While the cannabis industry rolled out significant discount promotions and experiences around 4/20 celebrations, brand licensing has struggled to become part of the mix.
This is, in part, because business has been hampered by cannabis remaining illegal under federal law.
While dozens of states have legalized cannabis for recreational or medical purposes, the lack of federal legalization has barred business from being conducted on a national level. The U.S. Patent and Trademark Office won’t register trademarks for federally unlawful products, making these items available only in states that have legalized cannabis.
So, for now, much of the interest in 4/20-related events centered on food promotions.
J.M. Smucker, for example, as part of a campaign to boost sales of Hostess snacks by connecting them to cultural moments like 4/20 celebrations, deployed a “Munchie Mobile” stocked with Twinkies, Ding Dongs, and Donettes outside dispensaries in New York, New Jersey, Connecticut, and Maryland. Meanwhile, the restaurant chain Jimmy John’s launched a new THC (Totally Hot Chips) Box that included a sandwich, chips, a cookie, and a mystery surprise. And Red Lobster served up $4.20 cocktails made with Still G.I.N. promoted by Snoop Dogg and Dr. Dre.
While these promotions were mostly limited-time offers, there has previously been interest in deeper investment in cannabis and brand licensing.
For example, in 2017, a section at Licensing Expo in Las Vegas was dedicated to the growing category. And Firefly Brand Management signed on to represent High Times magazine, which had plans for a lounge in West Hollywood, CA that didn’t open and later faced eviction, but did sign nine licensees. Beanstalk also weighed making the celebrity brands it represented available for cannabis brand licensing.work
“The legal situation hasn’t improved [on the federal level] and the industry is going through a correction where a lot of that enthusiasm that we were seeing a few years ago [has slowed],” said Fred Sliwoski, a partner in the law firm Harris Sliwoski. “Now it’s a time of reckoning because some investors went into the business based on federal legalization and you had a lot of money going into states but there has been no place for those businesses to grow. But we do see more crossover where cannabis companies are working with other brands that aren’t primarily involved in the business, but where there might be a good tie-up.”
That crossover can also be found in dispensaries licensing their name and brand to companies operating in other states. According to some dispensary operators, this avoids the need to set up a separate company to expand. The dispensary could also carry the name of a high-profile backer like former NBA star Al Harrington, who recently partnered with Curio Wellness to launch the Far & Dotter dispensary in Maryland.
“Everyone has to start somewhere, but learning is time-consuming and expensive, as is starting a new brand from scratch,” said David Craig, VP of Marketing at Illicit Gardens, which operates dispensaries in Missouri, New York, and New Jersey. “The most expedient move might be to partner with an experienced operator with a nationally recognized brand. This can give licensees a leg up and immediate cashflow while providing a platform for local teams to gain experience.”
Yet, with 4/20 promotions becoming an annual event, industry executives said it may only be a matter of time before licensing catches up.
“4/20 still has a certain power and there are still promotions that go on that are related to that day and the value of it in terms of branding,” Sliwoski said. “It will be a matter of why not appeal to that kind of [cannabis] consumer. Sometimes you see these fast-food ads with families coming in after the soccer game. Maybe it’s just a matter of time before you see the fast-food company saying, ‘a perfect way to accompany your smoking session is a nice meal.’”