What Will The Cannabis Industry Look Like In 5 Years?
April 19, 2019
There is little doubt that the cannabis industry—the above-ground, legal(ish) sector anyway—has seen rapid growth as laws and the social stigma surrounding it have started to ease. By one estimate, the global marijuana market could even reach over $146 billion by 2025.
Despite the relative market size for cannabis, the industry is still in the midst of growth and is nowhere near market maturity. The legislative landscape is also in a deep, prolonged state of change, but significant hurdles exist for pot businesses, in particular, federal financial laws that limit access to banking and capital.
Cannabis packaging still has unique challenges as well, as the industry juggles conveying mainstream legitimacy, legal compliance, and sustainability.
So, just in time for 4/20, a date when cannabis users and others celebrate all things sweet Mary Jane, we interviewed some of the best and brightest in the industry and asked them what they think the cannabis industry will look like in five years, especially when it comes to packaging and branding.
Phil Toronto, Partner, Green Street Agency
Cannabis products are going to evolve immensely over the course of the next five years as the industry continues to adopt packaging and design cues from ancillary brands and industries. The biggest brands in the cannabis world have yet to be started in my opinion, and it's exciting to think of what we'll see on the shelf sooner rather than later.
James Eichner, Co-founder and CSO, Sana Packaging
Our hope at Sana Packaging is that the cannabis industry will become a true bastion of sustainable business practices in the global transition towards a circular economy. As a rapidly growing industry, we have a unique opportunity to implement sustainability from the ground up and set a positive example for other industries to follow. We also have a responsibility to protect our planet for future generations.
It’s been incredible to witness the rising popularity of regenerative agricultural practices in the cannabis industry, especially in places like Oregon and the Emerald Triangle in California. However, we still have a long ways to go—for instance, cannabis production accounts for roughly four percent of Denver’s energy use.
On the packaging side, we would love to see the cannabis industry transition away from using virgin petroleum-based resins for single-use packaging. It’s insane that some companies, legislators, and consumers still think this is OK in 2019. Our goal is to help the cannabis industry adopt sustainable and regenerative packaging solutions by using new and emerging materials like hemp bioplastic and reclaimed ocean plastic.
As for branding, the cannabis industry has already come a long way from the classic stoner stereotype perpetuated by pop culture in recent decades. However, there is still a long way to go before the stigma is broken. We would also love to see more companies like Flow Kana that use their brand to support small farmers and co-ops using sustainable and regenerative agricultural practices.
Lastly, we’re weary of “big cannabis” and the people it brings to the industry. There is no place in this industry for people looking to make a quick buck. At its core, cannabis is an environmental and social justice movement rooted in the back to the land movement of the 1970s and the opposition to our government’s war on drugs. We can’t forget the people and communities that suffered—and continue to suffer—because of unjust laws. Just say no to the war on drugs!
Scott Palmer, Co-founder and CEO, Kiva Confections
Different for sure.
Where brands could be successful on product quality or limited marketing in the past, companies are starting to invest heavily in innovation, marketing and branding. Access to capital has dramatically improved over the past two years, and there’s no lack of interest from investors to jump into the space. Companies are capitalizing, and they’re hiring smart teams from the consumer packaging goods space to help push the boundaries of what’s possible in cannabis.
As a result, I think you’ll start to see more professionalized approaches to the big three categories in cannabis; inhalables, edibles, and topicals, as competition for shelf space heats up. If you compare cannabis with the development cycle of alcohol, we’re still in the bathtub-gin era. IPAs, cinnamon whiskey and monolithic vodka brands weren’t even a thing yet which is why cannabis is so exciting. While creating a startup is becoming more difficult from a compliance standpoint, the space is wide open for creative ideas.
Groovy Singh, Founder and CEO, Roam
In the coming years, I see the cannabis industry “stigma” going away, and it’s going to be the norm for everyone. We are going to see advancements in the development of cannabis products along with branding and packaging. The organic game, the small farms and genetics will be the new wave of the industry. Brands will need to provide more visibility to the consumer on their products and how it’s made which will stand as “branding” by itself. The end goal is to de-stigmatize cannabis and make it more mainstream, and that’s what’s going to connect brands with our customers and make our customers be our brand ambassadors.
