As cannabis legalization sweeps through North America there’s been a corresponding race for brands entering the market in what has amounted to a gold rush turn green. And Organigram is one such brand, they’ve been in the market from the time that medical cannabis became legal in Canada in 2013 and they now offer a range of brands including that medical line Organigram, and recreational lines Edison, Edison Reserve, ANKR and Trailblazer.
Ray Gracewood is the SVP of Marketing and Communications for Organigram and he’s going to tell us about the roller coaster ride at the front lines of the cannabis industry.
As cannabis legalization sweeps through North America there’s been a corresponding race for brands entering the market in what has amounted to a gold rush turn green. And Organigram is one such brand, they’ve been in the market from the time that medical cannabis became legal in Canada in 2013 and they now offer a range of brands including that medical line Organigram, and recreational lines Edison, Edison Reserve, ANKR and Trailblazer. So, Ray Gracewood is the SVP of Marketing and Communications for Organigram and he’s going to tell us about the roller coaster ride at the front lines of the cannabis industry. Ray, welcome. Thanks so much for being with us today.
Ray: My pleasure, Melinda. Nice speaking with you.
Melinda: Could you start us off by telling us a little bit about yourself and how you came to be working for one of Canada’s early starters in the industry?
Ray: Sure. So really the thing that appealed to me from the get-go, it was truly from a marketing and branding perspective, I think a once in a lifetime opportunity that allowed a select group of individuals to get together and start to define what a brand could possibly look like in a new regulated environment in Canada. And I think when we think through some of these opportunities and call it consumer packaged goods or other products is, you know, very few opportunities to really kind of have that opportunity to put your flag in the ground. So, I think that was the thing that first drew me to the industry.
And then couple that with the fact that in my past life I worked at Moosehead Brewery which is an independently owned brewery located here in the province of New Brunswick in Canada. And the company Organigram was also a New Brunswick-based company that had very much, you know, national and international aspirations. So, I think there’s a bit of that as well where I just wanted to be involved in something that I thought was going to be something that was done incredibly well here in our province and had the opportunity to be a leader right across the country.
Melinda: It’s been just over a year now that Canada has legalized adult recreational cannabis and Organigram has launched a number of brands into the market. Can you tell us a little bit about some of the highlights and the speed bumps that you’ve experienced over this first year?
Ray: Well, I think it’s fair to say that there’s a lot of both to be completely candid. It’s been certainly an interesting first year and a half to legalization here in Canada. And I think as I look back over the process that has got us to where we are now, you know, we’ve had to pivot and make an awful lot of changes based on a changing regulatory environment, competitive environment, rates of industry growth that are unexpected and fair to say slower than what we had anticipated.
So, I think for us one of the biggest challenges was understanding what the playing field looks like and whether that’s from a promotional perspective or a branding perspective or packaging all elements. Essentially, the marketing mix were kind of up for grabs. And working with Health Canada to start to understand what we were allowed to do and not allowed to do and us knowing just based on experience how long it was going to take to turn over, a lot of those things, I think, created an element of frustration in that we need to make decisions now that have significant strategic and financial implications. But, at the end of the day, we’re not 100 percent certain on what the environment’s going to look like. And I point to packaging design as being one of those things that we went far down the path on and in a couple of different instances felt really good about what our brand could stand for and how it could look like to consumers. But then at the end of the day after we get regulations obviously puts us in a very different place.
Melinda: Absolutely. So, when you began thinking about developing these brands, specifically the adult recreational brands, we all knew competition was going to be fierce. What factors did you feel were the most important for success?
Ray: So I think as a company, Organigram has always been focused on sticking to business fundamentals and not getting too wrapped up in a lot of the hype that has sort of been in and around our industry and I think that kind of goes back to our focus on strategy, to begin with. We’ve always had a very strategic approach to understanding the fundamentals of brand development and what we need to do to understand what that portfolio of brand needs to look like. So, you know, I think that we’ve been a firm believer since day one that this industry will evolve to a place where brands will be king.
And I think it’s fair to say, even now as we speak, I don’t think that the industry is quite there yet. And sometimes we need to be a little bit patient to understand that brands aren’t built overnight and that they take time to identify themselves and to get into the hearts and minds of consumers. And we’re very much at the early stage of that I think within the Canadian cannabis industry. But I think at the end of the day what sets us up for success is having a strategy that we believe in and a good understanding of our consumer and also, you know, how we create differentiated products that kind of dovetail into that consumer segmentation and understanding the link between great and innovative products and interesting consumer groups that they appeal to.
