I sat down with Owen Reader, CEO of Indelible and author of the Pot Apocalypse. We talk about creating the legacy brands of the cannabis industry, developing lasting, real connections with your customers and how to survive the impending pot apocalypse.
What does it take to create a legacy cannabis brand?
How can brands prepare to ride the waves of rapidly changing legalization and social adoption while preparing for longevity?
Owen Reader’s mission is to guide them there.
He envisions cannabis brands of the future, the Coca-Cola’s and Carhartt’s, that have withstood the test of time and still have loyal armies of followers.
Reader is the CEO and founder of Indelible, a cannabis branding agency based in Calgary. He’s also the author of the Pot Apocalypse, a field guide for cannabis brands on how to survive the impending industry implosion.
Don’t believe one’s coming?
Even back in 2019, Reader could see fault lines appearing in the industry. From his background in marketing and consumer psychology, Reader knew social adoption wouldn’t keep pace with sales projections. There was too much focus on investor relations and ROI, rather than the customer experience and education. And some of his predictions are already coming true, with production outpacing consumption throughout the Canadian market.
That makes the rest of his predictions rather sobering. Reader estimates that nearly 80% of existing cannabis brands won’t survive the coming industry consolidation, which can paint a scary picture for small business owners.
“The ingredients for survival are built into the DNA of your brand”
So what’s a cannabis brand to do? Buy his book! (Just kidding- mostly.)
There are tried and true tactics companies can use to establish a strong foundation and ride the turbulent waves of this rapidly growing and changing industry. It’s not easy building a brand of the future today, but lasting brands have several things in common. Firstly, they make customer-driven decisions, not profit-driven ones. They have a solid foundation of values and a customer experience promise that doesn’t change. And finally, successful brands aren’t afraid to niche down.
“If you’re not a little bit nervous about how niche your focus is, you’re not niche enough.”
In one of Reader’s more grand predications, he says brands should seek to eliminate more than 80% of potential customers from ever interacting with them. This polar opinion is based in audience psychographics, rather than demographics. By creating real connection rather than a relationship of convenience, you grow your opportunities within your market. And loyal fans turn into unpaid brand ambassadors, who aren’t constrained by marketing restrictions. Additionally, the cost of customer acquisition goes down as the lifetime value of the customer improves.
Tell me how Pot Apocalypse came to fruition
OR: At the time I wrote the book we were in the middle of the green rush, where everyone thought there’s no way to lose money in this industry. Most of the industry was moving with a great degree of optimism.
There was a bunch of irresponsible research studies claiming fairly unrealistic industry growth rates and these were the louder voices in the industry at the time. Most of the excitement was driven around the investor relation-side of things, rather than the product side, so it wasn’t true to the reality of turning fake money (investment) into real money (commerce.) There were a few red flags that lead me towards the thesis, one of them being the predictions around cultural adoption of cannabis.
My perspective with my experience as a marketer and consumer psychology expert was the adoption culturally would happen far more slowly than other people were predicting. That lead me to questioning the dollar values of the compound annual growth rate predictions and so on. After that it was just looking at the information. You could see two years ago that supply was already out stripping demand and there was no sign of slowing. You could read about the tens of thousands of square feet growing space that was being added both north and south of the boarder on a near daily basis. There was a supply and demand problem then that was being accelerated and enhanced. You could see it in the early results in same of these larger players bringing brands to market. No one cared.
Tell me about your journey with cannabis
OR: I went down a cannabis rabbit hole and never came out.
I stumbled into the industry at one of my previous roles and found the challenge of predicating societal adoption to be an interesting challenge. But more than that, I love the challenge of putting the work to change the hearts and minds of a society that has for 100 years been told this thing is evil, bad for you, dangerous.
When I first tried cannabis, I remember feeling angry that I had been so misled about what this plant was. That’s where the excitement around changing people’s mind comes from. I know what a benefit, a help, and a joy it’s been for me and I want other people to be able to experience that without the stigma, the weight, the guilt or the feel that’s been smushed into their brains.
What’s one thing your excited about in the industry right now?
OR: We’re just heading into the pain of the pot apocalypse but there’s a lot to look forward to.
