Canadian cannabis companies have been given a leg up on its global competition, but that advantage is being eroded and could be eliminated rather quickly once the United States ends federal prohibition, industry insiders warn, and it isn’t difficult to imagine. Federal laws allowing banking services, public investment, normal tax rules, and exports has made Canada the international cannabis industry leader, with companies expanding into legal US states and into other nations around the world, even sometimes making moves before major reforms pass, utilizing insight to follow the momentum.
However, with the United States making progress, especially with California companies striking huge deals with business moguls, Canada could lose its place at the top, especially if rules regarding advertising are not addressed. With US companies able to better leverage relationships with worldwide stars like Jay-Z, marketing rules, including on social media, need to be adapted, as Vice covered:
According to federal regulations in Canada, celebrities can’t give a testimonial about a licensed producer’s product, talk about its price, or say anything about it to minors. They can harness what’s known as “the halo effect” and hope that star power rubs off on the brand.
These are just a few of the rules that, according to cannabis industry and observers alike, leave Canadian cannabis companies at a disadvantage. This presents a huge challenge because they’re up against U.S. companies that are gearing up for a global fight, with big budgets and a deep bench of executives who have already established successful retail brands—such as Victoria’s Secret, Home Depot, and Pepsico’s Frito-Lay.
Cannabis marketing expert Kayla Rochkin said it’s just a matter of time before America loosens the rules federally. As vice president of marketing for TREC Brands, she works with a portfolio of cannabis companies and has seen firsthand how challenging it is to push a product, without being able to talk in-depth about the product itself to the public. But as the clock ticks down, she said Canadian companies are losing whatever first-mover advantage they may have had because of strict rules limiting brands from touting their advantages over rivals.
Confusingly, Canada’s Cannabis Act prohibits producers from marketing techniques that promote the business or product “in a manner that associates it or the brand element with, or evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring.” If any business, especially a small to medium enterprise that wants to find a niche as a craft cannabis company, branding with a positive emotion or way of life is key. Once the United States legalizes for all adults and starts exporting, US companies will enjoy a huge marketing advantage. Canada has been the king of the hill, but there’s a sleeping giant that’s about to wake up.
Stay up-to-date on the latest rules and develops while networking with top investors and entrepreneurs at the upcoming International Cannabis Business Conference in Vancouver, Canada, this September 15-16. Early bird tickets are available until August 21st. After the British Columbia excursion, we’ll be heading to San Francisco, California, on February 6-7.