This month, the Cannabiz Media team attended the 4th annual Marijuana Business Conference and Expo in Las Vegas where we heard loud and clear that the future of the marijuana economy is practically guaranteed growth. Make that massive growth!
First, let’s be clear. Just because this conference is about marijuana doesn’t mean it was much different from any other industry conference you’d attend. There were lots of people in suits and sport coats and the usual line-up of session topics on business, law, technology, and customers.
In total, the event drew more than 5,000 participants, more than 70 speakers, and more than 230 exhibitors. In other words, a lot of people are very interested in this industry.
Massive Growth Ahead
The marijuana industry is new but it’s already booming, and a lot of people and companies want to get in. And if they didn’t want to get in before, they’re going to want to soon if the massive growth predictions highlighted throughout the conference come true (and I think they will).
During the opening keynote, State of the Industry and Cannabusiness Forecast, by George Jage and Chris Walsh of Marijuana Business Daily, the industry growth expectation is forecasted at 25% to 30% in 2016 followed by what Walsh refers to as “massive growth ahead” in the next three years.
In 2015, the marijuana economy is valued at $3 billion, but according to Walsh, it will grow to $22-$29 billion in 2019. It’s not surprising so many people want to get in on it!
Of course, with massive growth comes problems, and keynote speaker, consumer advocate, and former presidential candidate Ralph Nader touched on some important issues that tied back to his role of protecting consumers.
He warned that testing organizations shouldn’t be allowed to gain too much power or we could face problems like those Volkswagen experienced recently in what has come to be known as the Volkswagen emissions scandal. He also noted that the entire industry needs to ensure oligopolies don’t develop—like the oligopoly that almost developed in Ohio.
When an industry is poised for massive growth, these are the types of issues that can’t be forgotten (or ignored).
As you’d expect, the massive growth in the marijuana industry will be fueled by consumer demand, and effectively marketing to those customers was another hot topic at the Fall 2015 Marijuana Business Conference and Expo.
In their session, What Patients and Consumers Want, Becky Olson of Marijuana Business Daily, Sally Vander Veer of Medicine Man, and Mark Walstatter of Pure Green shed some light on what both medical and recreational marijuana customers are looking for in the marketplace.
Specifically, marijuana customers want the following from the people and businesses they buy from:
- Excellent service
- High levels of knowledge, expertise, and experience
- Community involvement
Interestingly, these four things are exactly the same factors that consumers want from companies in most industries. The speakers pointed out that people do business with people they know, like, and trust. These aren’t revolutionary findings, but rather, show just how like other industries the marijuana industry really is.
Despite its similarities to other markets, dispensaries have trouble marketing themselves to consumers. The speakers offered a market segmentation strategy that dispensaries can use to develop more effective campaigns.
They identified the following customer segments, each with slightly different wants, needs, and priorities:
- Local resident
Dispensaries need to market to these market segments very differently to be successful. For example, tourists want discreet purchasing experiences and are not price sensitive. On the other hand, cannasseurs are very picky. In fact, many cannasseurs are similar too budtenders (like bartenders for the cannabis community) as they can be very influential to wider consumer audiences. The messages used to market to these two customer segments must be radically different or they won’t work.
With massive growth in the marijuana economy, the number of customers and dispensaries will also grow. Competition for consumer dollars will skyrocket, and without effective marketing strategies, dispensaries will lose market share quickly.
Dispensaries that don’t keep up with the growth trajectory with effective marketing could fail. That’s just one of many predictions made at the 2015 Marijuana Business Conference and Expo.
During the Expansion Strategies: How to Win Retail Licenses in Multiple States session, Avis Bulbulyan of Bulbulyan Consulting Group and Kyle Kingsley of Vireo Health, predicted, “The little guys will die out” as local and out-of-state influences increase and producers and dispensaries expand.
In his opening keynote speech, Chris Walsh predicted some similar changes in the future of the marijuana economy. He believes that products, dispensaries, owners, and investors will cross state lines as the industry expands. He also noted that big funds are already emerging, like Privateer and Tuatra, and larger, multimillion dollar deals are happening now. In other words, the marijuana economy is already changing.
Tracking the Future of the Marijuana Economy
As more states legalize medical marijuana and recreational marijuana, the massive growth of the marijuana economy is already well underway. Listening to the presentations at the Marijuana Business Conference and Expo, speaking with attendees, and listening to the marijuana business investor pitches delivered during the conference, I heard again and again that this is an industry that shows no signs of slowing down anytime soon.
What remains to be seen is who will end up on top. Which companies will have staying power? And what business and licensing models will end up being the best? We’ve seen the pharmaceutical licensing model in Connecticut and heard about the failed oligopoly in Ohio. We even heard about the benefits of pursuing a liquor distribution model during the How to Win Retail Licenses in Multiple States session at the event.
While the future isn’t entirely predictable, one thing is certain. Cannabiz Media will be tracking all of the marijuana licensing data in its database! Subscribe to our newsletter and follow us on Twitter or Facebook, so you don’t miss anything!