NetworkNewsWire Editorial Coverage: With legal recreational cannabis coming to Canada later this year, companies are making the most of the last few months to prepare for the challenge of a new and largely brand-free market. Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) (CHOOF Profile) is building a brand upon retail outlets and a slice of cannabis history, hoping to get the attention of existing and new curious consumers. Medical cannabis company OrganiGram Holdings, Inc. (TSX-V: OGI) (OTCQB: OGRMF) is expanding its operations, using larger growing rooms and more staff to ensure supplies when the law changes. Aphria, Inc. (TSX: APH) (OTCQB: APHQF) is also pursuing a growth strategy, using targeted investment and collaborations to reach a larger consumer base. Hydropothecary Corp. (TSX-V: THCX) is using the expertise of specialist companies, including Segra’s tissue culture propagation technique and Shopify’s expertise in building ecommerce sites. Meanwhile, The Supreme Cannabis Company, Inc. (TSX-V: FIRE) (OTC: SPRWF) is looking beyond Canada, with an investment deal to bring in cannabis oils from Lesotho.
Branding for a New Market
Despite potential delays in the Senate, Canada’s Cannabis Act is on its way toward becoming law. When the legislation arrives this summer, it will turn Canada into the first G7 nation to fully legalize the sale and use of cannabis for recreational purposes. It’s a change which will vastly expand the Canadian cannabis industry, which is currently limited to the medical market. It may also become a test bed for other nations, as attitudes towards drugs shift around the globe.
One of the biggest challenges for the companies looking to enter this new market is branding. For obvious reasons, there are no established big-name brands in this sector. The closest things that exist are medical cannabis brands, and the marketing of pharmaceuticals is hugely different from the marketing of recreational consumables. Following an extensive consultation, Health Canada has released draft rules on cannabis packaging, rules which set strict limits on how the product is marketed. With plain packaging, health warnings, and space for only a small logo, companies will be limited in how they can use the packaging to sell their brand appeal. Tight restrictions on advertising will add to the challenge.
So how will companies make their mark with such strict limits and a cold start?
Branding with History
One of the companies looking to compete in this new market, Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) has found a way to build its brand through an established part of cannabis culture.
The word “choom” was originally Hawaiian slang for smoking cannabis. During the 1970s, when the cultivation and use of cannabis proliferated on the island, a group of students formed a group calling themselves the Choom Gang. Like so many groups of young people, their story would have disappeared without attention, it not for the later fame of one member of the group – Barack Obama.
Obama’s rise to the office of president of the United States brought attention to his past. Inevitably, stories about his youthful behavior surfaced, as opponents looked for dirt to use against him. Obama dealt with them with the grace and political cool that won him such global popularity.
Off the back of Obama’s presidency, the Choom Gang became known around the world. Their story, and the relaxed Hawaiian ethos they were associated with, has become well known among cannabis consumers. By building a brand that connects to that existing story, Choom Holdings is creating a brand with history and a reputation behind it.
A Relaxed Style
The brand Choom is building is a perfect fit for the recreational cannabis market. It’s all about fun and relaxation. Images of Hawaiian beaches combine with a mellow color pallet to evoke an atmosphere that’s far away from the clinical style taken by pharmaceutical cannabis brands.
The company’s website and marketing materials emphasize the story behind the brand and, by implication, the bigger history of cannabis use in American and Canadian culture. Choom is showing an awareness of the decades of recreational smoking that have come before, that it understands that most customers aren’t just taking up the habit now, and that they have a whole culture built around shared interests and values. Through its branding, Choom is selling itself as part of an ongoing history of people relaxing and enjoying cannabis.
It might seem like a lot of effort to go to for a single product, but there’s a lot of money at stake. Cannabis already has a huge market in Canada, and with the change in the law, the profits from that market will shift from criminals to legitimate businesses. It’s estimated that the cannabis industry will quickly be worth $10 billion by 2023, according to a recent Research report by Pacific International Securities, more than the spirits and wine markets respectively. That’s not counting ancillary products and services such as security, testing, tourism, and paraphernalia. By making a new brand feel established, Choom is marking out a strong place within that large market.
With the limits on packaging, cannabis companies will need other ways to mark their brands upon the public consciousness. As in so much about cannabis branding, Choom is already a step ahead on this.
The company’s business plan includes a complete supply chain, from production through to sales. As part of this, it has developed a design for distinct Choom branded dispensaries to sell its products. Sitting on Canadian high streets, these will provide a welcoming place for consumers to buy their cannabis. The style of the shops combines elements of the relaxed, choom gang aesthetic with others drawn from high impact modern brands. Comfortable sofas and wood panels sit alongside clean white shelves full of neatly ordered products. There are even touches of Hawaiian greenery to evoke the great outdoors.
These shops will let Choom establish its brand identity despite the limits on packaging and advertising. It’s a smart approach to branding that should help it take a leading place in the new cannabis market.
