Bethany Gomez, Managing Director at Brightfield Group
Spoiler alert: it's not the CEOs with multi-million-dollar salaries. The hidden forces that are driving the success or failure of the cannabis giants are actually minimum wage employees.
In the world of legal cannabis, most consumers are still getting used to the idea of branded weed and unsure of who to trust. There is a constant flow of new brands, product formats and strains appearing every day, many of which have similar names or branding which can drive further confusion. In many markets, quality is highly variable, and pricing is not necessarily an indication of premium quality. The issue is further exacerbated in Canada, where marketing is highly restricted and the vast majority of media coverage on cannabis is geared toward an investor-- not a consumer -- audience.
So how do consumers decide what cannabis products to purchase?
In many cases, they consult their budtender. What is a budtender, you ask? Budtenders are the people who work at cannabis dispensaries, helping customers, ringing up orders and, most importantly recommending products. In most dispensaries, the customer is required to speak to a budtender to retrieve their product before checking out, so it is a required point of communication for any in-store purchases. According to a recent study of Budtenders in Canada from Brightfield Group and Spiffy, 53% of Canadian cannabis customers shopping in-store don't know what they want to buy when they walk into a store. Of those customers, 76% buy what the budtenders recommend. When you compound this with the fact that 71% of Canadian customers are shopping in-person, we find that budtenders are influencing approximately 30% of all cannabis purchases in Canada. 30% of all purchases in a CAD$4.6 billion market are being directly influenced by budtenders, many of whom make minimum wage.
When we dig deeper, budtenders reveal themselves to a fascinating group and can actually be quite difficult to influence. Most are heavy cannabis users who got into budtending out of a deep passion for cannabis. The majority were using cannabis long before legalization, and many had a role in the illicit market pre-legalization. This is an industry built on counterculture, and most budtenders didn't get where they are today by listening to authorities or doing exactly as they were told. They are often skeptical of "the man" and can smell inauthenticity from a mile away.
Budtenders have very strong opinions about leading brands in Canada, and they are pushing back hard on many of the top LPs. 19 of the 20 of the least recommended brands come from the Canadian LPs with the largest market caps, which is certainly contributing to their challenges with driving consumer adoption.
In light of these challenges for LPs, budtenders are helping to give rise to a disruptor class of brands that are looking to take on the industry giants. Half of the top 20 most recommended brands by budtenders come from this disruptor class of brands, indicating the significant brand influence of those not tied to an LP dominating stock market discussions.
Further disruptions may be on the horizon in the Canadian cannabis market. Smaller startup brands that have been focused first on developing great products that delight their consumers at a smaller scale are starting to raise capital to grow and expand. These brands have a level of authenticity, quality and positive company culture/vibe that enthralls many budtenders. Their recommendations drive increased velocity in store, which can give these brands the springboards that they need to grow.
So, what is the takeaway? Many of the larger LPs need to right the ship on budtender perceptions and do so quickly in order to outperform the market and keep the would-be disruptors at bay. Perceptions amongst budtenders of low quality, a lack of authenticity, corporatization and poor company culture are leading the most influential people in the cannabis industry to actively work against them.