Hema Patel, Creative and Brand Director, Roam
The cannabis industry is evolving at an exponential rate, moving beyond its prohibition era, underground status and associated “look” to an elevated plant-based wellness and lifestyle choice for discerning consumers. In order to attract and keep up with this new market, packaging and branding will balance regulatory mandates with aesthetics that appeal to the style of each of these new customers. Communicating benefits, ingredients and most importantly brand stories in a beautiful new concoction to resonate with people much like the well-established wine or beauty industries. As the industry begins to creep into our lifestyle, from products to experiences, branding and packaging will become increasingly important, helping consumers to make informed choices about which brands speak to them.
Dane Whitehurst, Creative Director, Burgopak
The future of the Cannabis industry and the way it looks will likely be shaped by three groups; lawmakers, brand owners and consumers. Each will exert different pressures and influences, and much of the future remains difficult to predict, especially among the first group.
Lawmakers have up until now shaped the landscape with restrictions on visual content, banning visibility of products such as edibles and differing requirements for child-resistant packaging. For me, it is the latter which is the most important to get right.
The legalization of Cannabis may, to some, be polarizing but something I think everyone can agree is that kids shouldn’t have access to it. Properly tested and proven child-resistant packaging is something that brands and consumers need to get behind.
Lawmakers are beginning to take the right steps in introducing child-resistant packaging into legislation, but there is still a need for greater fidelity. At the moment there is too much scope for interpretation and brands, designers, manufacturers and testing labs are struggling to navigate and interpret woolly regulations. I believe that this will evolve as the industry beds-in and solutions that are not covered by recognized safety standards will become unviable. I also think that band-aid solutions such as exit bags will disappear. They are too disposable, do not secure the product after the initial purchase and are environmentally questionable.
Brand owners are understandably pushing to define a space that is far removed from the memory of cannabis as a street drug. I see three aesthetics that seem most prevalent; premium/luxury which picks up design cues from high fashion and taps into exclusivity and status; premium/artisanal which defines a more home-spun, wholesome feel espousing the benefits of natural, grown-not-made produce; and premium/medicinal which frames the product as a viable alternative to traditional medicines and a responsible, forward-thinking lifestyle choice. I see these focal points continuing to evolve, but not fall too far from their origins.
Consumers will continue to push, pull and shape the cannabis space, not least in the way that it is packaged. An observation is that brands and consumers seem to gravitate towards more natural feeling materials such as paper-based solutions and away from plastic. From experience, it's difficult to remove all plastic from a genuinely child-resistant package. But minimizing usage and affording easy separation of materials represents a good compromise. Consumer demographics in this space seem to have a greater awareness of environmental issues. Packaging that feels natural and has good environmental performance will, I believe, be the most successful.
Hemp paper seems like a poetic way to package cannabis products, but I have yet to see a version that I am convinced will pass child-resistant testing. However, I am sure this will change in the near future.
This may, of course, all be academic. The biggest single test that the cannabis industry will face is what happens when the debate reaches the federal level. This remains the greatest unknown, and the results will ultimately have the greatest effect on the entire future of the industry.
Jared Mirsky, Founder and CEO, Wick & Mortar
The cannabis industry is unique in many ways, but the most transformational is its ability to span medical, recreational, and wellness audiences. So when we talk about the next five years, there are few industries in American history to look to for comparison—the sky is really the limit.
It’s hard to overstate just how drastically the cannabis industry has changed over the ten years since I first started this agency. That being said, it’s still in its infancy. Over the next five years, branding will become increasingly more important. Not only because consumers are looking for brands they can trust and forge a connection with, which they are, but also because we will undoubtedly see an increase in mergers and acquisitions as the industry matures. The first wave of cannabis entrepreneurs will be looking for an exit. And selling an established cannabis brand is much easier and more lucrative than trying to pawn off a half-baked one.
