canna ventures (now the matters. group) launches groundbreaking survey on cannabis/marijuana branding

cannabis-brand-development-summaryCanna Ventures has launched a groundbreaking new study on marijuana branding in the US. It is scheduled for release in early October 2014. This survey doesn’t simply retrace the familiar knowledge about adoption and usage. While valuable in its appropriate realm, such insights have been publicized by many other survey organizations. Instead the survey is designed to show the shape of “ideal marijuana brand,” as reported from consumers. It will serve as an important guideline to developing marijuana brands in the states that have already approved recreational use, as well as states that soon will.

the survey, launched on July 29, will cover:

  • What kind of brand would users be most strongly attracted to?
  • What kinds of people would be most strongly attracted to the ideal brand?
  • Among the consumer types, which are most and least marijuana-friendly?
  • How strongly and frequently would the most marijuana-friendly types patronize the ideal brand?
  • What messaging from the ideal brand is most likely to appeal to the users in order to create brand loyalty?

In summary, the survey will uncover what we can learn about the nature and behavior of the more numerous “other” types of consumers. Those whose feelings toward marijuana range from ambivalent to opposed.  How do they influence acceptance and adoption of the ideal marijuana brand? The survey insights will be critical for emerging brands targeting recreational and medical users. The data will be the basis for marketing plans targeting all stages of the value chain. From growers to producers to retailers and ancillary products and services, those who establish their brands will be the winners in the market. The fundamental question to be answered is: What are the attributes that, if communicated properly, cement the bond between brand and consumer? The study will answer those brand-development questions, among many other questions relating to the ideal marijuana brand. Stay tuned!

locations

Seattle

The Bay Area

contact

(206) 420-6121
info@thematters.group

hours

Mon - Fri : 8am–6pm PST

Sat - Sun: Closed

beware the 502 barriers to businesses

Many people saw dollar signs in the passage of Initiative 502, but the real business climate might prove treacherous.

Jessica Allen, a CPA with RainCity CPA, has already gained a wealth of experience dealing with interested entrepreneurs who want to take advantage of marijuana’s legalization. However, she has grown dismayed over hurdles the state has set in front of businesses trying to develop.

“A lot of people think that they are going to create a super profitable business,” Allen said. “But there are so many restrictions for those businesses to make money.”

502 barriers to business

The main problem she sees with the current state of the industry lies in the heavy taxes the state has levied against all levels. She said the 25% cut demanded by I-502 was part of the strategy to get the initiative to pass, but it has the potential to hamstring producers, processors and retailers.

“That’s the biggest initial barrier,” Allen said. “We need to see some sort of way for these businesses to make money or break even.”

With the continued federal listing of marijuana as a schedule one controlled substance, businesses also cannot claim business expenses to the IRS. Furthermore, Washington State does not allow any exemptions. So producers cannot expect to get an agriculture exemption on state taxes.

Allen said to imagine a businessperson starting with $1 million. Out of the initial take, this unfortunate person would immediately have to give $250,000 to Washington State and then give another $250,000 to the IRS come tax time. With the other $500k, the business would have to pay for products, rent, employees, marketing and any other expenses needed.

Where this really hits home for retailers, Allen said, is in the gross margin. Businesses will have to inflate prices relatively high just to compensate for all the costs derived from state and federal taxes.

“You will have to have more than a 50 percent gross margin just to make it by,” Allen said. “We’re talking about retail here — I’ve never heard of such a high margin in retail.”

Though the demand could help the retailers survive with the asking price, she said the expected margins were still very economically unorthodox.

“Retailers have always been about the slimmest margins,” she said about typical businesses. “Restaurants usually have a 5 to 10 percent.”

solutions to survive 502

Though she painted a somewhat dire picture of the landscape, Allen had a positive outlook of the future and even offered some solutions for new businesses.

“Co-ops are the way to go,” she said simply. To her they solve three large problems, the first being supply.

“When you have a co-op, you have three to a dozen other people who make up your network and you’ll always have some supply,” she said. “There’s also the support you will have in the camaraderie.”

She said a co-op also offered a way to increase sales. With a larger number of retailers and their extended network of supply, the co-op can sell more and reach the margins needed to survive.

The third answer co-ops provide is branding.

“You can really create a strong message,” she said. “Customers are not going to go from shop to shop to try it all out, because they can’t afford it. Retailers have to brand.”

Other solutions to the industry’s hurdles involve creating partnerships. Allen said the law provided nebulous areas that could find retailers striking deals with various producers and processors.

“If the producer and processors can offer the retailer a lower price, the retailer can kick back some of the profits,” she said. “But that’s getting into the grey area of the law.”

spreading the word about 502

No matter what immediate solutions businesses can find, Allen remained convinced the state’s system needed a reboot.

“I think the first step is talking about it,” she said. “There are places where we need real direction and the state isn’t even acknowledging that. Yeah, we’re still in the infancy, but is there going to be accountability?”

The legislature’s continuing silence on developing the fledgling industry kept new entrepreneurs in the dark.

“There’s no uniformity of direction,” Allen said. “There are people trying to start a business who are just shocked at how many hurdles there are.”

Still, she believed opportunities would arrive for all businesses trying to make economic sense out of the government’s wayward course.

“I’m extremely optimistic about the future,” Allen said. “I think legal marijuana is a fantastic way to boost revenue and support social services because no one like raised taxes. It’ll stick around for sure.”

locations

Seattle

The Bay Area

contact

(206) 420-6121
info@thematters.group

hours

Mon - Fri : 8am–6pm PST

Sat - Sun: Closed

the best day of the week for recreational marijuana sales (in Washington State)

Their home page may not be inspirational, but the Washington State Liquor Control Board is posting all kinds of fun information on their website.  Recently those fine folks started providing recreational marijuana sales by day. It would be super to see this data broken out by flowers vs. edibles. We’ve seen that information broken out in Colorado. But since this data is sourced from tax returns, it’s all we have for now. The first interesting thing the data tells us is supply is ramping up. Supply shortages were well documented the first few weeks of sales. However, supply must be starting to build based on the sales data. Total weekly sales were below $1 million until last week. Sales for the week ending 8/18/14 were more than double any of the prior weeks and topped the charts at over $2.2 million. On Friday, August 15 sales were nearly $1 million on their own. Now we have six weeks’ worth of sales data, we thought we would look at the most popular days to purchase weed in the state of Washington. So when is everyone buying their pot?


Friday ya’ll.

recreational marijuana sales on friday are nearly double the next highest sales day, saturday.

In fact, Friday and Saturday sales combined are 43% of the total sales each week. Tuesday is the least popular day to buy recreational marijuana although the aggregate data shows more total sales than Sundays and Wednesday’s. This is because the first legal sales were on Tuesday, July 14 when sales totaled $246,415. Apart from day 1 sales, Tuesday’s have averaged $88,240 per day. The next lowest day by average sales is Sunday, with average sales of $101,948. This isn’t earth shattering news. Most people prefer to party on the weekend. Personally I think the best explanation for the data is this.  Washingtonians need relief from annoying friends who still think it’s funny to post this on Facebook each Friday (and now I’m ashamed I linked to it too). I’m also curious if sales of marijuana will have an impact on liquor sales in areas where recreational weed is available. Given the shortage of supply, we may not know for a while. We’ve reached out to the Washington State Liquor Control Board to research this question. We will be posting the answer when the data becomes available.

locations

Seattle

The Bay Area

contact

(206) 420-6121
info@thematters.group

hours

Mon - Fri : 8am–6pm PST

Sat - Sun: Closed