How to Start a Cannabis Brand in a Mature Market

Getting a licensed cannabis business off the ground in any market, whether just opened or deeply established, is pretty much always a major undertaking. Both types of market maturity levels come with many different challenges; in new markets, simply getting a license can be close to impossible depending on preexisting demand, so prospective operators who don’t win their respective lotteries have to purchase them or wait until later rounds to be issued one. In mature markets however where competition is entrenched and the survivors have spent years optimizing, succeeding with a new brand requires new or exciting products, well thought out marketing, and operational efficiency from day one. 

In this exclusive Lowtemp Industries blog, we’ll lay out the most important things any would-be operator needs to do to successfully launch a new brand in a mature cannabis market.

Cannabis License Types & Direction

One of the most straightforward types of cannabis companies to launch in mature markets are those focused on concentrates or other infused products such as solventless edibles. This is because as consumers in recreational states or countries get used to smoking flower and eating the same types of edibles, they tend to want to try new things, and extract sales tend to quickly grow as markets mature. In addition to demand uplift, new labs tend to be a lot less capital intensive than grows to launch, plus they have the benefit of purchasing the right kinds of biomass for their product efforts from a large roster of established cultivators. This gives new labs many more choices of strains than they’d ever be able to provide with their own grow efforts. 

Picking the right kind of license to operate in your market requires careful planning and research based on the unique factors in each state as some allow for all types of extraction activities, and some are much more limiting. To be sure, we definitely are not suggesting it’s impossible to bring a new flower brand forward successfully, and if that’s what your leadership team is passionate about, by all means. It’s just a lot easier in most cases to do a lab as your startup business, and then grow into other areas such as cultivation if material supply and demand allow for it. Taking unnecessary risks is a surefire way to end up on the wrong side of your P&Ls, so do your homework on what consumers are after and crucially which existing competitors are already working overtime to fulfill. 

Innovation, Quality, or Both? Choosing the Right Product Lineup

Chances are if you’re planning to bring a new brand into a market that already has a lot of competition, you’re very unlikely to succeed by just putting the same SKUs out everyone else has in fancier packaging. There are essentially two key strategies that new companies can pursue that have the highest chance of succeeding: deliver a truly innovative product line that no one or very few competitors are offering, or exceeding the market’s high water mark for quality in any particular category whether it’s flower, concentrates, edibles, or vapes, etc. 

There are countless examples of this, from Dialed In… Gummies taking over a huge part of the edible game in Colorado with their unique collab-based business model and then expanding to multiple states, or Lily Extracts in New Jersey that started as a two man team and have quickly grown to steal market share from much larger, slower to react competitors. Both came to find runaway success in mature markets with something new and exciting in the product department plus sticking to a lean mantra internally. Since new cannabis brands are typically dealing with minimal early cashflow and limited resources that are largely dedicated to operationalizing, putting their dollars where it really matters begins long before their first products hit shelves. 

What this really means is that if you’re looking to boot up a new brand, doing your research at the very beginning to figure out where a niche product might succeed or where a popular product segment is underserved can be the bullseye. Then, figure out exactly what kind of license will be optimal for your selections. There are plenty of high quality data sources to choose from to harvest state-specific SKU sales information and general consumer trends, such as BDSA Analytics or Headset. Premium solventless rosin vapes and their related concentrates, infused pre-rolls, and specialty edibles are all among the fastest growing categories in many mature cannabis markets.