legalization on liquor sales will not be heard in similar markets such as British Columbia (Larson, 2014).
Numerous sources over that past decade have dabbled with the concept of marijuana as a substitute to alcohol. The follow describe their methods and the evidence to back their claims:
Higher minimum drinking age increases marijuana use – By raising the minimum drinking age marijuana use increased among young adults who were forced to continue acquiring either liquor or marijuana on the black market. (T. Lemieux, 2001)
Nearly 5% decrease in beer sales following legalization – Mathematical modelling using 20 years of data from 1990-2010 has been analyzed to determine the economic relationship between marijuana and alcohol. The results suggest a nearly 5% decrease in beer sales should the estimation hold true. (D. Mark Anderson, 2013)
Marijuana use decreases at age 21 – This study from the Journal of Health Economics demonstrates the significant drop in marijuana use as individuals turn 21. This would suggest that individuals are choosing to drink alcohol instead of using marijuana. (Benjamin Crost, 2012)
Less traffic fatalities following cannabis legalization – These authors found a significant decrease (7.2-13.2%) in traffic fatalities related to the legalization of recreational marijuana. “The negative relationship between the legalization of medical marijuana and traffic fatalities involving alcohol lends support to the hypothesis that marijuana and alcohol are substitutes.” (D. Mark Anderson, 2013)
Marijuana and beer spending comes from the same budget – These authors note a correlation between purchases that demonstrates a shared budget between a consumers choice between alcohol OR marijuana. The gap is noticed mostly among casual users. (Clements, 2014)
If this above statistics hold true, certain US States and Canadian Provinces who follow the model of legalizing recreational marijuana could witness a nearly 5% decrease in beer sales. The Liquor Control Board of Ontario reported annual sales of $5.2 billion in 2014. If this figure drops by the suggested 5%
|Potential industries affected by cannabis legalization:
· Pharmaceutical drugs
· Black market drugs
· Snack foods
experienced in certain US states, LCBO could bear witness to a dramatic $260 million drop in sales over the following 12 months.
Similar to what has happened in Colorado we need to understand that certain markets, such as British Columbia, already have liberal laws on recreational cannabis and to use the five percent beer sales comparison would not hold true. It is likely that in beer sales markets in BC are already competing with recreational cannabis. Particularly with the instance of craft breweries on the rise, it would be difficult to directly tie cannabis legalization to declining alcohol sales without a decade worth of data.
The data then begs the question, what are the costs and benefits to this change? One author has suggested that these behavioural patterns can lead to several benefits; of these are reduced traffic fatalities and reduced violent crime. Ask yourself, when someone drinks how do they behave? They are much more likely to become belligerent than if they partake in cannabis. The likelihood with marijuana products is that users will fall asleep on the couch and become hungry.
Evidence shows that marijuana is a substitute for alcohol. As a result the negative consequences associated with alcohol consumption will be reduced traffic fatalities and domestic abuse related to drunk driving and alcohol abuse.
Reduced traffic fatalities
One study from the Journal of Law and Economics reports a 7.2% decrease in traffic fatalities in non-alcohol related accidents and a 13.2% decrease in traffic fatalities where alcohol was present (D. Mark Anderson, 2013). If this holds true that would mean a potential reduction in traffic fatalities Canada-wide by roughly 300 people per year (MADD, 2010).
Furthermore allow us to examine the difference between drivers that are impared on cannabis as opposed to alcohol. One author proves that “[e]ven at low doses, drivers under the influence of alcohol tend to underestimate the degree to which they are impaired drive at faster speeds, and take more risks” (D. Mark Anderson, 2013). I am not suggesting that driving under the influence of marijuana is safer. The data simply suggests that perhaps those under the influence of marijuana are choosing not to drive altogether.
There is an inevitable link between alcohol abuse and domestic violence. One study demonstrates the advantages of cannabis for alcoholics (O’Shaughnessy, 2014). “As could be expected among patients seeking physician approval to treat alcoholism with cannabis, all reported that they’d found it “very effective” (41) or “effective” (38).”
As more and more states and provinces move towards the legalization of cannabis as both medicinal and recreational I believe it is imperative for competing industries to analyse the potential impact legalization will have on their bottom line. Some industries, such as snack foods, will likely benefit while others, such as pharmaceutical drugs or beer, could lose sales.
A pharmacy will take 30 minutes to fill a prescription. Health Canada’s MMPR licensed producer (LP) will fill your prescription in several days. A short visit to a local dispensary offers an alternative.
Top researchers from IBM’s business consulting services state that, “…being local will become increasingly important as shoppers demand the instant gratification of their purchases. Two day shipping will feel like snail mail when a local store can offer customers a variety of fast pick-up or delivery options, wherever they are” IBM Research (Nadler).
The demand for top quality products that are driven by consumer demand instead of Health Canada is more likely to be the future. With marketing strapped by Health Canada, LP`s have little control over the economics of demand. In this instance conditions have always leaned in favour of user driver demand, market pull vs. push. If this demand isn’t met by Health Canada’s MMPR suppliers, consumers will turn elsewhere. The future for MMPR LP’s is pushing towards a higher freedom of operation similar to dispensaries.
Despite dispensaries operating without regulation in a legal grey area they do offer numerous benefits:
Bricks and mortar stores are not dead. Take a look at Apple Retail Stores. When everyone else was making a move to online sales and marketing, Apple took the step to show customers the hands-on difference with their products. Apple knew they were selling top quality products and were proud to display them for everyone to experience.
