Licensed cannabis producers navigate Health Canada’s marketing and brand regulations

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By Laura Sciarpelletti

Recreational cannabis will be legal in Canada as of October 17. But there is still much uncertainly around how cannabis brands are permitted to market their product.

Products by licensed cannabis companies must have “plain packaging”, and adhere to strict requirements around logos, colours, and branding, due to Health Canada regulations. However, according to Steven Kates, associate professor of marketing at Simon Fraser University, branding and communication go way beyond packaging.

A lot of what companies can and can’t do is a grey area. The creative ways in which brands choose to manoeuvre within their limitations will determine which product becomes a household name.

“[Cannabis] companies will have to enter into intelligent conversation with consumers,” Kates tells the Straight.

New Brunswick–based OrganiGram is a licensed cannabis producer. It has been functioning as a corporate medical brand, but is set to launch three adult recreational brands in October. OrganiGram is currently working with its provincial jurisdiction and Health Canada to understand the Bill C-45 regulations, particularly from a marketing perspective.

While chief commercial officer Ray Gracewood says OrganiGram is still trying to gain some clarity, the company is approaching the bill as an extension of the Access to Cannabis for Medical Purposes Regulations (ACMPR).

“With the adult recreational space, there’s a huge opportunity for us to create an industry in a socially responsible way,” Gracewood tells the Straight. “We’ve always been of the mind that the future of this industry is going to be contingent on the strengths of brands and the needs of the consumer.”

Marketing parameters

Cannabis companies cannot utilize broadcast ads, attractive packaging, or billboards to promote their products. This will increase pressure on brands to differentiate themselves as they try to compete with other brands and the illicit market.

According to ACMPR regulations, OrganiGram cannot show images of the cannabis flower through its social media, website, or any consumer-facing media, even if that media is age-gated. Those within the illicit market can.

“That sort of naturally puts us at a disadvantage,” says Gracewood. “What we can do though is talk about the brand name, the strain, the CBD levels, and the price.”

According to Health Canada’s advertising prohibitions on cannabis information bulletin for licensed producers of cannabis for medical purposes, the content, context, purpose, and intended audience of any message by a licensed producer determine whether it can be deemed advertising or not.

In lieu of traditional promotional approaches, SFU’S Kates foresees that licensed cannabis companies will communicate to consumers that cannabis should be used responsibly—brands can use the alcohol industry as a model for promoting moderation. Brands will also differentiate themselves by indicating that products are made in a unique way.

“I don’t think there are any regulations that say you can’t tell interesting, funny stories about your company,” says Kates, citing a case in which Alberta licensed medical cannabis producer Acreage Pharms shared its “Old Lady Clippers” story with the public. The company employed retired seniors to keep its plants healthy and make the cannabis buds look beautiful.

OrganiGram has partnered with Trailer Park Productions to create the adult recreational brand Trailer Park Buds. But in keeping with government regulations, OrganiGram has no intention of leveraging the characters, actors, or any sort of association with the television show Trailer Park Boys, says Gracewood.

It is illegal for celebrities to directly endorse cannabis products. In the end, a good product is the best marketing strategy, says Gracewood.

A brand needs to have a presence on social media so that consumers can reach out and get more information, says Gracewood. OrganiGram is trying to find a way to provide factual information about its products, without violating government marketing regulations.

Boosted posts through Facebook do not allow cannabis companies to invest within their properties. Despite ongoing dialogue with social media companies about future cannabis advertising possibilities, OrganiGram has no reason to believe that will immediately change.

Competing with the illicit cannabis market

Currently, branded and nicely packaged products that promote a specific lifestyle can be seen on the shelves of illicit dispensaries. According to Gracewood and Kates, licensed producers need to enter the market from a “safety” angle in order to compete. Within the regulations, licensed brands can share that their product is created under strict quality control procedures.

Many illicit brands have adopted high standards for quality and safety, but thus far it has not been a mandatory industry practice.

“As an industry, one of the things we continually talk about is the importance of communicating how critical regulating product is to a successful industry and to a safe and trustworthy industry. That doesn’t exist right now within the illicit market,” says Gracewood.

According to Health Canada regulations, brands cannot advertise their product as a cure or treatment, but they can say that there are no contaminants in their product.

The Cannabis Act ensures that licensed products come with a seal of authenticity, as well as information on potential pesticides and health concerns.

“That should give Canadians a better sense of security,” says Gracewood. “Brands need to be competitive. But we also need to understand what kind of value our brands can deliver on and how they can premium-ize it so [consumers] are willing to pay for it…but trust it.”

Companies may also choose to advertise that they promote responsible and moderate use of cannabis.

“Canadians have allowed this. But they may still be somewhat nervous,” says Kates of legalization. “So [licensed brands] might create public hotlines that communicate research on cannabis and overuse…That will enhance the image of the company and brand.”

The store-front approach

Gracewood says that it is sales-staff education that is really going to make the difference in this highly regulated environment.

“One of the most important things for us is working with our jurisdictional partners to create an environment for their front staff to get well educated on our products,” says Gracewood.

OrganiGram is creating marketing materials to increase staff knowledge on brands and their features at government-run or private dispensaries, as well as retail locations.

There is a grey area around whether brands are permitted to display advertisements in dispensaries or retail locations. Companies will need to approach each location individually and have clear discussions about what the stores will and will not allow, says Gracewood.

 “The strategy is to work closely with [each location] to see what they are comfortable with,” says Gracewood. “In that environment everything is age-gated. So we’d be comfortable that any marketing we do within that environment would never be exposed to youth. So that falls in line with the Cannabis Act regulations.”

Many consumers purchase illegally because of the price point difference. But as legalization approaches, brands that successfully market their product as “pure” and “top-line” will stand out, says Kates.

“The goal is to get people to pay more for branded, legal, legitimate products,” he adds. “That’s going to be the company’s challenge.”

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