It’s no secret that the Cannabis industry is one of the fastest growing in the world, but looking at the sheer fact that the total economic impact of legal cannabis sales is projected to increase from $46 billion in 2019 to an estimated 130 billion by 2024 – we realize just how massive the growth trajectory really is.
With such rapid growth come growing pains, and we are not speaking about regulatory compliance or obvious business challenges. Consider California; being the world’s largest cannabis market, this state represents a whopping 2000+ “brands”. If we look at this from our lens, the lens of cannabis vaping – then roughly 30% of those companies are competing in the same segment within the same designated market area.
When you walk into any dispensary in Cali, besides the outliers like Stiiizy, Pax, Dosist, Airo, etc. who have been able to create their own unique sub-category in the market, the rest of the so-called brands default to a 510 thread cartridge or disposable vaporizer with slim to no differentiation outside of packaging. Even if you look at packaging, most are using one of 5 popular child resistant box models. Have we really reached ceiling of innovation on CR front? We think not. When it comes to the actual product, the cartridge – here’s a challenge: take 10 carts out of their respective boxes, line them up and try to tell the difference from a distance – same 510 thread body, similar mouthpiece – mostly same shape ceramic or poly, and a tiny logo which you cannot see from more than 5 feet away.
The source of the challenge here is quite simple actually. As an industry we have mostly relied on product design and “innovation” that is generated by the 600 plus competing factories in Shenzhen, China. The problem is, that only a handful of these factories actually innovate and the minute something new and cool comes to market, like a new funky shape mouthpiece, it is copied by everyone else, packaged in 48 hours or less and marketed at scale to us all.
If you look at any other developed industry in the world – it is clear that form factor is an inherent part of the brand. Some forward-thinking companies in our space have recognized the threat of defaulting to a commoditized product; many are going above and beyond to impact their product experience – from form factor, to options and features to interactive and guided experiences. These are the companies that will have the upper hand in 2021 and beyond, they will carve out their loyal consumer base and other like minded individuals will follow and will resonate with the unique propositions these brands have to offer. We will see more and more brands embark on a path of innovation and differentiation, from simple mods to existing hardware to completely new and uncharted territories – proprietary systems, controlled experience and connected devices and the controversial, so-called dosing systems.
Our prediction is simple
Long term commercial success in the Cannabis industry will be a reward reaped by those who Innovate and differentiate their product and whole brand experience. Those who continue on the beaten path will inevitably get lost in the clutter of our noisy and saturated cannabis marketplace. We will start seeing the big effects of this inside 2021.