The in-store experience is very important with products that offer a personal experience such as cannabis and the dispensary model gives consumers access to touch and feel the products they want. Consumers want to touch and feel the quality of their options before making commitment to a particular crop.
|Alternative medications to dried cannabis:
· Various extracts
· Topical creams
· Simpson oils
· Infused drinks
BC Supreme Court ruled in April that Marijuana Medical Access Regulations were unconstitutional to deny patients the right to alternatives to smoking and eating dried cannabis as treatment. This is a positive move for British Columbians however does not open the opportunity for MMPR licensed producers bound under the federal Health Canada regulations. Furthermore Health Canada states on their website that smoking may “…increase the risk of developing respiratory infections or chronic cough” (Information – Cannabis (Marihuana, marijuana)).
Further to this, many dispensaries offer a wide range of strains for many ailments. Whether you’re seeking a medication for anxiety or sleep deprivation, the average dispensary offers over a dozen different strains to suit individual needs.
Imagine having to mail order extra strength Advil or muscle relaxants or maybe even something as common as cigarettes. Having access to medicinal grade products in a local, timely fashion is important to individuals suffering from illness.
Under section 7 of the Canadian Charter of Rights and Freedoms everyone has the right not to be deprived to life, liberty and security. Simple and immediate access to their choice of medication, should they prefer locally sourced products, should not be hindered in the event their current supply is damaged or misplaced.
Dispensaries have more flexibility to focus on customer needs. This type of advocacy allows the stores to listen to the demands of the customer and quickly implement changes in a level of agility LP`s cannot replicate under current MMPR regulations. In order to maximize customer advocacy “…organizations need to connect better with consumers; they need to get close enough to consumers to understand how to deliver the value that consumers are seeking in a continually adaptive and innovation way” (Baker, 2004).
The following is a comparison of customer advocacy. The four mechanisms for customer advocacy as an asset to brand management are based on a study from the Journal of Product & Brand Management (Lawer, 2006).
|Customer Advocacy Mechanism||MMPR||Dispensaries|
|Focus on customer success – Taking time to ensure customers individual needs are met aids with long-term loyalty.||Instead of working off market demand, LP’s are limited to dried cannabis.||On-site professionals can aid with choices between strains and extracts to match the needs of each individual.|
|Improve marketing context and customer involvement – Keeping in tune with ever changing market conditions by actively engaging stakeholders.||Mail delivery systems limit customer interaction and as such contact with LP’s is seldom face-to-face. LP’s are limited to sharing certain information regarding the unconfirmed medical benefits of cannabis.||Many dispensaries have lounges for customers to relax and chat about their experience with medical cannabis.|
|Foster knowledge-creating partnerships – Sharing internal corporate knowledge with consumers to deepen buyer/seller relationship.||LP’s contain extensive data about their clients however the knowledge is held close to their chest. Empowering communities of knowledge sharing and expertise to thrive provides a higher level of engagement and experience with the brand.||Day to day direct interactions with customers allow each individual dispensary to focus on servicing the needs of their customers. By sharing the expertise and knowledge of the on-site professionals, customers can grow to appreciate the relationship.|
|Enable choice transparency – comparing directly with the competition, even if they are better than you. Think “Progressive Insurance”.||Once chosen, consumers are locked to a licensed producer. Prices and rating are available online, however shifting LP`s is more difficult than walking into another dispensary.||Consumers can easily move from one dispensary to the next with their doctor’s note.|
The bricks and mortar dispensary model has proven to provide professional support and excellent access to quality cannabis products. As one Lift author puts it, dispensaries “[have] already been doing a fantastic job for so long and have helped thousands of Canadians access their medicine with safety, confidentiality and dignity” (Valleriani, 2014). In our modern era of immediate communication between customer and supplier it is unfortunate LP`s aren`t given the freedom to explore supplying the increasing demand for product alternatives.
If our neighbours to the South can be any representation of the future, the American state-led model for accessing cannabis products, particularly in Washington and Colorado states, may not be perfect but it is telling us that patients are driving demand for readily accessible product. BC is closely following that formula and dispensaries are on the rise.
Dispensaries operate in a legal grey area without regulation. This may result in products which are untested and inferior. I have personally witnessed products available from dispensaries with significant volumes of seeds. These lower assurance protocols surrounding dispensaries create concerns for consumers and thereby reflect the need for stronger self-governance. Not only will consumers seek the familiarity of certain strains but they will also demand the reputation of specific growers.
This brings forward the argument that LP’s and dispensaries don’t serve the same market. MMPR patients are seeking the qualified, Health Canada certified products for their guaranteed value. Many dispensary customers look for alternatives such as extracts.
For MMPR`s to succeed in the future they will need to pursue options of supplying locally, offering alternatives to dried cannabis, and the freedom to explore R&D internally without a special license. For those investing in MMPR LP’s, the long term play is access to this dispensary market and, furthermore, a Canadian recreational market.
Cannabis users aren’t all that sensitive to price. With a few exceptions of free market economics where customers can just buy from a cheaper source, such as walking in to a different dispensary in Vancouver and/or reverting to the black market, data suggests that cannabis users are willing to pay higher prices for the same product. This is particularly impactful when we consider under Health Canada`s MMPR program medical users are somewhat locked into a specific Licensed Producer.
Canadian economists and politicians are salivating at the thought of a cannabis tax; after all, consider the additional tax revenue for schools and healthcare. Understanding that cannabis users are less sensitive to price it is very much likely that politicians will try to push for a cannabis specific tax. Medical users, on the other hand, will argue that taxation behind prescription drugs should equally reflect the cannabis market and not show favouritism. The question lies herein, will taxation be more beneficial to the cannabis mandate or political policies?
Over 23,000 cannabis transactions were analysed to understand how the price per gram influences quantity demanded. The PriceofWeed.com is a collection system for recording cannabis transactions of which the intent is to crowd source data from across the United States to better understand the value of cannabis. Anonymous users input location, price, and quality to better share and build this database. A recent study from the USA using price, product quantity, average income per state, and the liquor tax (reference article marijuana as a substitute for alcohol) was able to understand how sensitive customers are to the price of cannabis, also known as price elasticity. The study found that demand for cannabis is relatively inelastic at -0.65 (Adam J. Davis, 2013).
