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Cannabis Sponsorship in Canada: What You Need to Know

Cannabis Sponsorship in Canada: What You Need to Know

5 Minute Read

  • Cannabis brands are forced to get creative in their strategy when marketing their products and brand to conform with Bill C-45 regulations.
  • Celebrities that invest in the Canadian cannabis market act as brand ambassadors for cannabis brands.
  • Cannabis brands are creating products outside of the cannabis category to gain traction in market before legalization.
  • Cannabis brands are breaking into market by using another division of their brand as a lead in sponsorship.

The cannabis category has presented many sponsorship challenges for brands in Canada. As current cannabis regulations are still foggy, Cannabis brands have been scrambling to maneuver around regulations by working with properties – not to sell cannabis, but rather create brand awareness – with a large portion of these partnerships occurring in the festival landscape where cannabis brands are sponsoring one-off events versus signing reoccurring deals. With the legalization of recreational cannabis announced for October 17, 2018, brands are wondering how to get involved within this lucrative category. Once legal, Bill C-45 states that it would:

“…prohibit the use of cannabis-related brand elements, or the name of someone associated with the production, sale or provision of cannabis or related services, in the sponsorship of persons, events, facilities or activities. It will also be prohibited to use cannabis-related brand elements or names of producers or sellers on facilities.”

With legalization approaching, cannabis brands are acting fast in the sponsorship world before regulations hit. Here some of the efforts we have seen thus far in the Canadian market:

1.      Aurora Cannabis was a presenting sponsor at this year’s North by NorthEast and created a 2018 summer tour titled the Illumination Concert Series that features big name artists such as Post Malone where tickets are supplied through TicketMaster.

2.      Tweed created a Wellness Zone activation at Toronto Pride 2018 and worked with designers to create a collection for Toronto Men’s Fashion Week for the Fall/Winter season in 2018.

In light of this bill and anticipation of legalization, MKTG looks at how cannabis brands are operating around regulations and the future of the cannabis category.

How Cannabis brands are getting involved around regulations:

#1 Cannabis brands are using celebrity investors as ambassadors

Cannabis brands cannot use celebrities as brand ambassadors as stated in Bill-C45. Instead, cannabis brands are enlisting celebrities as investors, who can then freely leverage their reputations to speak about the company they’ve invested in. Celebrities are increasingly investing in the Canadian cannabis market and are advocates of the medicinal purposes and growth from a business perspective. In Canada, we see a few big-name investors such as Snoop Dogg who has partnered and invested in stocks with medicinal marijuana, Tweed, and Trellis, which is a cannabis inventory management software provider.

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The Tragically Hip have also partnered (through investment) with medicinal and soon to be recreational marijuana producer Newstrike. The band members are advocates of marijuana’s health benefits and believe the employees at Newstrike are creative in nature, which creates an ideal combination for this partnership.

#2 Cannabis brands are creating products outside of the cannabis category

Using a strategy called brand stretching (where a product uses the same brand name in a different product category), cannabis brands are creating and marketing products in non-cannabis categories. The idea of brand stretching faced backlash from the senate but was turned down due “unintended consequences” such as the idea of Ontario Cannabis Stores using this tactic in their own marketing.

 Source: Strategy Online

Source: Strategy Online

Medicinal cannabis brand MedReleaf plans to launch their first recreational brand of cannabis titled San Rafael ’71 once Cannabis is legal in Canada. To gain traction in market before legalization, MedReleaf partnered with Toronto’s Amsterdam Brewery to launch San Rafael ’71 4:20 Pale Ale (the beer contains no cannabis). This allows consumers, both cannabis and non-cannabis users, to become familiar and develop a relationship with the San Rafael ’71 before it is launched as a recreational brand in market.

#3 Cannabis brands are breaking into market by using another division of their brand as a lead in sponsorship

By using another division of the company, cannabis brands are less likely to face challenges with regulations. Mettrum Hempworks, which is owned by Canopy Growth, landed a three-year partnership with Live Nation in 2016 to re-name the Molson Amphitheatres’ (now Budweiser Stage) grass bowl seating area the “Mettrum Originals Lawn”. The partnership was designed to bring Mettrum’s superfood and skin-care hemp products to artists and fans at events. This was the first time the Canadian market has seen a collaboration between a hemp food/skincare company and a live entertainment brand. This partnership allows Mettrum to gain brand awareness with thousands onsite and provides the opportunity for a cannabis brand to lock in a multi-year deal with a property (potentially allowing for further Canopy promotion should the regulations change) - something that only can be done with a sub-division of a larger cannabis brand.

As the cannabis market in Canada continues to evolve, several key trends may shed light on how brands will operate in the future…

1. Cannabis brands may become more involved in philanthropy such as creating partnerships with non-profit organizations that support public safety and substance abuse such as MADD. Community investments that have a more altruistic purpose are likely to face less push back.

2. Cannabis brands may look to use an educational division or food/lifestyle division of their company as the lead brand in a sponsorship and work with a property in negotiations to swap in their recreational cannabis brands. If the regulations change and loosen up, brands may be hesitant to act but also do not want to lose out on building a relationship with a property that meets their brand strategy (even if it is a scaled-back partnership to begin with).

3. As a push for more natural pain remedies continues in sport markets (vs athletes using strong opioids) and leagues such as the CFL allowing cannabis usage with their players, we could see more major sport leagues such as the NBA and NFL revisit their drug usage policies. Former NBA commissioner David Stern has already stated that marijuana should be removed from the banned substance list. Properties will not want to sell sponsorship in this category if it is banned amongst their employees and players. Look out for leagues revisiting their drug testing policies as a pre-cursor to branded partnerships in this space.

4. We will see an increase in non-cannabis brands targeting cannabis users . For example, Oh Henry! in Canada has already launched the 4:25 bar which gets its name from the hunger one feels five minutes after using cannabis and is “specifically formulated to satisfy the intense hunger craving that occurs after 4:20.” This may cause properties to look at their sponsor roster to see if brands using marijuana culture in their creative make sense and fit amongst other co-sponsors.

The cannabis industry is changing fast, and if marketers want to become involved they’ll need to stay on top of the evolving regulations - and get creative with the opportunities available.

 

 

 

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