I am excited about a softening around people’s perspectives around CBD- within the industry. With the excitement that spawned from the Farm Bill in 2018, CBD was looked at as a bit of circus for the past few years, particularly in Canada where we’re approached that particular differently than the starts. There’s a lot of slow investment there, not a lot of excitement. In the states, it has this huge initial rush and then the FDA slapped the industry on the wrist and said pump the breaks. A lot of retailers got quite gun shy of it. I think we’re seeing that soften and I think we’ll see movement towards innovation in the space that will be good for people, some exciting products will come as a result.
Another thing I’m excited about is changing brands. For a long time, this industry only had what I called pioneer brands in it. Everything from product names to visual style and brand names- they were all very much aimed at the prototypical consumers. I call them pioneers; other people refer to them as stoners. That deep, longstanding engagement with cannabis culture. That was where everyone thought they needed to start. It’s exciting to see a bunch of things on market that are good products for the emerging consumer. It’s not for people who love cannabis, it’s also for people who love being with friends, or relaxing on a Friday night- they don’t have to be deep in cannabis culture.
What’s one thing that needs to change in the industry?
OR: There are inevitabilities here. There are things that will happen whether we want them to or not. That includes losing about 80% of the total number of brands on market. There’s too many and too few who are remarkable. That’s going to have to happen. It sprung up so fast, there’s significantly more brands than there are attention spans.
What we need to be mindful as an industry is where that happens, who pays the price. Right now, with how regulations have been setup, there are promises made to the craft scene that have not been fulfilled. They were promised a space for them in the industry and the industry has not made space for them. I don’t think that should be regulated; I think the government should be less involved in this industry. But as consumers and processes, we need to make sure some of the unique stuff doesn’t disappear in favor of the cheap stuff.
There’s a lot of price pressure right now. But we need to have a conversation as an industry about what’s worth saving and be intentional about it. The weed you grew up smoking illegally was made by a craft producer. There’s a lot of really interesting genetic that have been created, those stories and those histories, that richness, is at risk if the industry doesn’t response intentionally around what we think is worth saving. Let’s not let price be the only thing that dictates whether you can pass through this brief but severe disruption.
How does diversity and inclusion factor into your branding?
OR: Certainly, if it’s authentic but if it’s not authentic, no. if a founding team truly cares and wants to make a difference, then yeah. That’s an area I’d love to be creative about.
What I don’t love doing is paying lip service to important issues to pay a progressive tax on looking like you’re doing the right thing. At the end of the day, lip service doesn’t solve the problem. The inequity we see in the cannabis industry we see everywhere. But there’s some very poignant contrasts between making a lot of money and spending a lot of time in jail, which is one of the reasons it comes into focus. This has been an industry, that while illegal, disproportionately affected some groups of people.
I don’t think the government is the right vehicle to solve that. I think private industry and true capitalism should be the thing the solves it because the government made the mistakes. We expect that regulations or the government is going to magically fix these problems. But the government is the same body that created the circumstances for that inequity to exist.
We as an industry should adhere to a moral standard that’s appropriate for us, not dictated to us by the government. Consumers should be critical of brands that are paying lip service to something without actually contributing to a solution. From there, consumers should decide how to vote with their dollars. If we all care about it, the first we can indicate that is to vote with our dollars. Are you engaging with brands that are creating a meaningful difference, or are you buy whatever’s cheap? It’s expensive to care.
If you want this industry to succeed and be diverse, we have to stop kicking it while it’s down. This is an industry that’s barely had a chance to mature; we’re at the top of maybe the third inning. We have to find ways to elevate the pressure that’s placed on the smaller, independent players.
What do you want customers to take away from an experience with you?
OR: If we were to just transplant one perspective in an organization, it would be that when they make decisions, they don’t make those decisions from a balance sheet, they make it from a perspective of a consumer. Because the most empathetic brands will win.
Every industry has these treasured spaces for the brands that have managed to maintain relevance over a remarkable period of time- not 10 years, but 120, 140 years of relevance with consumers. And what they share is a constitutional commitment to their values. Our purpose is to create those brands within the cannabis space. The problems we’re trying to solve at the outset with our clients is how are we going to be relevant 50 years, 100 years from now?
What’s your favorite fun fact about cannabis?
OR: I am fascinated by the fact that all mammals have an endocannabinoid system. I’m not an evolutionary biologist but my understanding is that at some point, cannabis provided a broad evolutionary advantage. I don’t know where it would have started, but that point I get excited is this isn’t just getting high. We’re in an ecosystem with this plant for a reason. Our bodies have evolved in a way that we can leverage cannabis for a variety of benefits and that’s not by accident.