Inelastic products are ones that we will likely buy no matter the price. Prime examples of this is water, electricity and gasoline; all of which we require for our daily lives. Elastic products are more influenced by price such as vacation, television, and lattes. According to this study, Cannabis has been classified as inelastic, a product we need.
|Cigarettes||-0.3 to -0.6||Perloff, J. (2008). p.97.|
|Medicine||-0.31||Samuelson; Nordhaus (2001).|
|Rice||-0.55||Perloff, J. (2008).|
|Cannabis||-0.65||Davis, A. (2013)|
|Beer||-0.7 to -0.9||Chaloupka, Frank J. (2002)|
|Movie Tickets||-0.87||Samuelson; Nordhaus (2001).|
|Wine||-1||Chaloupka, Frank J. (2002)|
|Spirits (liquor)||-1.5||Chaloupka, Frank J. (2002)|
|Vacation Airline Travel||-1.5||Pindyck; Rubinfeld (2001). p.381.|
|Coca-Cola||-3.8||Ayers; Collinge (2003). p.120.|
By comparison Cannabis falls in between medicine, rice, cigarettes and beer. Medicine, a product we need to survive, rice, a dietary staple, cigarettes, an addictive substance and, beer, an American tradition. This speaks volumes to the importance of cannabis to existing users.
|Example (1) – a 10% increase in price for Cannabis
1) Price Elasticity = Δ% Quantity Demanded / Δ% Price
2) -0.65 = Δ% Quantity Demanded/ 10%
3) Δ% Quantity Demanded = -6.5%
Example (1) demonstrates a 10% price increase. This means a 10% increase in price results in a 6.5% decrease in demand. Compare this to the same price increase for Coca-Cola which results in a 38% decrease in demand and we can agree that cannabis prices have a relatively low impact on consumption.
Keep in mind, that if one supplier was to increase their prices by 10% in Canada’s free market economy, consumers will just buy elsewhere. However, if all the prices were to go up by 10% because of a government policy, such as a tax, this situation would hold true.
Colorado was a prime example of displeasure with the marijuana tax. Because cannabis consumers have been using the black market since marijuana was first criminalized in the 1920’s, it isn’t necessary to every user to have legal sources. What Colorado has is quite spectacular. On the retail level Colorado has a 2.9% sales tax and an additional 10% marijuana tax. Furthermore there exists a 15% excise tax on the wholesale market, from manufacturer to retail store. Tally this up and you get a total of 28% tax on marijuana in Colorado State. According to our formula earlier (example 1), a 28% increase in price would result in 18% decrease in demand. However, just because we tax something by 28% doesn’t mean we are going to fundamentally change the position of cannabis users. Initial forecasts on tax revenue should have considered that nearly one fifth of cannabis consumers would disappear back to the black market.
Many investors in Health Canada’s MMPR program had to learn about Canada’s black market the hard way. Considering the implications of taxation on the cannabis market we need to understand that each consumer lost due to taxation is most likely to return to the black market as opposed to quitting cannabis use altogether. If the aim of legalization is to regulate the quality and distribution of cannabis, while collecting tax revenue, then there is a fine line policy makers must walk. The industry has fought hard to find itself where it is today. The roots are embedded in antidisestablishmentarianism and are not necessarily seeking reform.
A policymaker who chooses to tax cannabis will need to show the public the overwhelming benefits; a Health Canada program that actually monitors and controls the quality, dosing and support of Canadian research and development of cannabis as seen through the eyes of sick people; the everyday users of the products. Such a bottom-up program could work well – with careful taxation.
It’s been over a year now that Tweed (CVE:TWD) has been publicly listed. In June 2014 Tweed broke a $100 million dollar market cap putting it in the same valuation ballpark as Shopify and Sidney Crosby’s contract with the Pittsburgh Penguins but has slowly been trickling down to its current market cap at $80 million. Still, $80 million is an excellent valuation for any business. This carries weight across Canadian and American financial markets in support of the legitimization of cannabis as a valuable commodity; a future staple of the Canadian economy that even Health Canada has mentioned could one day contain over 400,000 registered patients.
The $80 million valuation for Tweed isn’t supernatural for Canadian cannabis companies. In fact, publicly traded Licensed Producers under Health Canada’s MMPR program are experiencing strong market valuations all around.
|Company||Market Cap (www.ycharts.com)||2014 Sales|
|Tweed||$80.47 million||$1.15 million|
|Bedrocan||$49.11 million||$1.08 million *q4 absent|
|Organigram||$26.51 million||$0.02 million|
|Mettrum||$59.00 million||$2.21 million *q1 absent|
|Aphria||$55.10 million||$0.00 million|
No. Tweed`s 2014 sales were $1.15 million with over half coming in the last three months. Even with some creative valuation metrics (and I can be very creative) it is difficult to get close to half the $100 million market cap. Furthermore, the stock price of Tweed has been hovering slightly above $2 long enough for them to issue millions of shares to raise more money because of their negative cash flow. In fact, pretty much every LP is bleeding.
It’s all about the potential of the MMPR market. Investors are salivating over the idea that everyone from MMAR (Health Canada’s old system that exists in limbo) will flock over to MMPR. The hunger is for MMAR buyers, which has a current agricultural potential to manufacture $1.77 billion in dried product. Sorry to be the bearer of bad news but this is an unrealistic dream.