At Wick & Mortar, we build brands focused on more than just getting a customer high, and we do that because we know that is where this industry is headed. Smart brands are moving away from strain specificity and the overly general “indica,” “sativa” and “hybrid” classifications. It’s no longer a key ingredient in selling a cannabis product.
Instead, we focus on a brand’s value proposition and their specific product benefits. We say to our clients, “Don’t undersell the value of your product by calling it something as generic as a hybrid.” If you know your product works well for something specific, like menstrual cramps, let’s find a way to build education about that into your branding and packaging without making unverified medical claims.
As far as packaging goes, there are a few trends to watch. The first is standardization. Right now with state-by-state legalization, there isn’t a national consensus on cannabis packaging laws. As we head towards federal legalization and interstate commerce of cannabis, we expect standardization across the country to begin. At Wick & Mortar, we pride ourselves in our ability to design packaging that is not only beautiful, functional, and well-branded, but also above and beyond the state packaging requirements. Over the next five years, we want our packaging design to be an example of how to do it right.
Another is sustainability. More and more, our clients are asking how to create packaging that is beautiful and sustainable. Whether we achieve that by using plastic alternatives, glass, or compostable materials, it is a challenge our design team happily takes on. As our collective responsibility to the planet grows increasingly imperative over the next five years, we expect to see sustainability at the forefront of cannabis packaging.
Lastly, our team is actively exploring creative ways to use Augmented Reality (AR) in packaging. We want to use AR not just for its visual and experiential appeal, but also as an opportunity for further education. Cannabis laws have strict labeling requirements, which can take up a lot of prime real estate on the packaging. With AR, we can provide an extension to the packaging, offering customers more details on things like dosage, growing practices, brand story, and the intended effects of the product they are buying, just to name a few. We think this could be a major trend in packaging over the next five years, beyond just cannabis.
Overall, the next five years in the cannabis industry will be a lot like puberty—not quite an adult, but no longer a child. As with all maturing markets, the winners will be sorted from the losers, and the winners will be those who are beautifully branded, well positioned and make a damn good product.
Zak Normandin, Founder & CEO, Iris Nova (DIRTY LEMON, The Drug Store)
Currently, the branding in the cannabis industry looks similar to the natural food industry in the early 2000s, where most products were created in small batches in peoples' homes. These small businesses would then sell their products to retailers and would rebrand as a result of increased financial support. I think the majority of products in the cannabis industry are in the first or second stage of packaging and branding—most brands are homegrown, and very few have received the resources to market their products properly. Naturally, as more money comes into the cannabis industry, I expect the packing and branding to reflect the growing resources available, resulting in stronger branding and more thought through product design.
Liz Kost, CEO, Purple Line Media
The number one catalyst for the Cannabis industry is going to be banking. Currently, banking with the Cannabis industry is considered high risk making access to capital extremely difficult. Banks and ancillary services like design studios and packaging producers face the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties when processing transactions with a Cannabis company. That means Cannabis manufacturers have to pay for all their packaging costs upfront. Most packaging companies and banks won’t offer lines of credit to Cannabis producers, so all dry goods costs come out-of-pocket before the packaging even hits the shelf. This slows brand growth. Large design studios are also hesitant to work with Cannabis clients for fear they may face push back from their banks. In addition, the current banking situation restricts large corporations from entering the market. Companies like Constellation, are having to invest in Canadian Cannabis brands instead of investing in brands in their own San Francisco backyard.
At the end of March, a congressional committee voted to approve legislation aimed at increasing marijuana businesses' access to banks. Advocates expect the legislation, which cleared the panel in a bipartisan vote of 45-15, to be considered on the floor within the next several weeks. If the bank safe harbor act passes, the cannabis industry will experience explosive growth. There will be an immense amount of acquisitions of small brands by large US corporations providing those brands with an opportunity for rapid national expansion. Large ancillary businesses will move into the space creating more competition for the current boutique cannabis design studios, but it will also attract more outsiders to start creating brands of their own, and current producers will have more capital which will flood the design and packaging sectors with more work.
Regardless if cannabis is ever federally legalized, if a safe harbor banking act passes, the US cannabis brands would dominate the global cannabis industry.