Despite a struggling stock market, consumer demand for cannabis is higher than ever – and companies are focused on creating clear, enjoyable experiences to drive growth. That sentiment permeated the recent Benzinga Cannabis Capital Conference in Miami, where cannabis industry leaders gathered to discuss strategies and insights.
To succeed, companies need to understand their consumers and offer a diverse range of products and price points to capture a variety of consumers, according to Gary Santo, CEO of TILT Holdings. The past focus of “super-high end” and “ultra-premium” focus is no longer enough to meet customer needs.
Brett Novey, CEO of Pharmacann, echoed the sentiment of tailoring your products for different landscapes. “If you want to have a brand that’s going to last the market, you have to evolve with the market,” he said.
“If all we had was 10 milligrams (in a new market), and there are all these new customers who are so excited about legalization and are coming to try cannabis for the first time, and you’re like, ‘Sorry, all we have is 10 milligram gummies – cut it into fourths,'” he added. “That’s a horrible customer experience.”
However, some industry veterans, such as Kristi Palmer, co-founder of Kiva Confections, expressed concerns about the current barriers for new entrepreneurs entering the market.
Palmer reminisced about starting her edibles business in her home kitchen, a practice that is no longer viable: “I hope that in the future, we live in a world where starting an edibles business can be done in the kitchen.”
Beyond Product Development
While products are the foundation of the business, to succeed in cannabis you also have to focus on the business fundamentals, such as how to effectively deploy available capital and how to measure success.
A key part of that is investing in a long-term plan, said Christine Smith, CEO and founder of Grön. “We’re putting a huge capital investment in these markets, so we’re looking for a long-term strategy because pivoting is not an option,” she said. “If I can’t own 5-10% of that market within a year, it’s not a good deal and we made a mistake.”
As the cannabis industry grows, competition has grown with it. Businesses must adapt by conducting thorough market research, understanding industry intricacies, and developing long-term plans before committing to large investments.
New entrants must innovate to differentiate themselves from well-established competitors, focusing on unique products, strong brand identity, or exceptional customer service.
It’s a challenging environment for newcomers, certainly, said Mike Weinberger, CEO of Item 9 Labs Corp. “You can see just from this conference how hard it is for everyone — even MSOs — so imagine never being in the space at all. I don’t know how newbies survive. The big MSOs are just too big.”
With substantial initial investments now required in states like California, entrepreneurs must secure adequate capital and develop comprehensive budgeting plans. Fostering customer loyalty is crucial, emphasizing smaller, frequent transactions, and implementing loyalty programs.
“I hate to be the one to say it, because I know that I’m the most recent startup and I mentor startup companies too, but have a couple million dollars,” said Caroline Yeh, co-founder and CEO at TSUMo Snacks. “You can’t start a cannabis business in California with $10,000. It’s not structured like that anymore.”