The waiter sidled up to the table to deliver an order of beer and a well-worn marketing tactic: tossing down cardboard coasters advertising a different brand of suds. This moment at a bar on a recent night in downtown Toronto would have been unremarkable, if it weren’t for the image decorating each of those coasters: a large gold cannabis leaf.
They were just one part of a promotional campaign for a beer co-branded by Amsterdam Brewing Co. and cannabis producer MedReleaf Corp. Launched in February, San Rafael ’71 4:20 Pale Ale carries the name of what will be one of MedReleaf’s recreational brands, once federal legislation to legalize the sale and use of cannabis takes effect this year. The beer, which has also been advertised on billboards, is just one example of work cannabis companies are doing to build their brands in consumers’ minds in advance of the biggest change in controlled substances in Canada since the end of Prohibition. This advance work is crucial because as the market opens up, restrictions on advertising are likely to become much tighter.
Health Canada’s current proposal calls for plain packaging with only a small logo and a brand name, and no images or graphics, as well as prominent warning labels.Jim Mone/The Canadian Press
“Brand differentiation is starting ahead of time,” said Allan Rewak, acting executive director of the industry association Cannabis Canada. Whether such marketing tactics in use now will be permitted under the regulations later, is “very much an open question,” he said. “We’re eager to have the rules of the road established for us, so that we can all operate within them.”
“We’re in a grey zone right now,” said Kirsten Gauthier, chief marketing officer at licensed cannabis producer 48North Cannabis Co. “It’s a really fun time because you’ve got to be really creative, but responsible and mindful. … We’re all waiting for the rules around branding.”
While advertising and branding rules have yet to be finalized, the federal government revealed proposed regulations in March. Health Canada’s proposal calls for plain packaging with only a small logo and a brand name, and no images or graphics, as well as prominent warning labels. Making matters more complicated is that certain regulations could differ province-to-province. In Ontario, for example, product will not be visible on store shelves, so companies hoping to succeed will need to rely on customers asking for their product. Brand awareness will be especially important.
“This beer product is very much meant to expose Canadians to the brand, to get them familiar with it,” said Darren Karasiuk, vice-president of strategy at MedReleaf. He is hoping the beer will kick up some curiosity about the brand, driving potential future customers to Google to learn more. As time goes on, we’ll shift from awareness to [purchase] consideration.”
Tweed, one of the recreational cannabsis products to be introduced after legalization was a sponsor at Men's Fashion Week.
MedReleaf is one of more than a dozen producers that formed the Coalition for Responsible Cannabis Branding late last year. The group — which includes companies such as Canopy Growth Corp., Tilray, Aphria Inc., and Aurora Cannabis Inc. — has advocated for the ability to advertise cannabis under restrictions similar to those that apply to alcohol brands. That would mean ads on television, in print and on social media as long as at least 70 per cent of the audience expected to view the ad is over the legal consumption age in each province.
The government has clearly said that cannabis advertising appealing to young people will be prohibited. In 2016, a federal task force released a report suggesting cannabis should be subject to similar restrictions as tobacco, with “strict limits” on its promotion.
The industry coalition has developed its own guidelines for marketing and promotion ahead of legalization, including the stipulation that ads will “only promote a brand, not cannabis in general.” The coalition is working with self-regulatory group Advertising Standards Canada, and its members are encouraged to preclear any campaigns with the organization.
“What we pledged to do, within the bounds of creativity, is follow the spirit of the legislation,” Mr. Rewak said.
That means, for example, that participating members won’t be engaged in naming-rights deals for stadiums and other event venues, such as Mettrum Hempworks Inc. did in a 2016 deal with Live Nation to name the Molson Canadian Amphitheatre grass bowl seating as the “Mettrum Originals Lawn.” While the lawn sponsorship focused on the company’s hemp food and skin care products, they share a brand with medical cannabis producer Mettrum Ltd., and are owned by the same company. Such co-branding will be less likely to occur in future, Mr. Rewak said: “That was an earlier stage.”
Tweed is one of the cannabis brands Canopy plans to introduce.
Tweed, which is one of the brands Canopy plans to sell in the recreational market, sponsored a fashion show during Toronto Men’s Fashion Week in March, in which 19 designers presented looks incorporating the brand’s namesake textile. As models walked the runway, images of cannabis buds were projected on screen behind them.
“It was a great way for us to get some exposure,” Mr. Sinclair said. “We’re trying to make some noise.”
In provinces where cannabis retail will be privatized, Tweed-branded stores will be another marketing vehicle, he added. Canopy, which is headquartered in an old Hershey factory in Smiths Falls, Ont., is also working on reopening what used to be the Hershey visitors’ centre in the town. “That will be heavily branded,” Mr. Sinclair said.