Health Canada forecasts that by 2025 the MMPR market will maintain 400,000 patients. If this holds true my metrics put the market around $1.73 billion (figure 1) with Health Canada claiming the market to be $1.3 billion (Freeman, 2015). Ironically the current market for MMAR is roughly $1.77 billion (figure 2) and the future market for MMPR is $1.73 billion – that can’t be a coincidence. Comparing these numbers lead me to believe that MMAR markets are likely already servicing 400,000 Canadians looking for quality product.
Figure 2 – Forecasted MMPR data, (Health Canada, 2015)
Even in 10 years, if and when the market reaches a $1.7 billion valuation Tweed would have to control a significant chunk of the market for investors to see any return worth the original risk.
Furthermore there is an entire extracts market that isn’t even close to being understood. Cannabis creams, oils, and extracts have the potential to hit many more markets beyond the reach of dried cannabis. LP’s are hungry to tap these markets with ready branded products targeting folks who are averse to smoking.
MMPR still has a long way to go before catching up to Health Canada’s “old” MMAR program. As the old program continues to operate the follow numbers suggest that as long as MMAR continues to exist, the MMPR Licensed Producers can only continue to dream about absorbing MMAR production and clients.
Pharmaceutical Companies on Medical Marijuana
Big pharmaceutical companies are just that, too big to be interested. A market that is seen as $2 billion with dozens of existing players, a messy legal system, and 1000 more applicants this is not an area of interest for the likes of Pfizer and J&J. The American pharmaceutical industry is valued around $300 – $400 billion. With the light of cannabis extracts however, there is no doubt that some of the minor players will begin testing the effects of THC for markets such as branded medical pain relief for arthritis.
How Big is the Market for Extracts?
The market for extracts is difficult to determine because the potential extent of medical cannabis. However, we can observe a few of the basic markets (Figure 3) of which Health Canada mentions cannabis offers “potential therapeutic benefits.” (Information – Cannabis (Marihuana, marijuana))
|Potential Market for Cannabis Extracts||Market in Billions||Sample Medication||Type of Extract||Source|
|Pain treatment||$35.4||Tylenol, Advil, etc.||Mix||goo.gl/4nyr1V|
|PTSD, Stress, Antidepressant||$22.5||Prozac, SSRIs||Mix||goo.gl/OnB69U|
|Sleeping Pills||$9||Ambien, Lunesta||Mix||goo.gl/dYxlfe|
|Migraine Relief||$3.3||Asprin, Ibuprofen||Mix||goo.gl/F2LNkn|
Understanding that years’ worth of research is require before entering these ‘potential markets’ under the disguise of pharmaceuticals, cannabis Licensed Producers are a long way from tapping these markets from a Health Canada perspective.
Millions Lost Since the Inception of MMPR
Those who have invested millions in MMPR LP’s and applications are quick to blame Health Canada, MMAR and the black market. But what did they expect?! This grassroots industry has worked underground for decades and has fought hard to arrive where it is today only to be overrun by stock brokers selling what many consider harsh product at harsh prices – This attitude will only drive the market back underground and away from regulation.
Licensed producers under the MMPR system continue to bleed cash as they sit on oversized facilities for today’s market requirements. Fundraising efforts will continue to dilute stock prices as long as the system is left with more questions than answers and numerous legal battles in a rusty legal system.
Long Term Strategy
It’s evident that Licensed Producers are banking on the potential for markets beyond $1.7 billion in dried cannabis however what is equally supported is that Health Canada is in year two of their MMPR program and have shown no interest in including extracts in the program. In fact, any indications that Health Canada might move in that direction have been purely speculative. For the time being, MMPR LP’s are bound to the manufacturing of limited amounts of dried product and as an investment they
There are a number of different models available for accessing cannabis products. The historical market, represented by the black market, is quickly becoming obsolete because it is unable to compete on quality, price, comfort and selection for medical cannabis users. Times are changing and the days where medical cannabis users are buying off the streets are passing; dispensaries are moving forward as the model of choice for users across Canada.
The dispensary model sources dry cannabis products through Health Canada’s MMAR program and sell through the store directly to customers through store front locations.
This program, also known as MMPR, is the model of choice for Health Canada to help control and regulate the sale of medical cannabis. Unfortunately this model has been shunned by many users because the products are over regulated and are limited to dry product designed for smoking only. Because of this, many buyers under the MMPR program are unhappy.
This vertical market has been around since cannabis was deemed illegal in the early 20th century. The black market model has worked because of the high profit margins associated with illegal operations. As legalization moves forward and industry expands the profit margins are reduced and black market operations become less feasible. Many would argue the decreased strength of the black market will free over-burdened law enforcement agencies. However, with taxation comes the risk of price sensitive consumers returning to the black market.
The horizontal markets in medical cannabis are vast. From the farm to the end consumer, the following chart briefly analysis horizontal markets that exist under the dispensary model of vertical markets.
The agriculture behind medical cannabis has a wide variety of horizontal markets including nutrition, pesticides, soil, indoor lighting, quality control, security, clipping and scientific extraction. Each industry in itself represents multi-million dollar markets. Furthermore as legalized cannabis becomes commonplace the research and development in each respective market is quickly expanding. Furthermore, farming technology has expedited quality control measures exponentially making it easier for quicker and more voluminous manufacturing of raw cannabis.
Dispensaries have a wide range of horizontal market; everything from payment processing to displays and marketing. Some have compared the proliferation of cannabis dispensaries in Vancouver to a gold rush. The people making money aren’t necessarily the gold miners themselves. The financial opportunities during the gold rush were found in equipment sales, hotels and transportation.
One of the fastest growing markets is security, primarily the movement of cash from dispensaries to the bank. The historical purchasing habits of cannabis have been black market purchases and exchanges of cash from one to another. Because of this, many cannabis users continue to use cash for their purchases. This may also be due to the ongoing taboo that surrounds cannabis and the fact that users may not wish to have cannabis purchases seen on their credit card statements.