Melinda: You’re leading right into my next question. It’s so hard to know what consumers want when there is so little legal or even available market research about what consumers are doing, is there some indication now what kind of direction consumers are leaning to in these different groups?
Ray: Well, I think within our industry right now, within the Canadian cannabis industry, it’s a blend of art and science that gets you to a place of really understanding your consumer. The short answer would be yes, there is more data available now than what there was a couple of years ago now that we have established ourselves as an industry, now that there is a core group of consumers that are purchasing legal cannabis on a regular basis. And there is a lot of great work that we’re doing with our research partner in trying to understand how those consumer segments are emerging and becoming clearer and how, or if we need to adapt our brand strategy and our communication strategy to deal with that.
So when I look back a couple of years ago there was far less immediate information and data for us to rely on and that’s everything from consumer preferences all the way through to the ability to forecast volumes and some of the more operationally kind of focused decisions that we need to make. But you know as the clock ticks and time passes, we get a better sense of who our consumers are and I think as the industry grows and continues to grow we’ll only be able to sharpen the sword and get stronger at understanding those groups of consumers and identifying new opportunities and new reasons to be able to hopefully lure consumers from the illicit market to a legal market.
Melinda: For those who are listening outside of Canada, I’ll just lead into this question with a bit of an explanation. Just before legalization, just very shortly before legalization, the Canadian government announced that the packaging regulations would be extremely strict to the point that the package itself is almost unbranded. Can you tell us a little bit about how consumers in Canada are making decisions about what brand they’re going to go with given that the package is no longer really a touchpoint where they can get any information about the brand?
Ray: It’s certainly a unique challenge and I mean when we had found out what those restrictions were going to look like, part of my heart as a brand marketer died that day.
Melinda: I can imagine.
Ray: As we move forward though, we start to get a better handle on how do you impact consumers outside of packaging and the reality is, obviously packaging is very, very important in terms of identifying a brand, especially a consumer packaged good brand. But at the end of the day, there’s other tools that a marketer has in their toolbox. So for us, we focused an awful lot of attention on educating frontline retail staff on what makes our products different and understanding our growing processes and points of specification around our facility that how we grow is different and the process and how that sort of relates to certain kind of consumer groups.
And I think that over time, the one thing that I’ve found is quality is certainly the best marketing tool. And I think at the end of the day it forces us to hold ourselves accountable to a higher level of quality and consistency with our products that then become very inherent and obvious within, you know, not just our consumers, our end consumers, but our retail customers as well. And I think then it becomes more of a story about what’s in the box versus what’s on the box.
It’s not to say that I’ve ever diminished the power of good packaging and even within the restrictions as they are, there are some points of differentiation that we’re allowed to use in terms of color palette and logo placement and brand mark design and things of that nature. So, it results in a relative, call it sea of sameness within the retail environment, but we can differentiate based on colors and logos as I mentioned. But really at the end of the day, it puts more emphasis on us telling our quality story and the story about our company and where the product comes from and providing a strong mechanism for the retail frontline staff to communicate that message to consumers.
Melinda: That’s kind of interesting. I’m wondering if we look at a state like Colorado where there are very little restrictions on packaging and you can basically do whatever you want, do you think it’s possible that we’re going to end up with a better quality assortment in Canada because you’re forced to use that as your differentiator whereas in Colorado it could be that I’m drawn to this colorful, beautiful package and don’t necessarily seek the amount of information that I might in a Canadian environment?
Ray: Well, that’s an interesting perspective. I think that at the end of the day, quality always matters regardless of the ability to sort of market through packaging. So, there may be an element of that, but at the same time I think when we talk about the regulations as they stand now and how the market is due to evolve over time and we’ve gotten off to a very conservative start for good reason. I think that if we look at what the path forward looks like, one of our top priorities from an advocacy perspective is being able to have more leniency in terms of telling our brand story within packaging and within branding.
So, I think that there is value outside of any potential loss in quality or perceived quality but I think there is some value in allowing brands to exist in the Canadian marketplace. And what that does is it allows us a better opportunity to compete against the illicit market, who in some cases have all of the flexibility in the world to tell their story. And quite frankly, when I look at some of the packaging I see from the illicit market, it looks far more legitimate than what you would see within the legal market, which, you know, from a consumer perception perspective is a real problem especially when you put it through the filter of public safety and the importance of that as a mandate to the Canadian government.
Melinda: If you look forward to the next couple of years, do you expect the Canadian government is going to allow you that latitude?
