San Francisco – International Cannabis Business Conference

Canada Needs to Adapt as US, Especially California, Cannabis Industry Grows

Written by Anthony Johnson on July 16, 2019. Posted in Business, Politics, San Francisco, Vancouver.

Canadian cannabis companies have been given a leg up on its global competition, but that advantage is being eroded and could be eliminated rather quickly once the United States ends federal prohibition, industry insiders warn, and it isn’t difficult to imagine. Federal laws allowing banking services, public investment, normal tax rules, and exports has made Canada the international cannabis industry leader, with companies expanding into legal US states and into other nations around the world, even sometimes making moves before major reforms pass, utilizing insight to follow the momentum.

However, with the United States making progress, especially with California companies striking huge deals with business moguls, Canada could lose its place at the top, especially if rules regarding advertising are not addressed. With US companies able to better leverage relationships with worldwide stars like Jay-Z, marketing rules, including on social media, need to be adapted, as Vice covered:

According to federal regulations in Canada, celebrities can’t give a testimonial about a licensed producer’s product, talk about its price, or say anything about it to minors. They can harness what’s known as “the halo effect” and hope that star power rubs off on the brand.

These are just a few of the rules that, according to cannabis industry and observers alike, leave Canadian cannabis companies at a disadvantage. This presents a huge challenge because they’re up against U.S. companies that are gearing up for a global fight, with big budgets and a deep bench of executives who have already established successful retail brands—such as Victoria’s Secret, Home Depot, and Pepsico’s Frito-Lay.

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Cannabis marketing expert Kayla Rochkin said it’s just a matter of time before America loosens the rules federally. As vice president of marketing for TREC Brands, she works with a portfolio of cannabis companies and has seen firsthand how challenging it is to push a product, without being able to talk in-depth about the product itself to the public. But as the clock ticks down, she said Canadian companies are losing whatever first-mover advantage they may have had because of strict rules limiting brands from touting their advantages over rivals.

Confusingly, Canada’s Cannabis Act prohibits producers from marketing techniques that promote the business or product “in a manner that associates it or the brand element with, or evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring.” If any business, especially a small to medium enterprise that wants to find a niche as a craft cannabis company, branding with a positive emotion or way of life is key. Once the United States legalizes for all adults and starts exporting, US companies will enjoy a huge marketing advantage. Canada has been the king of the hill, but there’s a sleeping giant that’s about to wake up.

Stay up-to-date on the latest rules and develops while networking with top investors and entrepreneurs at the upcoming International Cannabis Business Conference in Vancouver, Canada, this September 15-16. Early bird tickets are available until August 21st. After the British Columbia excursion, we’ll be heading to San Francisco, California, on February 6-7.

Keeping Up with Canada? California Moves Towards State Cannabis Banking.

As most folks know by now, a lack of banking services have forced cannabis businesses, including those legal under state law, to deal predominantly in cash due to continued U.S. banking laws that make it nearly impossible to do business with federally chartered financial institutions. There are a few reasons why Canada, the first G7 nation to end cannabis prohibition, gives a leg up to its cannabis entrepreneurs, and normal access to banking services is one of them. Thankfully, the California Senate has moved forward with some sensible legislation that can help its state-regulated businesses and should add pressure on Congress to recognize the will of the people and legalize banking for state-licensed cannabis businesses. CNBC reports:

Under the state legislation, which was approved by a vote of 35 to 1, private banks or credit unions can apply for a limited-purpose state charter so they can provide depository services to licensed cannabis businesses. The measure, Senate Bill 51, still requires approval of the Assembly and California Gov. Gavin Newsom to become law.

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“It’s hard to imagine an industry that at this point is as large as, like, craft beer that does not have banking as we have come to know it,” said Steve Hawkins, executive director of the Marijuana Policy Project, a national marijuana reform organization. He said the legal marijuana industry lacks access to commercial banking services available to other industries, including payroll, loans and deposit needs.

“As policymakers, we have a duty to further the will of the voters while protecting the public safety of our constituents,” California Senate Majority Leader Robert Hertzberg said last month when introducing SB 51. “This measure is by no means the ultimate solution, but it’s just one small step in the right direction to get some of this money off the streets and into bank accounts.”

Hopefully, this sensible banking legislation will have smooth sailing through the California General Assembly. Governor Newsom, who spoke at an International Cannabis Business Conference reception a few years ago, is certainly expected to sign the bill that should be supported by everyone, including those that oppose legalization as forcing cannabis businesses to use only cash encourages tax evasion and endangers our neighborhoods.

To stay up-to-date on the latest cannabis industry news, and to network with top investors and entrepreneurs, the International Cannabis Business Conference is THE event for you. Next up: Vancouver, Canada, in September and then back to San Francisco, California, next February. Get your early-bird tickets and save!