Cannabis Marketing Magazines & Blogs
The marketing of cannabis has also been particularly lucrative; as a business model explodes there is an on-going need to inform the public. In the past five years alone there has been an exponential increase in the number of cannabis magazines and news sources offering their advertising space for upwards of $500 per ad.
The customer has a wide range of choices when looking at consumption methods for their medical cannabis. Each method in itself involves a device such as the traditional pipe, rolling papers or new technologies such as $600 vaporizers (Feldman, 2014) that involves water vapour instead of smoking the carbon of the product.
Many users are also now enlisting memberships at lounges and cannabis bars across the country (Bud Pubs). Similar to a pub that would serve beer and liquor, cannabis users can go to a smoking lounge where they can meet likeminded folk, relax and share discussion. Horizontal markets such as lounges demonstrate the wide reach of cannabis and cannabis related products. Consumers are not bound to single experiences while in the store; cannabis, as a medicine, is close to the heart of many consumers and is consumed in a very ritualistic manner.
Current regulations from Health Canada are only applicable to Licensed Producers because, as mentioned before, dispensaries are not regulated by Health Canada.
“The Marihuana for Medical Purposes Regulations (MMPR), along with the Food and Drugs Act (FDA) and the Narcotic Control Regulations (NCR), define advertisement to include any representation by any means whatever for the purpose of promoting directly or indirectly the sale or disposal of a drug (in the case of the FDA) or a narcotic (with respect to the NCR)” (Health Canada, 2014).
The key point for Health Canada is that marijuana is not a proven medically sound treatment for any specific ailment. Therefor they will not allow any advertising of cannabis that might lead people to believe it will treat or cure their specific illness.
On November 24th, 2014 Health Canada issued warning letters to 20 LP’s regarding their advertising practices. The purpose of the letter was to outline, once again, the information released in June 2014 that LP’s are not allowed to claim certain varieties of cannabis will treat certain ailments. Specifically brochures, websites and packaging are restricted to base information such as: brand name, common name of strain, price per gram, cannabinoid content and the company’s contact information (Healthy Canadians, 2014). Further speculation regarding this information could restrict LP’s on social media as well.
As a result many LP’s are resorting to third party marketing such as media touring their facilities and sampling their strains. Furthermore LP’s such as Tilray, based on Vancouver Island, are part of a larger conglomerate who also owns www.Leafly .com, a popular informational source for cannabis strains.
By taking a look at numerous products that are also considered taboo, for various reasons, perhaps we can better understand the methodology for creating a brand in an industry surrounded by secret. When you take a moment to discuss medical cannabis with others the odds are in your favour that they have tried the product and have an opinion, but by no means is it a typical conversation among strangers.
Kentucky Fried Chicken – Follow Purchasing Behaviour
In 2010 KFC rebounded against the standards of healthy eating. While the likes of McDonalds completely flipped their branding strategy to offering healthier, weight conscious options, KFC positioned themselves in an opposite manner. They knew consumers purchased their food because it was delicious, not because it was healthy – so they played off that idea.
KFC launched a marketing campaign around how their food is full of taste and changed their motto to, “So Good.” This was against the norm at the time but proved successful in triggering society’s desire for fast, cheap and delicious tasting food. In an age where health was trending, KFC just needed to remind people that it’s okay to enjoy your food once in a while.
Kotex Tampons – Connecting with the Customer
Looking deeper into questions about women’s health “…Kotex determined that its customers were ready for frank messages about women’s bodies and health.” (Sutton, 2010). The marketing campaign involved a packaging redesign to a sleeker and modern design, online marketing connecting the manufacturer to consumers and humorous advertisements that poke fun at the old campaigns.
The product redesign shifted the image of Kotex to a product that can better relate to the modern woman. By creating online videos and enhancing their online presence Kotex fostered a discussion and a relationship with the customer. Sections on education, communication, and charities in women’s health were created to fully immerse consumers with the information that it is okay to discuss and take pride in one`s health. Significant work went into communication and discussion back and for the between the customer (Sutton, 2010):
- 3,072 questions asked
- 195,060 polls taken
- 9,031 declarations signed
- 827,000 sample requests
KY Jelly – Separate the Stereotype
The market for sex lubricants is $219 million annually (Kroll, 2012) and Johnson & Johnson, owners of KY Jelly personal lubricant, are hungry to get a bigger piece of the pie. In order to present themselves above the rest J&J took a bold move to examine what it is that drives sales in a market rampant with sexuality.
Pulling away from the stereotype proved successful for KY Jelly (Hughes, 2015). By presenting the advertisements with middle aged actors KY helped associate their product with the average consumers. “…by showing a suburban couple discussing their sex life together, KY becomes a product line that can appeal to the average couple” (Hughes, 2015).
Typically manufacturers advertise products in the sex industry with sexy actors but the reality here is the majority of people buying these products are ‘average’ and are looking for products that would appeal to their average sex life. Understanding that you don’t need to create an outrageous fantasy to sell a product was a breakthrough for KY Jelly.
Dove – Promote Self-Confidence
“The Dove Campaign for Real Beauty was conceived in 2004 after market research indicated that only 4% of women consider themselves beautiful” (Vega, 2013). Playing off not what we want to look like but what the majority of American’s actually look like, Dove’s ‘fat acceptance’ advertising with the “Real Beauty” campaign was extremely successful in promoting their new brand strategy.
The campaign generated significant media exposure. Following the success Unilever, the owner of Dove, pushed the campaign globally over a number of different medium, most recently as online videos. Overall the campaign was a success and met their goal of connecting with the day-to-day woman. Over a decade after launching the campaign, Dove continues in line with their original plan and develops new campaigns with the aim of increasing “self-esteem and body confidence” (World Association of Girl Guides, 2013).
