If you’ve been keeping an eye on the cannabis industry of late, you’ve probably noticed a trend bubbling beneath the surface. Some leading cannabis brands sell direct to consumers now, such as—Kiva Confections, CannaCraft, Cann Social Tonic, Old Pal, and Roach.
What’s behind the trend? An attempt to circumvent retail gatekeepers like dispensaries? A desire to connect more deeply with consumers and their preferences?
If you’re a cannabis brand navigating the sticky business of direct marketing, this is information you need to know. Let’s dive in and get to the bottom of this intriguing, still-developing trend.
Cannabis Brands & Direct to Consumer Sales: A Historic Opportunity
Why are cannabis brands embracing direct to consumer sales now? The answer is predictably multi-layered. For one thing, there’s COVID to consider. Even if the majority of jurisdictions granted cannabis dispensaries “essential business” status, the global pandemic was a major disruptor of retail activities, or at least for in-person retail activities.
For Amazon, the pandemic was an unprecedented windfall, with the online retailer racking up a brain-boggling 84% rise in net profits. With so many consumers turning to delivery services for the household goods they once bought in person, many cannabis brands turned to embrace a direct to consumer (D2C) model themselves, at least where it’s permitted.
Right now, the question of “where” appears to mainly be confined to California, the world’s largest legal cannabis market (and one where home cannabis delivery is well established). Though Eaze imploded a few years back and was forced to retool into a vertical integration model, the company has since reinvented itself as a highly capable delivery option serving the entire state. Other ventures—such as BlackbirdGo and Grass Door—aren’t far behind. And reportedly, some brands are taking the leap themselves, applying for delivery licenses in this newest phase of the fast-moving industry.
What’s in it for cannabis brands? Besides bolstering their sales, it’s no secret that consumer-facing brands—cannabis-based or not—can reap huge rewards by interfacing directly with their customers. In addition to helping deepen the all-important relationship with members of the purchasing public, it allows them to maintain complete control over their image and story, thus strengthening their brand identity.
There’s more. Transacting directly with the public allows brands to reinforce MSRP—the manufacturer’s suggested retail price—which can be degraded by retailers’ sales, clearances, and other factors. And while it’s relatively rare that dispensaries will carry a company’s entire line, direct-to-consumer sales allow brands to offer the entire range of their products—plus premium and limited-edition products—directly to the people most interested in trying them.
There’s one other underlying factor. While it’s the one least visible to the consumer, it’s arguably the most impactful to brands: These direct exchanges allow those cannabis companies who are positioned to collect and interpret consumer data a wealth of actionable information.
From building their email lists to learning their consumers’ preferences—which helps deepen the brand-to-consumer connection as well as helping guide future product design—there are very few downsides from brands’ perspective.
Cannabis Brands & Direct to Consumer Sales: What’s Next
With this trend still in its early days, it’s impossible to say where it’s headed. But Roie Edery—formerly of the aforementioned Eaze and now with Ginger Commerce, a company focused on exactly the sort of cannabis brands direct to consumer transactions we’re talking about—sounds optimistic. Quoted in Marijuana Business Daily, Edery notes that no cannabis brand has outright turned down his offer of delivery fulfillment:
“It’s truly an open field right now. Out of the top 100 brands in California, only about 5% are doing D2C, and the other 95% are thinking hard about it. I’ve pitched close to 30-40 brands in the past month, and nobody has said, ‘Yeah, no, not interested.’ Everyone is like, ‘Hey, great timing, we just started thinking about this.”
What does this mean for dispensaries?
According to Marijuana Business Daily, some retailers are less than pleased to find that the cannabis brands they carry are now reaching out directly to consumers, in many cases offering products at prices dispensaries can’t hope to match. As states from Massachusetts to Arizona prepare to allow cannabis delivery, they may find themselves in an increasingly competitive environment.
If you are a cannabis brand thinking of selling directly to consumers, contact us to learn how our suite of digital marketing strategies can help you connect with new customers.