A cannabis outsider details everything you need to know about building a brand in one of the nation’s most regulated industries.
Futurist, filmmaker, and former Head of Mike’s Hard Lemonade Anat Baron has never tried cannabis. But she’s the perfect person to tell you everything you need to know about regulations, advertising, and building a brand from the ground up.
Recently, Baron was asked to keynote at MJBizConNEXT, not because of her expertise in cannabis, but because of her background in the consumer space, especially with heavily regulated industries, like beer.
In her film Beer Wars, Baron addresses the stifling regulations of the beer industry while highlighting the struggles of entrepreneurs trying to gain a foothold in a highly competitive market controlled by multinational conglomerates. It probably sounds like a familiar scenario for many cannabis business owners, as more regulation and more competition continue to add complexity to the nascent industry.
In this exclusive interview, Baron reveals how cannabis could be a major disruptor across multiple consumer verticals and offers her advice on getting consumer attention and operating in a highly regulated industry.
Cannabis & Tech Today: You’ve been involved in so many different industries. Is there a common thread between hospitality, beer, and cannabis?
Anat Baron: I think the common thread with all of the industries I’ve worked in, wearing a variety of hats, is that they have all been on the consumer side. So, I think my fascination is really with consumers. Now, in technology we call it user experience. It’s also called customer experience.
I started in hospitality, at Four Seasons, at the beginning of my hotel industry career. I mean, service was everything, right? Trying to figure out how to give the customer what they want was extremely important. In the beer industry, it’s a little different because one is service and this is a product.
So, when you’re dealing with service – obviously you have the ability to bring in the human connection. When you’re selling a product, you have to figure out who your customer is, and then deliver an experience when they consume the product that they enjoy.
In cannabis, what’s so interesting is that you have all of the different parts of it. There are the people, the farmers who are growing, there are the producers who are manufacturing. Then you have the producers who are actually making product out of it, and then you have the retailers. So, it actually cuts across all of those industries from the supply chain to the end consumer.
C&T Today: How important is it that business owners become involved in the regulatory process?
AB: There’s no question that the industry will be regulated heavily, and already is on a state level in the states where it’s legal. But it’s just the beginning. When I was at Mike’s Hard Lemonade, for example, we launched a new category in the beer industry because we were malt based, and we were distributed by beer distributors.
So, we had to get very involved in making the rules. The problem with regulations is that you’re not the boss of you and the rules keep changing. So, the more you can be part of the process, the better off you’re going to be.
This is a new industry, just like we were something new in the beer industry. It gets very complicated because on a federal level there are so many government agencies. I used to joke that as the head of the company I had to deal with every government agency that had acronyms, other than the FAA because we weren’t flying airplanes.
Between advertising laws, marketing to kids, where you’re allowed to advertise and where you’re not allowed to advertise… And then getting labels made, and labels are so complicated because you need different labels for each state… and sometimes depending on the jurisdiction, where you’re allowed to sell, who is allowed to sell, and at what hours of the day. Even in 2019, there are still areas of the country that have Sunday blue laws.
That comes from the regulations. That also comes from the fact that there’s still a stigma with alcohol. So, you can imagine what the stigma is and will continue to be with cannabis.
C&T Today: Regulations surrounding advertising are such a challenge within the cannabis industry. How can business owners capture the attention of their audience without using traditional advertising avenues?
AB: That was a concern at Mike’s, too. We built that brand, we advertised on television, but we really built it guerilla style. The advertising, I think, was really more to make our distributors feel like we were a real company versus trying to reach our target consumers.
It turned out that who we thought our consumer was, and who our consumer actually was, wasn’t the same person… which I’ll get to. But, for cannabis companies, I think it’s really the lessons I learned from Hollywood – how to tell great stories.
You’re just trying to figure out how to capture attention. The real answer to your question is, you have to figure out, who is your customer, actually? When I ask that question to people who are in the cannabis space, I get such a variety of answers. I think the reality is that nobody really knows yet.
You have two types of potential customers, right? You have the people who are moving from buying it illegally to now being able to walk into a store and buy it. Then the second type of consumer is new entrants – and that’s where I believe the bigger opportunity exists. So, it’s obviously converting people from illegal to legal. But then the question is, who is this new consumer? And I think everyone is trying to figure that out…
Ultimately, I think for anybody who’s selling cannabis, the question is: “Who is my target market?” When you know that, then you can answer the question of how to reach them. I think so many brands are just trying to reach people en masse, but let’s say you’re allowed to run Facebook ads, right? Who are you actually targeting?
