Why Branding Matters in the Cannabis Industry
April 16th, 2019
Exclusive, News, Top News
The global cannabis industry is projected to reach $146.4 billion by 2025, according to Grand View Research, representing a blistering 34.6 percent compound annual growth rate. While the industry is known for strain names, like OG Kush and Girl Scout Cookies, there aren’t established marquee brands like those found in tobacco or pharmaceutical industries—which has many companies rushing to fill the void.
Let’s take a look at the importance of branding in the cannabis industry, how it will play a role in shaping the future, and how TransCanna Holdings Inc. (CSE: TCAN) (XETR: TH8) has positioned itself to capitalize on the evolving dynamics.
The Evolution of Branding
The cannabis industry is only starting to mature in many jurisdictions. For example, Canada just legalized recreational cannabis last year and many U.S. states haven’t even legalized medical cannabis. Many of these markets are still struggling to achieve a sufficient supply, which means that companies have invested in production more than branding. These dynamics will begin to change as supply and demand evens out.
Cannabis branding will likely evolve in two stages:
- Approachability: The cannabis industry has been subject to many stereotypes over the years thanks to the decades long War on Drugs and popular Hollywood films. The first hurdle for cannabis companies will be making their products more available to the general public. Some companies have already experimented with lifestyle brands (to shake the “stoner” stereotype) and all-natural branding (to shake the “drug” stereotype).
- Differentiation: The general public will eventually grow to accept cannabis as they have tobacco, alcohol, and traditional pharmaceuticals—depending on the market—which means that brands will start focusing on differentiation. These campaigns will be a lot more nuanced than the initial approachability phase (e.g. market specific or celebrity endorsed) and must evolve with the competition to remain effective.
Cannabis branding will also evolve in terms of the language and channels that can be used. For example, Colorado doesn’t permit outdoor advertising for dispensaries whereas Washington State has many billboards. Health Canada doesn’t permit much branding on actual cannabis products—and even mandates a large warning label. Companies must follow these policies and quickly respond to changes to remain competitive.
Building a Leading Portfolio
TransCanna intends to build a portfolio of premium brands to capitalize on these market dynamics. Through both strategic acquisitions and organic growth, the company plans on acquiring 15 premium brands, manufacture them in a state-of-the-art 196,000 sq. ft. facility that covers everything from the nursery to extraction, and distribute them to a network of dispensaries via an internal sales team.
The company is focused on five keys to its success:
- Vertical Integration: Controlling all aspects of infrastructure to mitigate the risk of unreliable third parties and lower the cost of production.
- Management: Retaining top-tier professionals in their respective fields.
- Software: Create state-of-the-art proprietary software that powers business intelligence and fuels operational efficiency.
- Cap Structure: Maintain a conservative capital structure with just 26 million shares outstanding to preserve shareholder value and keep options open.
- Network: Build upon its long-standing ties to the Canadian investment community, as well as its California network.
Management has made substantial progress on these goals over the past several months. Last year, the company created an advisory board with over 80 years of combined branding, transportation and logistics expertise and entered into an agreement to acquire 23 exclusive branding contracts. The company then executed a lease agreement on a warehouse in Adelanto, California and entered into a LOI to acquire a 196,000 sq. ft. manufacturing facility, also located in California.
In addition, TransCanna completed a very successful IPO on January 9th, 2019. It went public at CDN$.50, closed the first day at $.95 and has traded greater than $5.00 over the past several weeks. The company also announced a $10 million private placement which was up sized to $16 million due to substantial interest. The private placement closed on Thursday, April 4th.
TransCanna Holdings Inc. (CSE: TCAN) (XETR: TH8) has come a long way since its incorporation in October 2017. However, the acquisition of arguably one of the largest vertically integrated facilities in California, which has capacity for nursery, growing, manufacturing, bottling, extraction, and distribution and transportation, indicates the company has significant upside potential over the next thirty six months. Investors may want to take a closer look at the stock given TransCanna’s focus on branding and infrastructure in California and beyond.
For more information, visit the company’s website at www.transcanna.com.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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