Viagra – Use Supporting Data
Quite possibly one of the most prominent and successful advertising campaigns for a taboo product, Viagra took what was once considered a topic of serious embarrassment into something that was considered safe to talk about and made men more comfortable to discuss.
Some would argue that is was the data that made this campaign so successful. By telling men and women that erectile dysfunction was actually quite common, men were more likely to talk to their doctor about it.
LELO Sex Toys – Professionalism
Masturbation has always been a difficult topic even though it is, in fact, commonplace. LELO recognized the opportunity for a well-designed product in a market that is surrounded by cheap, sleazy brands. Far from traditional sex toys, LELO products are designed to be comfortable, discrete and fun.
The packaging for LELO is the initial representation of professionalism. Discrete and elegant, one would never assume what is beneath the packaging. Furthermore the product is also professionally represented. The simplicity of the design expands the fundamentals of the product as discrete.
Old Spice Deodorant – Humour and Surprise
Not necessarily something people commonly talk about, deodorant marketing needs to be clever to ensure interest and exposure. Few have been more successful that Old Spice by P&G. This campaign exploded with popularity and injected them as the primary example of a successful viral marketing campaign.
Playing off the humour in their marketing campaign, Old Spice men’s deodorant played up their products sex appeal to both men and women by popularizing, “the Man your Man could smell like.” By playing the juxtaposition between the name “Old Spice” and fresh nature of the commercials, P&G successfully branded toward a younger crowd.
Further to this, P&G pushed the campaign through several layers of interaction, asking the public for their feedback and requests. Despite the fact that they weren’t directly promoting deodorant to the customer, their humour and intense interaction created a relationship with the customer that is considerably more valuable than any single handed marketing campaign.
Some of the world’s most creative marketers have worked for big tobacco on what has been one of the most aggressively campaigned products worldwide. Modern tobacco advertising focuses heavily on specific people groups. An example of this is for people who seek independence and freedom:
“Some current cigarette advertisements show pictures of people isolated and alone, far from society, uninvolved in the social world. Advertisements show a couple on a boat far from shore; a single man climbing a mountain; a couple in a house; and of course, the cowboy riding across the plains. This is different from what I have seen of older advertisements. In pre-Surgeon General era advertisements we see more actors, sports heroes, doctors, people in restaurants, couples on the way to the theater, and the like. Smokers in these current advertisements are retreating to private locations for tobacco consumption” (Breed).
Restrictions in Tobacco Advertising
The advertising code of the tobacco industry states that they will not advertise in school and college publications or on campuses, require that all models must be and appear to be over 25 years of age, and will “not present smoking as a pastime which leads to success, sexual attractiveness or prominence” (Tobacco Institute, 1986, p1). These regulations are designed to protect children from the proven harmful effects of smoking tobacco.
Cultural norms are not societal norms
Kentucky Fried Chicken is a prime example of how cultural norms are not the same as societal norms. In a time when it was trendy to act, purchase and appear healthy people continued to purchase buckets of fried chicken. “When asked direct questions about their interests and preferences, people tend to give answers they believe the questioner wants to hear” (Rapaille, 2006). It is our duty as marketers not to tell people what they want to hear but to market to how they live.
The reality is that people smoke cannabis. A successful marketing campaign under this strategy would argue that cannabis use is normal and a relatively popular treatment for a variety of ailments.
Humour can help “break the ice”
It can be difficult to introduce the topic of cannabis without making someone uncomfortable. Humour can help release some of the tension related to conversational insecurities. The campaign for Old Spice broke down the taboo barrier of talking about deodorant by playing off humorous content that would make people talk. In fact, the original advertisement, The Man Your Man Could Smell Like, was so successful it was viewed over 43 million times on YouTube from 2010 to 2012 making it one of the most successful viral campaigns of all time (Academy of Television Arts and Sciences, 2010).
Making it clear not to offend the existing cannabis culture, marketers need to careful strategize an appropriate branding campaign that uses humour to break the taboo of cannabis without offending others.
Demonstrating that cannabis use for medicinal purposes is not unique will help bring people around and break the taboo of the traditional stereotype. As noted above, the average female member for the studies compassion society was 41 years old. The following data supports the cause that cannabis legalization and use is widespread and users should not feel alone when discussing cannabis for medicinal use.
- Despite US policy, 51% of Americans support the legalization of marijuana (Saad, 2014).
- More than two-thirds of Canadians want cannabis laws softened (Kennedy, 2014).
- According to a 2012 survey by Statistics Canada, 3.43 million or 12.2% of Canadians admitted they use cannabis (Statistics Canada, 2013).
Education is instrumental in moving medical cannabis to the next level. This begins at the most basic level in informing the public about various types of cannabis, the science behind the medicinal value of the plant, the various intake methods and why they exist, the benefits and drawbacks of cannabis, etc.
Unfortunately the historical perception of cannabis, which is also pushed hard by the media, does not portray the more common medical users. Typically films promote cannabis users as lazy, unsuccessful and criminal; however with the recent rise in popularity and legalization one such film is bucking the trend and promoting cannabis in a more educative fashion. “The Culture High,” among other films, is introducing cannabis as a product that has valid medicinal value.
One example of education is the reality that there are a wide variety of intake methods for cannabis. Smoking a joint, although it’s the traditional method of consumption, is not necessarily the most beneficial. With the development of vaporizer technology, people can now consume cannabis extracts through discrete, computer-controlled inhalers that release no odour and do not require a flame.
The cannabis industry is built on testimonials. Due to the lack of scientific research, which is typically funded by the same federal governments who have marked cannabis as a schedule one drug, cannabis treatments are commonly based on shared experiences. For this reason the cannabis community is well knit when it comes to information and experience collaboration.