The Substance Behind the Sizzle
This isn’t to say that Choom is nothing more than a collection of flashy branding techniques. Far from it.
The company has been working for several years to establish two licensed facilities to grow cannabis, making use of the existing medical regulations. The buildings at Vernon and Chemainus are both undergoing a refit to bring them into prime condition. Between them, they will be able to grow $11.1 million worth of cannabis each year. Phase two of their development, scheduled to be complete early next year, will more than double this capacity to $24 million.
Choom continues to expand its portfolio of late-stage ACMPR applicants to include brands that are strategically focused on cultivating a consumer cannabis experience. The company has obtained substantial funding to support it through establishing its presence. With its growing facilities in place, its shops designed, and capital ready for a first big push, Choom looks set to become an important brand.
Companies Getting into Cannabis
Of course, Choom isn’t the only company preparing to take a share of the recreational cannabis market.
Medical cannabis company OrganiGram Holdings (TSX-V: OGI) (OTCQB: OGRMF) is going through a period of expansion. The company is looking not just to cater to the existing medical market but to add recreational users to its consumer base. The company has received approval from the Canadian government to expand its existing growing rooms, increasing not only its capacity but also the efficiency of its operations. Automated systems in its second phase of growing rooms will save costs and increase crop yields. At the same time, the company is expanding its staff, with a recruitment fair to find new employees for posts across the business.
Aphria (TSX: APH) (OTCQB: APHQF), another medical cultivator, is also pursuing a growth strategy. Targeted investment and collaboration with other companies have given it more resources and opportunities, including a route into the American medical cannabis market. Having recently acquired Broken Coast Cannabis, and with a distribution deal in place with Shoppers Drug Mart, the company is taking a larger place in the medical market, strengthening its position to reach recreational smokers.
Hydropothecary (TSX-V: THCX) is also using collaborations with other companies to develop its processes. It recently announced an agreement with Segra International Corp. to incorporate plant tissue culture propagation into the cannabis plant production process. By using Segra’s tissue culture technique, Hydropothecary aims to increase its yield to serve both the medical and the recreational cannabis markets. To better reach those markets, it has struck a deal with online commerce company Shopify. Shopify will build a bilingual ecommerce platform serving Hydropothecary’s customers in both English and French speaking Canada. Like Choom’s chain of dispensaries, this will give Hydropothecary a complete supply chain from production to retail, for vertically integrated cannabis production and sales.
The Supreme Cannabis Company (TSX-V: FIRE) (OTC: SPRWF) is developing its 7ACRES subsidiary as a cultivator of premium cannabis, ready to expand beyond the medical market and reach recreational users. Its supply chain has been further assured through a $3 million investment in BlissCo, a company about to complete its application for a cannabis license. But Supreme is not just concerned with Canada – it is looking at the global cannabis market. A $10 million investment in Medigrow Lesotho gives the company a position within that country’s medical cannabis industry, which will support the export of cannabis oils and so let Supreme start building a global supply chain and brand.
With legal recreational cannabis on the way to Canada, companies are finding many ways to prepare for the change. Strong brands backed by efficient production facilities will surely shape the future of the Canadian market.
For more information about Choom Holdings, visit Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF)
NetworkNewsWire (NNW) is a financial news and content distribution company that provides (1) access to a network of wire services via NetworkWire to reach all target markets, industries and demographics in the most effective manner possible, (2) article and editorial syndication to 5,000+ news outlets (3), enhanced press release services to ensure maximum impact, (4) social media distribution via the Investor Brand Network (IBN) to nearly 2 million followers, (5) a full array of corporate communications solutions, and (6) a total news coverage solution with NNW Prime. As a multifaceted organization with an extensive team of contributing journalists and writers, NNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. By cutting through the overload of information in today’s market, NNW brings its clients unparalleled visibility, recognition and brand awareness. NNW is where news, content and information converge.
For more information, please visit https://www.NetworkNewsWire.com
DISCLAIMER: NetworkNewsWire (NNW) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. The commentary, views and opinions expressed in this release by NNW are solely those of NNW. Readers of this Article and content agree that they cannot and will not seek to hold liable NNW for any investment decisions by their readers or subscribers. NNW is a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security.
The Article and content related to the profiled company represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in the Article and the content has been obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. None of the Author, NNW, or any of their respective affiliates, guarantee the accuracy or completeness of any such information. This Article and content are not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action; readers are strongly urged to speak with their own investment advisor and review all of the profiled issuer’s filings made with the Securities and Exchange Commission before making any investment decisions and should understand the risks associated with an investment in the profiled issuer’s securities, including, but not limited to, the complete loss of your investment.
NNW HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may”, “future”, “plan” or “planned”, “will” or “should”, “expected,” “anticipates”, “draft”, “eventually” or “projected”. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company’s annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and NNW undertakes no obligation to update such statements.