WeedMD Inc. has teamed up with a subsidiary of alcohol broker Lifford Wine & Spirits to get product to market in Alberta and British Columbia, becoming the latest cannabis grower to contract out its sales force to alcohol marketing professionals.
Lifford Cannabis Solutions will help WeedMD negotiate with government liquor boards in B.C. and Alberta, earning commission on sales to the provincial wholesalers. It will also run WeedMD’s brand awareness strategy with retailers in the two western provinces.
“We would take on training the retailers, as well as throwing events that target the budtenders, the buyers, as well as consumers," said Lisa Campbell, CEO of Lifford’s cannabis subsidiary. “Because cannabis has the same route to market as alcohol, the same sales strategies are effective.”
The brokerage model is common in the alcohol industry, where breweries and wineries rely on third-party sales forces to drum up brand awareness and ensure their product gets onto retail shelves. Cannabis companies, now jockeying for recreational consumers, are starting to follow suit.
In May, Aphria Inc. signed a distribution deal with Southern Glazer’s Wine & Spirits LLC, one of the largest alcohol distributors in North America. In September, CannTrust Holdings Inc. signed a similar deal with Breakthru Beverage Group LLC. CannTrust still has an in-house sales team that manages the company’s relationship with provincial wholesalers. But a Breakthru subsidiary called Kindred will manage CannTrust’s in-store education and brand awareness.
“They’re able to take best practices from alcohol and bring them over into cannabis,” said Bernard Yeung, CannTrust’s vice-president of strategy and business development. “I’m not saying everything is transferable. But there’s transferable skills, such as the way they capture data, the way they do their analytics, the way they understand frequency of routes – whether they’re Tier A, Tier B, Tier C stores, there’s strategy around that that people forget or take for granted.”
Other large LPs like Canopy Growth Corp. and Aurora Cannabis Inc. have decided to develop sales teams in-house. But this strategy only makes sense for the largest companies in the space, said Ms. Campbell of Lifford.
“For folks that are selling under 200,000 kilos... it makes more sense economically to outsource your sales and go on a commission-on-sales structure where that sales force is representing multiple brands that are allied or complimentary brands in the market,” she said.
For Ms. Campbell, and a new breed of cannabis sales reps, the biggest challenge will be navigating restrictive rules around advertising and samples. There’s no sampling in-store, and you can’t simply hand out joints at events.
That’s led Ms. Campbell, whose company also represents TerrAscend Corp. in Ontario, to creative alternatives, such as hosting educational events or cocktail evenings, with drinks supposedly inspired by certain weed strains.
Another challenge for alcohol distributors getting into the space, is the pace of change. You can spend months negotiating with a cannabis company, only to see it gobbled up by an unexpected merger deal, said Ms. Campbell.
“In alcohol it’s all about long-term relationships. But I found when we’re negotiating with [cannabis] suppliers, a lot of them are afraid to commit to multi-year agreements,” Ms. Campbell said, noting that WeedMD was different, and did sign a longer-term deal. “Even with accessory companies, they’re like, we don’t know what the space is going to be like in six months, let alone a year.”