As the cannabis industry expands, so will the internal communities. By fostering this discussion brands can promote themselves as community driven experts with a grassroots appearance.
What better way to draw cannabis away from the historical perception of cheap and lazy than to professionally brand the products using top quality packaging and professional service. LELO was able to introduce the sex industry with a wealth of classy, discrete products and the same can be done with cannabis. Although this has already begun in the cannabis industry, where many examples can be found at www.rebrandingcannabis.com, this is something that needs to be brought across all levels of products and customer service.
One way to achieve high standards industry wide would be the consideration of public policy or member driven associations which require certain standards to be met. The airline industry has the Star Alliance Group which requires all members to adhere to a high level of quality in their products and services. This could serve the cannabis industry as a starting point to develop professionalism across the board.
Separate the Stereotype
The constant portrayal of cannabis users through the media has not been healthy for the future of the cannabis industry. By opposing the traditional view of the ‘stoner’ the stereotype of cannabis users can be changed. This is very important to connect with modern day cannabis users and help educate them on the benefits that medicinal cannabis can have in their life.
Blue Ocean strategy pushes enterprises to be innovative and seek new ‘blue’ markets away from the competition. With regards to the cannabis industry it is ripe with blue market opportunities. By examining the ERRC matrix we are able to examine a number of unique opportunities.
The first firm to successfully disconnect themselves from the stereotypical cannabis image will tap a market of consumers who might not otherwise associate themselves with the typical cannabis image. If 12% (Statistics Canada, 2013) of Canadians are using cannabis that means, by deduction, 88% are not. Of this 88% there is, most likely, certain number of people with ailments that can be treated by cannabis such as insomnia, chronic pain and anxiety. The following data, taken from a 2005 Statistics Canada survey, shows a market potential for cannabis products (Statistics Canada, 2005):
- 23% of Canadians report being stressed
- 12% of Canadians report having insomnia
- 20% of Canadians report having chronic pain
Creating a ‘blue’ market through a creative campaign that properly demonstrated the benefits of cannabis products to non-traditional consumers would undoubtedly be a success.
Awareness and education on cannabis has long been the most difficult to accomplish. In part because of the long standing negative stigma and criminal association of the cannabis industry, the industry also suffered from a lack of research and federal funding. Fortunately in our modern era it would appear that the walls of cannabis prohibition are coming down and opportunities for peer-reviewed research are coming to light.
Through successful and meaningful education using scientifically sound data and personal testimonials the cannabis industry has an opportunity at a rebirth to truly show the benefits of cannabis use for a wide variety of ailments.
In order to reduce the legal constraints and stigma around cannabis, firms need to ensure they are touching on the benefits of cannabis in a professional manner. With respect to the history of cannabis and what advocates have achieved, mass acceptance of cannabis will require neutral medicinal products; ones which can be easily associated with everyday medicines.
If cannabis is trying to replace Lunesta, a common insomnia medication, we will need to brand the products along the same lines as Lunesta. If insomniacs have been using oral pills for the past decade, it would likely ease their acceptance of cannabis if it was also in the shape of a pill.
Few products have been introduced to the masses in the world of cannabis as specifically branded products. There are opportunities for specially branded technologies and products that directly impact specific ailments. The following are markets that have the potential to be impacted by cannabis (North America annually)
- Pain treatment (Tylenol, Advil) – $35.4 billion
- PTSD, Stress, Anxiety – $22.5 billion
- Arthritis – $14 billion
- Insomnia – $9 billion
With the exception of specifically branded arthritis creams, there are very few products branded to aid with these ailments. At this time more public research is required to verify these treatments, however until that time there are creative opportunities available to explore these marketplaces.
The external environment for Canadians is on the brink of major change. If the recent developments regarding cannabis legalization in the United States is any representation of the potential for Canada’s future there is nothing but opportunities.
The Canadian political scene has been relatively consistent over the past decade. However, with a Federal election fast approaching in October there is much discussion about change. Not just the type of change that politicians talk about, but genuine shifts among controlling political parties. It looks as though the Conservative party, which has dominated Canadian politics for the past decade, may be on its way out. The Conservatives, Canada’s right wing, have portrayed themselves as anti-marijuana while the other parties have illustrated they are pro-cannabis.
Despite the federal movement against cannabis, Canadian municipalities have begun moving in the direction desired by their constituents. For example, the City of Vancouver recently adopted a bylaw which allows for the retailing of cannabis by dispensaries, something that has been deemed illegal by the federal government.
The Canadian economy is relatively strong. Rich in resources, the opportunities to expand cultivation facilities has no shortage of available land. Furthermore Canadians are relatively well to do with Canada ranking 10th in the world for average annual income (OECD.Stat, 2013).
With almost 300,000 immigrants annually, Canada is very multi-cultural and frequently accepting of new cultures and innovation. Canada has a robust healthcare system of which cannabis advocates are pushing for medical marijuana coverage. Furthermore its education system is well known worldwide for its quality.
Figure 5 – Source: Statistics Canada
The technological environment for cannabis is changing rapidly. As legalization becomes more of a reality every day, investors, entrepreneurs and researchers alike are getting on board with technological opportunities from agriculture to ingestion.
The legal environment for cannabis in Canada is quickly adapting to the desires of the communities and many municipalities are working on adopting bylaws which would allow for the regulation of cannabis dispensaries. Furthermore on June 11th the Canadian Supreme Court declared that the citizens are required to have reasonable access to their medicine however they choose to ingest it.
Needless to say the legal framework is changing quickly in favor of cannabis producers and retailers. Ultimately this will benefit the consumer as naturally competitive markets lead to lower prices and reasonable access.