Celebrity endorsements are another tactic that will not be allowed, but some companies are still building associations with celebrities through business partnerships. Canopy is the exclusive distributor in Canada for Snoop Dogg’s cannabis products, for example. When that deal was announced in 2016 it was accompanied by a photo of the rapper wearing a Tweed-branded T-shirt. That photo appeared on the Thomson Reuters billboard in New York’s Times Square, which posts some PR Newswire releases.
“That was one of the biggest highlights for the brand,” Mr. Sinclair said. “It’s about aligning ourselves with people that have high profile in the industry. When you associate yourself with someone like that, you gain some of the credibility they’ve spent years building.”
Newstrike Resources Ltd. has seen similar benefit, receiving media coverage for the fact that members of the Tragically Hip are investors.
In January, Newstrike announced a partnership with talent firm Feldman Agency to look for further opportunities in music and entertainment that still play within the coming regulations.
One of the most high-profile celebrity associations recently has been Vancouver-based Invictus MD Strategies Corp., which in March announced KISS front man Gene Simmons as its “chief evangelist officer.” The company trades on the TSX Venture Exchange under the stock symbol GENE.
The partnership is not a celebrity endorsement, according to the company, because Mr. Simmons is promoting Invictus’s stock – in which he is an investor – and will not be advertising the recreational product (which is not yet branded but will not carry the Invictus name.)
“To have him provide more eyes into the Invictus stock will bring more shareholders to us and will give more awareness to the general public as to who we are,” CEO Dan Kriznic said.
The role of chief evangelist officer will be to “open doors” and consult on the business side, he added, not to endorse the product, which Mr. Simmons says he has never used.
“Isn’t it a thrill talking to me?” Mr. Simmons said, smiling broadly, during a recent visit to Toronto. “I’m serious. I don’t know why you’re laughing.”
He then leaned into a reporter’s audio recorder.
“By the way, go to Invictus-md.com, that is a public service announcement,” he said, articulating the URL carefully. He then added, “I’m not here to promote Invictus. … I don’t want to sound like I’m promoting it, because there are certain restrictions. But am I personally bullish on Invictus? Oh yeah.”
These types of corporate partnerships are a way around prohibitions on endorsements, said Rebecca Brown, founder of a Toronto-based advertising agency focused on the cannabis industry.
“You may have to scrap it when regulation comes out, but if you got enough traction and enough recognition in that window, you’re ahead of your competitor who didn’t take that risk,” she said.
That’s true of a lot of the branding happening now.
Recreational cannabis is now legal in Canada. The federal and provincial governments have been working to develop rules on the use and sale of cannabis. Here are some things you should know about the use and sale in your province.
“No one really knows what the regulations are,” she said. “There’s jeopardy in diving in [to marketing]. There’s jeopardy in waiting.”
Once the regulations are clear, she added, she expects to see brands doing sponsored content in publications and online, in a bid to inform people about the product without taking out traditional advertising.
Tokyo Smoke has been one of the more prominent brands doing advanced work to build awareness, by marketing other products under its name such as coffee shops, apparel and candles. Ms. Gauthier of 48North said she admires that work. “They’re normalizing cannabis and elevating it,” she said.
Newstrike is currently working with three different marketing and advertising agencies to prepare possible initiatives to promote the company’s recreational product, Up Cannabis. It will finalize those plans once regulations are clearer. (The company has not yet announced who those agencies are.)
“How do you narrow it down and brand it so it doesn’t become an overwhelming task when you walk into that store?” Mr. Wilgar said. “Everyone is playing by the same rules. So if you’re able to establish early on, an identity with the consumer … that’s going to be really critical.”
Another producer, Supreme Cannabis Co. Inc., foresees “cannabis enthusiasts” as the target market for its recreational brand 7 Acres. These are customers who do their research before purchasing and are knowledgeable about the product. So most of its advanced branding has been focused on its presence at retail stores, which will vary from province to province. The company wants to educate sales reps to be able to talk about the brand’s different strains, how the product is grown and aged and how it is packaged.
“It’s a huge market that is largely unbranded,” said Supreme CEO John Fowler.
The industry has argued that the government should not crack down on advertising altogether, by making the case that marketing will play a role in convincing consumers to make the transition to the legal system, and not to continue supporting the black market.
“We think a responsible approach to brand building, in advance, is the best way forward,” MedReleaf’s Mr. Karasiuk said. “We’re trying to focus on building brands in a responsible way. It’s a matter of putting in place plans now, and maintaining flexibility to respond to what regulators come up with.”
Susan Krashinsky Robertson