I think figuring out who your customer is is paramount. I know some people are using Instagram and getting influencers involved. Not necessarily influencers the way we think of them, like Kim Kardashian, but people who are already in the game and can tell stories. The reason people are successful doing it on Instagram is because they are telling stories. And I don’t mean “stories” as in that part of the app. I mean using storytelling.
So, it’s not like saying, “Oh, look at this gummy bear, isn’t it cute?” It’s more like, “Oh my God, I’m so excited because I can finally sleep at night.”
C&T Today: How is cannabis disrupting existing industries? Some people think it might cause disruption in the alcohol industry.
AB: So, this is really interesting. In putting my talk together [for MJBizConNEXT], I actually made a list of all the industries that I think will be disrupted, and it’s a very long list. It cuts across many consumer verticals including the obvious like Pharma and Tobacco but also Wellness, Tourism, Beauty, etc.
The way that I think it’s going to disrupt alcohol is, already some craft brewers are working on collaborations with different cannabis brands to add some sort of functional benefit, either through CBD, or THC, to a beer and create a new type of collaboration. Let’s call it a hybrid. So, call it a Prius.
They are creating a Prius. Is that going to take over? And that’s the question it goes back to, who is the consumer? Does that person like craft beer? Are they just going to try it because that craft brewery made it? Or are there consumers out there who are looking to discover these collaborations? And I don’t think anybody honestly knows the answer to that. This is one of those, “If you build it, will they come?” I don’t know. And so, I think that’s really a good question. Where it will disrupt the alcohol industry depends on how smart the cannabis industry is.
So, here’s my question that I don’t have an answer to. And maybe you do, and maybe some of your readers do. Is cannabis an additive or is it a replacement? Meaning, there are people who are currently drinking alcohol to use it as, let’s call it a social lubricant. Are they looking for a new type of social lubricant? So instead of going to a bar in 10 years, will they want to go to a cannabis bar?
Because we know that experiences are the hot thing right now, millennials love experiences over things. I think we’ve been moving toward an experience society for a long time. But in that case then, is it going to disrupt alcohol?
Yes, if people stop going to drink alcohol in bars, or if people aren’t buying as many six packs to take home and drink at home and they are replacing it with cannabis.
The other part of it, too, is on the wellness side. Is CBD going to be added to some beers or spirits to provide a different functional benefit? So, I’m not sure I’m answering your question because I don’t think anybody knows the answer to this yet.
C&T Today: What role will developing technologies play in the evolution of the cannabis industry?
AB: Depending on regulation, which is the elephant in the room, technology is going to play a huge role in the following areas: the first one being education. The biggest challenge for the cannabis industry is that most people don’t know anything about it. It depends how old you are, what part of the country you live in, how much experience you’ve had with it, whether you read or not, or whether you are online or not. So there’s a humongous opportunity and it’s only going to be through technology that the industry is able to reach consumers of all types.
You, the consumer, need to see it in your world. For example, here in L.A. you see it on a billboard. It gets your curiosity going. So, creating awareness is key. You can do that online and you can do it the best you can on social media right now. So, huge opportunity for content. Figuring out how to get people to it, that’s another challenge.
The next place where technology is going to play a huge part is where I see the future going. What my company StashWall is all about is this idea that what this world is moving toward in 2020 and beyond is all about personalization. So, if you think about the past, companies used to talk at consumers and it was a one-way conversation. We now have empowered consumers who are used to two-way conversations. And I see a world of, let’s call it personalization, or hyper-personalization where the consumer is at the center.
We are going to be willing to exchange information about who we are – which by the way, is already in all of your social media and on your phone – in exchange for value, for getting personalized messaging and personalized product recommendations, specifically for you based on your needs and likes.
The people who are trying to help me, if it is people or if it’s going to move towards artificial or augmented intelligence and machine learning, they are going to know everything about me. So, when I want to buy whatever it is to address whatever it is that I’m looking to address, it will be able to help me find better products that are suited to me.
The third piece, after content and personalization, is going to be on the robotics side. We’re going to see huge, huge, huge transformation in agriculture, using artificial intelligence and machine learning to be more productive. The other part of it – there will be robots that are going to change how the product is delivered to us. Again, depending on regulation in those municipalities, cities, and states where delivery will be legal.
And some of these things, if you really
think about them, are at odds with each other. Like personalization and then having a robot deliver your product, right? But these are just some of the ways that I think technology
will play a huge role and I think the first one is really the key to unlocking the size of the industry.
And that’s such a huge opportunity. That’s where I started this conversation: understand who your consumer is and where the opportunities are, and frankly the advice is to really figure out what you want to make, figure out who needs it, and then figure out how to get it to them.