Choom™: Laser Focus on Recreational Branding for Legal Cannabis
January 25th, 2018
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As the legalization of adult use of recreational marijuana approaches this summer in Canada, there have been three phases of growth in the industry. The first phase was medical use only, in which licensed producers (LPs) with medical/pharma brands sold to medical users. In the second phase, LPs planned and financed major expansion projects, upping production levels in anticipation of a supply shortfall this summer when cannabis is expected to be fully legal. This phase is ongoing.
The third and very recent phase is for these companies to invest in consumer oriented brands as opposed to those aimed at medical patients. Marketing to a broad consumer base is a very different prospect than marketing to doctors and their patients. As with the similar alcohol market, success in the recreational cannabis market will likely depend on developing and maintaining brand loyalty through consumer identification with a marijuana lifestyle. In this phase branding and retail distribution will become the key.
In this article, we will cover this third trend and the early mover position taken by Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF). Choom is the Hawaiian slang for marijuana, and the company intends to bring the spirit of aloha and good times to Canadian cannabis consumers. Choom is a late stage applicant under the Access to Cannabis for Medical Purposes Regulations (ACMPR) licensing process, has a letter of intent to acquire another late stage applicant, and recently announced its intention to create its own chain of branded retail dispensaries.
Pure Play Recreational Brand
Choom Holdings began trading in the fall of 2017 on the Canadian Securities Exchange with one thing in mind: develop a recognizable and loved lifestyle brand for the adult use cannabis market. Choom has an interesting documented history: Choom™ was inspired by the Choom Gang, a group of buddies in Honolulu (including President Obama) during the 1970’s who loved to smoke weed—or as the locals called it, choom.
Choom came out of the gate knowing what its mission was with a clear plan to achieve it, while more established companies have had to switch gears from years of focus on medical marijuana, doctor/patient relationships, and effectiveness of strains for different indications.
Recent deals clearly display the medical-to-recreational trend and the value placed on the larger adult use market. Constellation Brands (NYSE: STZ), a large alcohol conglomerate with brands like Corona, bought about 10% of Canopy Growth (TSX: WEED), one of the largest licensed producers in Canada, for around C$245 million. The intent is to develop and market cannabis-based beverages. Aphria (TSX: APH), another of the larger licensed producers, has been very active on this front. The company bought Broken Coast Cannabis, a small producer of premium strains, for C$230 million with an eye on the consumer market. Aphria also chipped in C$12.5 million for a stake in Hiku, the company being formed from the merger of consumer brands DOJA Cannabis Company (CSE: DOJA) and Tokyo Smoke. The value of Tokyo Smoke alone was C$70 million for a brand and retail locations… and they don’t sell marijuana yet.
An interesting aspect of Canada’s legalization is the limitations on the way cannabis can be marketed. Similar to restrictions put on the advertising of tobacco, cannabis will not be advertised where youth can see it. Companies with deeper pockets will not be able to plaster the media (both traditional and social) and the countryside with ads, squeezing out smaller brands through sheer volume and force. Rather, according to experts in the industry, the most successful brands could come from smaller, more nimble companies like Choom. With its strong brand history and retail plans in place, the company is positioned to carve out its niche in the anticipated C$6 billion/year adult use market.
In 2017 Health Canada implemented a streamlined process for the review and approval of ACMPR license applications. This has led to an uptick in approvals as full legalization approaches and supply worries loom. Though nothing is guaranteed, these developments are a good sign for Choom. With one application in the detailed review stage (already been granted security clearance) in Vernon, B.C., and plans to acquire a second applicant company that is even further along on Vancouver Island, B.C., Choom hopes to hit the ground running.
Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) appears primed to take advantage of market and regulatory forces in the pending Canadian adult use cannabis market. Marketing to adult consumers of marijuana is quite a different proposition than marketing to medical patients, a fact that Choom heartily acknowledges and embraces. Stay tuned to this channel for further developments, and say ‘Aloha’ to good times to come.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please see our disclaimer below and follow the link to view our full disclosure outlining compensation: https://www.cannabisfn.com/legal-disclaimer/
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