Ray: Well, all I can say is that it’s a priority for us not just as Organigram but as an industry to keep that as an agenda item and a topic of conversation whether it’s from licensed producers such as ourselves or the associations that we’re a part of, it’s very much a priority for us to have those discussions and to create that degree of education. And our hope is that there will be movement over time, but at the end of the day, it’s tough to say how things and how quickly things might evolve and move.
But the reality is that we’ve seen it be successful in other markets and Canada has an interesting opportunity as the first G7 country to legalize cannabis for adult recreational purposes. And I think as a thought leader in that space it’s on us to understand the importance of brands and how they can potentially be a positive thing to communicate quality attributes and things of that nature versus it being used as, you know, some kind of potential issue maybe against appealing to children or some of the other things that have been discussed in the past.
Melinda: Aside from the packaging component of our conversation, what other changes do you see coming or do you hope to see coming?
Ray: Well, I think that most recently the regulations evolving to include more product formats and packaging formats, I think is certainly a step forward. So we’ve been, I’d say slow on the uptake in terms of capturing the illicit market within Canada and I think partially due to the fact that we’ve been relatively controlled and constrained in the amount of products and product types that we can bring to market. So just recently we’ve had the doors open to edible products, concentrate products, vaporizable products and cannabis beverages that I think, in our estimation, probably make up almost 50 percent of the possible market. And that’s just based on what we’ve seen in certain regulated states in the U.S.
So, I think that to me is one of the biggest opportunities that’s in front of us is to be able to market to a whole new group of consumers that might not be a traditional cannabis user. So that would be daily or regular users that would prefer dried flower and enjoy the ritual of, you know, breaking it up and rolling it up and it’s either combustion or in a vaporizer, etc. But there’s a whole different group of consumers that I think appreciate the convenience and the discretion of some of these other product forms that are now available. So, I think that watching that piece of the industry evolve over the next couple of years is gonna be a real difference-maker for our industry.
And then I think the second factor would be, you know, convenience for consumers in terms of distribution and points of purchase. One of our biggest struggles over the past year or so has been in certain markets there’s been a slower than anticipated roll out of retail locations. And I think once there’s a certain comfort level through the provincial jurisdictions and, you know, those retail locations start to pop up with greater ease and licensing gets a little bit more streamlined, I think having more points of purchase for consumers is really going to help our market along as well over the next two or three years.
Melinda: That’s absolutely been a big deal here in Ontario. So, I agree with you on that 100 percent.
Let’s just imagine that another one of the G7 countries decides they are going to legalize cannabis and someone calls you up who’s a brand marketer from that country, what would be your top pieces of advice for them in getting a brand up and running in this market?
Ray: Well, I think first and foremost it’s understanding the sandbox and understanding the rules and regulations and that in Canada specifically, we’re very much regulated through Health Canada. And I think, you know, I’ve never worked in an industry or for a company or in a job where I’ve had a closer working relationship with my legal and compliancy group. So I think for me that was the biggest change from my previous life in more traditional consumer packaged goods is that you had less regulations and less rules to deal with and the sky is the limit when it comes to creativity and promotional ideas and different concepts, etc.
And I think for me, especially in an industry that’s growing so fast like ours is, it’s really about managing your time. And I think that the more you can manage your time to align with what is within the regs and you minimize the amount of time invested in ideas that are frankly never going to go anywhere, that would be, I think my number one point of advice is getting very cozy with the regulator and understanding exactly what there’s a good chance that you can and can’t do so that you can maximize your time efficiency and focus your efforts in the right place.
Melinda: Ray, thank you so much for sharing your thoughts with us today.
Ray: My pleasure, Melinda.
Melinda: Getting cozy with your regulators isn’t maybe the sexiest advice we’ve ever given but as cannabis legalization and regulation evolves, it might save you a lot of energy if you are at the front lines and understand clearly what limitations and requirements are going to be relevant in your market before you get too far down the rabbit hole. From speaking to a number of people in the cannabis industry, the other word of advice that keeps coming up is to be prepared for anything, be prepared to pivot, and expect the unexpected. That might make things scary, but as Ray points out, it is a once in a lifetime experience for brand marketers and it is a pretty exciting time.
For brands and markets that aren’t heavily regulated, there is something interesting to be learned from that constraint-driven environment, it’s forcing brands like Organigram to focus on quality, on education of frontline staff, and on ensuring that their brand story is really compelling. Anything that can help you really tighten your message isn’t a bad thing.
That’s all for today. Thanks for listening.
Ray Gracewood is the Senior Vice President of Organigram, a leading publicly-traded licensed producer of cannabis in Canada.
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