Environmental conditions around cannabis have two elements. The first is the negative impact that cannabis can have on the neighborhood if a dispensary or cultivation facility is improperly ventilated. Despite what those inside the industry believe, there are people who do not appreciate the smell of cannabis. The odors given off from the industry into the immediate environment need to be considered when choosing a location. Respecting the community should be among the top priority of any business owner, cannabis industry or not.
The second element of the cannabis industry is its inherit benefit for CO2 reduction and waste fiber strength. There is opportunity to reuse cannabis fiber, which is considered a waste, in the construction industry. Cannabis fibers are well known for their ability to absorb CO2.
Although efficient with examining the larger scope of business, limitations exist with both the PESTLE analysis and the Blue Ocean strategy.
The PESTLE analysis is limited in number of foreseeable areas:
- Because it is an external analysis, the unknown internals of any given cannabis related businesses are subject to limitations.
- PESTLE analysis requires significant data. The lack of industry data makes it difficult to perform extensive analysis.
- The environment for the cannabis industry changes quickly and therefore any PESTLE analysis requires constant updating.
Blue Ocean limitations:
- By creating new market space, Blue Ocean strategists may risk ignoring the relevant market space where they are already successful and strong.
- There exist also time limitations on both innovation and business strategies. As mentioned before, the cannabis industry is moving extremely fast and requires more than simple innovation strategies.
When analyzing marketing and branding opportunities there are always limitations, primarily due to the unknown consumer reaction to product labels due to the stigma around cannabis. These limitations can be minimized through extensive research which, unfortunately, can be very time expensive.
When talking about a complete brand, another element that has limitations is employee professionalism. Extensive training programs have been developed to ensure consistent and professional customer interaction at various firms such as McDonalds and Starbucks, however when it comes to medical products and the variety of ailments that are potentially treated there is a certain point where employees need to become trained medical experts to properly advise and aid customers.
And finally, no matter how well a product is marketed, you cannot overcome government policy and legal regulations. As long as cannabis is considered a harmful drug it will continue to have marketing restrictions.
The cannabis industry is in dire need of more research and data. There are several sources of market data for cannabis however it is typically outdated by over a decade and in need of refreshing. As the subject of cannabis continues to become less and less taboo over time surveys will become more honest and as a result, more accurate.
Without a doubt, there is a need for more scientific research to prove the validity of cannabis as a replacement for traditional medicine. Fortunately numerous research programs are currently underway to build this knowledge from scratch.
From a business perspective, more research is required to understand the size of the black market and therefore the full potential of cannabis in the world. The data analyzed in this document is primarily from Canada and the United States. A comprehensive analysis of the worldwide markets would have a lasting impact on demonstrating the full legal potential of cannabis, medicinal and recreational, worldwide. Specifically there are a number of countries looking into cannabis laws that should be analyzed including: Australia, France, Germany, UK, India and China.
Other opportunities exist in further breaking down the markets for accessories and the horizontal markets of the cannabis industry. A grasp on not only the size of the market for medicinal products but also the sister industries would provide us with a better understanding of the true value of cannabis markets to the Canadian and world economy.
The success of cannabis relies on breaking the taboo. Brands that exhibit non-stereotypical marketing behaviour coupled with scientific data is the key to a modern industry that is widely accepted. In order to create a brand that will flourish in the Canadian economy, a successful branding campaign would need to break the boundaries of the existing taboo surround cannabis. Although it may be difficult it is certainly plausible with a willing marketplace. Policy for cannabis is ripe and ready for change and because of this, there exists an opportunity today to pursue a fresh market. Opportunities exist in all market forms both horizontal and vertical for engineers, doctors, anthropologists, entrepreneurs, biologists, etc.
When manufacturing any sort of medicine it is important that there is government oversight and regulation to ensure quality and consistency. However the restrictions placed on the cannabis industry in Canada are handcuffing patients’ access to medicine. I invite policy makers and regulators to examine more closely the conditions and commonalities among typical, non-stereotypical, cannabis users. The analyses herein discover that our long standing policies and stereotypes of cannabis users are incorrect.
My first-hand experience with medical users and farmers gives me the understanding that many people rely on cannabis as a medicine to bring balance to their life. To restrict user access is not only cruel but detrimental to their health. The prohibition of cannabis has gone on long enough.
An August, 2015 poll by Ipsos found 65% of Canadians supports the decriminalization of cannabis. Vice-president of Ipsos, Sean Simpsons stated, “It doesn’t matter where you live in the country, a majority of every demographic group supports decriminalization” (Armstrong, 2015). In October this year, Canadians will vote for the government of their choice. Two out of the three major political parties have stated they will decriminalize cannabis. It has become a major political discussion as volumes of scientific studies and data that support cannabis as a medication have begun to unfold. The argument against cannabis is becoming more and more difficult.
The stars are aligning for the cannabis industry and for that reason I am confident that the future of cannabis in the Canadian marketplace is bright. Policies around the world are changing quickly and it is instrumental to place one’s self on the forefront of innovation in, not only technological forms, but also politics. Political innovation is a rare concept that we may be fortunate to witness only but several times in our lifetime and, for that reason we, must quickly adapt business practice to take advantage of these rare opportunities. The opportunity exists today with cannabis markets, after all cannabis users are known for their willingness to try new things.
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Average Medical Ailment at a specific Compassion Society
|Average Medical Ailment (Pogue, 2015)||Number of Members|
|Loss of Appetite||5|
|Degenerative Disc Disease||2|
|Restless Leg Syndrome||1|
|Post Concussion Syndrome||1|
|Chronic Heart Failure||1|
Infographic – Markets for Medical Cannabis
Infographic – Alcohol vs. Cannabis Consumption Replacement