Six Strategies for Surviving the Next Crisis

Authorities in Kenosha, Wisconsin, found more than 31,000 illicit marijuana vape cartridges traced to the vaping crisis in September. Courtesy Photo

The vaping crisis was the first national health emergency to hit the cannabis industry, but odds are, it won’t be the last.

Cannabis vaporizer and extraction executives who weathered the vaping crisis learned valuable lessons about how to react and what businesses should consider in the event something similar occurs in the future. Their advice could help determine whether a company survives—or dies.

To prepare for any future crises, cannabis industry executives recommended six strategies. They range from educating retailers and consumers about the contents of your products to thoroughly vetting suppliers.

 

1. Hone a marketing response to provide clear messaging to the general public.

To deliver a clear message to the general public—that cannabis vaporizers are safe, for example—marijuana companies should view the vaping crisis as an opportunity to better define their brands.

“A lot of it comes down to the marketing and the messaging,” said Patrick Mitchell, director of sales for Jupiter Research, a Phoenix vaporization technology manufacturer.

When the vape crisis erupted last summer, Jupiter’s in-house marketing team developed a response that pointed to documentation reinforcing the company’s adherence to established safety standards, such as those set by the U.S. Food and Drug Administration as well as Good Manufacturing Practice.

Mitchell noted that vape products purchased via the legal market differ markedly from unlicensed merchandise bought off the street or online. For one, the licensed products are lab tested and verified.

He recommends that vape brands highlight that testing in their messaging by saying: “Here are the steps we have to go through. Here is the process.”

For instance, vape products in California are required to undergo heavy metal and pesticide testing, and that should be part of a brand’s messaging.

The message helps solidify consumer “understanding of the difference between licensed and unlicensed products,” Mitchell said.

 

2. Consider the food industry’s farm-to-table approach.

Another strategy is to help consumers understand where their cannabis comes from, much like farm-to-table restaurants that detail the origin of their food ingredients, said AC Braddock, CEO of Seattle-based Eden Labs, a cannabis extraction company.

She recommends, for example, marketing the farmer who grew the cannabis and how the product was made. Another incentive: Consumer demand means such information can command a premium markup.

“Really market that you’re a modern business with a mission to provide a product that’s healthy and safe,” she added.

 

3. Reassess and reevaluate the internal workings of your business.

When an industry crisis hits, a cannabis company should take itself apart in much the same way a mechanic disassembles an engine and examines the components to ensure they’re in good working order.

For a business, that means organizing a team to study processes, organization and execution. Even if nothing is discovered, the reassessment still helps to set policies moving forward.

“When the vape crisis hit, we pulled together an internal product-quality task force that was cross-functional,” said Matt Ingram, president of Chicago-based multistate operator Cresco Labs. The task force reexamined growing and manufacturing processes, scrutinized suppliers and reviewed customer feedback about vapes. “We had to put everything back on the table and reassess it from seed to sale,” Ingram noted.

 

4. Educate retailers and consumers about what your products contain and how they are tested.

It’s important to focus on your retail clients and customers—and to educate both groups about your products.

“By educating your client and consumer, you’re creating your market and stabilizing your business,” Braddock said. “This is a once-in-a-lifetime opportunity as businesspeople to create an entirely new market and educate consumers.”

Vape manufacturers and extraction companies also should push retail clients to help educate customers as they shop, she said. Budtenders, for example, could pass along information about how vape products are tested.

One silver lining to the vape crisis: Consumers are learning that not all vape products are created equal, said Jupiter’s Mitchell.

Jupiter, for example, has been taking anti-counterfeiting steps so it can teach the public about the difference between its hardware versus fakes.

“We’re trying to educate consumers more about what a CCell cartridge is,” Mitchell said, referring to the brand of vaping hardware Jupiter sells.

The company includes logos and trademarks on its products that are used only on legitimate CCell hardware.

Jason Vegotsky, president of Cypress, California-based KushCo Holdings, attributes the recovery in his company’s vape sales to a rebound in consumer confidence toward vape products. He attributed that confidence mainly to transparency and education.

“Retailers really had to get confident in the brands they were carrying, and that these operators could execute and bring safe products to market. Earlier, people were worrying about ordering vapes and then being stuck with them,” Vegotsky said. “We’re just trying to get the word out through more interviews, TV, talking about the subject.”

Similarly, Shavo Odadjian, CEO of 22Red, a Los Angeles cannabis company specializing in oils, uses social media to provide consumers with information about processes, testing results and other product information. The company also was shooting an informational video for release in February or March.

“We’re going to talk about how we choose the flower, how our terps are derived. We’re going to show the lab. It’s just better to have people know,” he said.

 

5. Offer other types of cannabis products.

If regulators ban vaping products—as they did in Massachusetts and elsewhere—pivot to utilize cannabis oil for other products such as edibles or tinctures.

By having a broader offering of stock-keeping units (SKUs), a business doesn’t have to merely try to change the message around one product and have a “knee-jerk reaction,” Braddock said.

Instead, lead customers to another option that appeals to them for a similar reason.

Braddock focused on the appeal of vape products—in particular, the fact they’re discrete, easy to use and allow consumers to control their cannabis consumption.

With that in mind, Braddock suggested focusing on topicals, tinctures, edibles and lozenges. Those products can also be flavored because they’re not vaped, which works well if your business is sitting on a large quantity of flavorless distillate.

“Have a diversified product line that appeals to the new entrants to the market,” she added.

 

6. Vet and diversify your suppliers.

Before Odadjian of 22Red tries a new vendor or testing lab, he asks two or three trusted peers for their opinions about the companies he’s considering. Odadjian also advised being open to new names. “We’re happy with our sources, but our eyes are always open—and we’re always looking,” Odadjian said.

Ingram, too, said it’s important to always be looking at new suppliers. They can be found by investing in professionals to visit supply facilities. “We always need to be looking at new materials, and we need to make sure we are looking at alternate suppliers—because when the next thing pops up, we need to be prepared for it,” he said.

Ingram also noted that Cresco “went back and asked our vendors to provide more information about their own ingredients. I think more transparency and disclosure from our vendors was something where our expectations have changed.”

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