Business

Are celebrity brands monopolizing the cannabis industry? How boutique brands can compete against pop culture giants

AUSTIN, TX – JULY 04: ‘Willie’s Remedy’, a CBD-focused product line from Willie Nelson (Photo by Rick Kern/WireImage)

Ever since cannabis was legalized for recreational and medicinal usage, companies and brands of all sizes have been fighting their way into an increasingly crowded market. Celebrities including Snoop Dogg were early to capitalize on the opportunity, starting brands shortly after cannabis became legal in their respective states. More recently, actor and comedian Seth Rogen became the latest A-lister to join the community.  

Boutique brands, on the other hand, have struggled to crack into a competitive marketplace that’s full of choices and expensive to break into. 

But what makes celebrity brands more successful in the market? 

“Celebrity brands have more marketing dollars. They can afford to run all these ads, press and influencer marketing to build their brand. They can afford to pay top dollar for brand ambassadors that go to stores and introduce their brand directly to consumers,” said Albert Valdovinos co-founder and CEO of Product of Los Angeles, an established cannabis company that produces the La Familia line of edible chocolates. 

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He added, “Celebrity brands can afford to pay for shelving fees. Not only that, they bid for shelving fees — whereas smaller brands can’t afford that, which in turn makes it for the stores to more favorably work with the brands who can.”

The deep pockets of celebrity sellers also provide them with more room for error. 

“Overall, these big celebrity companies have so much financial backing that they can afford to operate in the negative for years,” Valdovinos said. “If a small brand operates in the negative for more than two or three months, they’re dead.”

But do dispensaries notice higher demand for products linked to celebrities?

“There’s usually a pretty high demand initially after a celebrity brand first releases a product,” said Travis Davis, a manager for The Sanctuary, an independent dispensary in Sacramento. “People want it on the shelves.”

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That initial interest, however, can quickly taper off if the brand doesn’t deliver any out of the ordinary, he said.

“The plain and simple fact with celebrity brands is that you’re paying a premium on top of a premium.”

From a dispensary point of view, Davis said, you want to jump on the product when hype is peaking. That means having it in stock when the product is first released. After that, the quality of the product needs to be there in order to justify keeping it in stock. 

The more passionate and connected the celebrity is to the brand, the more likely it is to stay on top of consumers’ minds, Davis said. 

The Sanctuary has carried several celebrity brands in the past, including rappers Redman and Method Man’s TICAL label. 

“It really has a lot to do with how long a celebrity keeps it in the forefront,” he said. “It’s about how much they are hyping it up going on shows and doing radio spots. When it’s that celebrity’s passion, it’s going to last longer.”

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Though celebrity brands have the name recognition and financial resources required for a successful cannabis business, they typically don’t make as much effort to reach out to dispensaries as boutique labels, Davis said. 

Smaller outfits are known to have brand ambassadors who will travel to dispensaries and educate budtenders about the product. They’ll provide answers and demos, and even sometimes offer incentives for sales, he said. 

That type of bond between provider and consumer is an important one for dispensaries, Davis said.

“You want support and to build a long-term relationship,” he said. “That can be harder with celebrity brands because the name is really all the marketing behind it. You don’t have people come do demos with those products.” 

Bottom line, Davis said, is that consumers want value for their purchase. If a celebrity brand is simply average flower with a famous person’s name attached to it, buyers will quickly lose interest in paying top-dollar for a merely average product. 

“You see some celebrities jump onto a brand just to get paid,” he said. “And buyers will quickly get ‘strain fatigue.’”

 

Jordan Guinn is a published journalist with bylines in the San Francisco Chronicle, the Los Angeles Times, the Stockton Record and more. He’s covered everything from agriculture, to violent crime to water.