Cannabis: A billion dollar industry ready to take off
Cannabis is big business. The market for the cannabis-based product has grown exponentially in recent years, particularly in the US where recreational cannabis is legal in 16 states, and the UK, where regulation of medicinal products has helped the industry thrive.
Australia is a market that is behind other western nations. Nine’s The Big Ideas Store, in conjunction with Initiative, brought together some leading minds on the subject to chat about why the business of cannabis is yet to take off here, and how marketers should tackle the complex product area.
L-R: Sam Geer, Martin Lane, Natasha Gillezeau, Eric Thomson
On a panel moderated by Initiative national managing director Sam Geer, the topic of how the Australian market will embrace cannabis was discussed, as was the challenge of negative preconceptions with the product.
“Cannabis legalisation is something you need to prepare for, whether you like it or not,” Geer implored attendees.
For a state of play update, he threw to founder and former CEO of Mumbrella, Martin Lane, who co-founded cannabis industry media platform Cannabiz in 2020. Lane agreed that now is the time for businesses and marketers to prepare.
“I went to Advertising Week in the UK in 2017 and there was a whole stream dedicated [to the business of Cannabis]. It’s important to prepare now when we become the US and the UK,” he said.
The Australian Financial Review’s tech, media and marketing reporter, Natasha Gillezeau, added that it’s only a matter of time, and once the industry takes off here, “marketing will follow”.
“Where the business leaders are at is quite far away from where the consumer is. The expectation is that revenue for the whole sector will go up 79% year-on-year, so there is opportunity.”
Without a clear timeline for legalised recreational use in Australia, where is the opportunity for brands and marketers? Lane said that complementary medicine will be where cannabis products will be able to make their mark, at least to begin with.
“There’s a path in terms of Australia. It is now possible to buy CBD [cannabidiol] over the counter in pharmacies, but there isn’t currently a medicine available to be sold,” he said.
“We’re 12-18 months away from being able to go into Chemist Warehouse and buy CBD. When that happens and the price comes down, it will begin to compete in the complementary medicine stage. That gets you another several million [interested]… Then you get to recreational.”
Pernod Ricard Winemakers global marketing director, Eric Thomson, said that cannabis continues to face the fallout of how it has been presented in popular culture for many decades, going back to America’s war on drugs in the 70s.
“The cultural context is really important. Medicinal will be the first cab-off-the-rank and 42% of Australians favour legalisation. In Canada and The [United] States, it was 80-90% in favour before it was legalised. It stopped being a political discussion. Here it remains political.
He added: “I struggle to think of a brand or a product or a category that has been so consistently demonised in culture, that has been turned around. Anywhere there is money, people will take the opportunity. The culture has started to shift from demonisation to business opportunity.”
Lane believes that it’s only a matter of time before Australian businesses wake up to the business opportunities. “There’s enough dollars in it,” he said.
New Zealand recently voted no to legalising cannabis, and the panel broke down the marketing campaigns for the ‘Yes’ and ‘No’ campaigns respectively.
It was agreed that the ‘No’ campaign was much better, with positioning like ‘Vote Nope To Dope’. ‘Life Is Too Precious To Be Wasted’.
The yes campaign, on the other hand “treated it like a debate, which is never going to resonate as well as something that’s single-minded and emotional,” Geer said.
Lane concurred. “They [Yes campaign] got bogged down in the detail, compared to the very powerful messaging of the ‘vote no’ campaign. There’s a lot to learn from that. They got too defensive and too complex in the messaging.
He added that there’s a real opportunity in New Zealand to get tourists back with cannabis tourism.
“If you look at New Zealand’s economy, tourism is hugely important to the economy. The opportunity around Cannabis tourism must be huge. In ten years time visiting a cannabis farm will be the same as going to a winery.
“If New Zealand had said ‘yes’ it would have concentrated minds on this side.”
As for the challenges facing marketers, there are many, but Geer said that advertisers shouldn’t shirk away from the challenge because: “There isn’t a marketer who hasn’t faced a similar challenge around what they can and can’t say,” with another brand or product.
Thomson added that depending on how cannabis ends up being regulated, there could be further barriers for marketers. “Some markets have regulated packaging where you are limited in what you can communicate in terms of packaging and how consumers interact with the category.”
He agreed though, that the most opportunity is in the ‘wellness space’. “That’s where we will get the easiest acceptance from the Australian consumer. The vitamin/supplement space. That will be the earliest adoption.”
Chatting about cannabis’ branding as a whole Lane said businesses need to make sure they don’t just think about it as a ‘youth category’. “Thinking that it’s just going to be surf brands is a bit lazy,” Lane said.
There could also be a branding problem that the industry itself is perpetuating through continuing to use heavy amounts of the colour green, and championing the cannabis ‘leaf’ itself.
“What’s going to happen with the ‘leaf’? The ‘leaf’ is the golden arches of the Cannabis industry. There is a theory that is a bit throwback, the use of green colours, it’s all a bit stoner. So many cannabis companies start with the leaf and that disables them from putting the product in a wider cultural context,” Lane proposed.
Not only that, under TGA rules cannabis is still a “pharma category,” Lane explained. As a result, “it can’t be advertised direct to consumers. So you’re very limited in what advertising you can do generally”.
The industry will also need to get Google and Facebook on side too. “Google and Facebook don’t want to play in this space,” Lane said, explaining that he tried to send a link to his own website via Facebook messenger and it didn’t allow him to.
Despite those challenges, Lane has high hopes for the next few years. “There is definitely a content marketing play in this space because you can talk about the benefits, you can communicate to people that you don’t have to smoke it.”
Geer summed up: “It’s about creating things that people can share in their own networks.”
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Zanda Wilson was a reporter and podcast producer at Mumbrella, specialising in radio reporting. He left Mumbrella in September 2021.
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