The Mandalorian hints at 9 epic mistakes to avoid in cannabis!
Picture this: a ragtag team of former criminals, technicians, leaders and vanguards join forces on a mission to deliver an unstable, combustible commodity to a specialized but eager set of consumers.
Knowing that the cargo they carry is volatile, they proceed with caution as they set off into an unfamiliar landscape, using a vehicle with highly complex controls. With a sense of foreboding, they observe the burned-out husks of other vehicles who had attempted to deliver this product to the waiting consumers – and were decimated in the process. Further along, they pass disgruntled groups who express general disapproval of the team’s product and presence in the landscape, and who wish they would take their business elsewhere.
Just as the team begins to gain speed while they rush their product on its way, a vehicle in front of them explodes violently. Then another. They’ve pushed too hard against the power limitations that are keeping their commodity stable. The team knows that unless they want to suffer the same fate as their co-carriers they need to ease off – but if they hold back too much they will never succeed with their mission. Now aggressive objectors have swooped in and are attempting to sabotage the shipment. The team scrambles to fight off the attack and push their product’s instability to dangerously high levels. Just as the onslaught seems impossible to fend off and with destruction imminent, reinforcements from the backline arrive and wipe out the attackers, allowing the team to safely deliver their cargo into appreciative hands.
Exciting right? Perhaps familiar? Well, if you thought we were reciting the plot of Star Wars’ The Mandalorian Season 2 Episode 7 – you’re wrong. We are painting a picture of the general experience many Canadian cannabis start-ups face!
OK, the allegory might be a stretch in some places we’ll admit, but you can see the resemblance. Hybrid teams of illicit market pioneers, business professionals and engineers, complex protocols and packaging systems, explosively strict compliance, anti-pot objectors, and ruthless regulators are common-place in this volatile and alluring industry. Despite the fact that Mando’s mission on Morak with Mayfeld (Bill Burr) and company was intended to be a means to an end, when it comes to cannabis, the end goal is (or should be) true and widespread consumer adoption – which thus far has been limited.
To help ensure your start-up doesn’t go up in a rhydonium-fuelled fireball, we’re sharing 9 epic mistakes you absolutely must avoid when it comes to making Cannabis products in Canada. These are hard-learned lessons right from the frontlines of Canadian LPs. Heed them well.
#1 Avoid committing to a packaging system before having a strategy
We’ve got a baaaaaadd feeling about being trapped by a cannabis packaging solution that ultimately undermines your product’s margin or positioning. Or both. Hasty compromises on cost-effective packaging are often made to accommodate variable data and Health Canada compliance.
For example, paperboard boxes are looked at as a go to that provides a large enough surface area to easily support the required padding, warning symbology, content includes and type size requirements of the regs. Because they are certified, child-resistant paperboard boxes are generally expensive for the ones that can provide valid CFR reports. For non-CR boxes, Hymes-bottom (auto-lock bottom) are the standard, and they are also not cheap unless you can hit higher minimum order quantities. If you are combining this type of box with a CR immediate container, you are now looking at a packaging system that requires more complex production processes, increasing labour and materials costs and cutting into your margin. Plus, all that packaging is just plain bad for the environment.
Do boxes allow you to create a little more negative space for your mono-colour background and brand element – absolutely – but they lack all the fun extras that usually go along with a layered packaging experience like embossing/debossing, raised varnish, spot UV coatings and foil. Unless you’re targeting an uber-premium product position, multi-layer box-based systems can become a glorified billboard for the regs. With a little design ingenuity and some help from the June 2019 amendment allowing concessions for small immediate containers (labels that extend off the principal display surface) you would be amazed at what you can fit into a small, single-layer packaging system.
Other package considerations include stickered versus pre-printed Standardized Cannabis Symbol (SCS) for vapes, and excise stamp adhesion to the outermost packaging layer. Remember, every time a package is handled, the more labour dollars begin to rack up.
#2 Don’t wait until the final hour to consider variable data
Linked to your overall packaging strategy should be a considered variable data plan. Many licensed producers avoid discussions about variable data like the THC% CBD%, Packed on Date, Lot# and databars until they’ve already committed to a fixed packaging system/immediate container. This can be devastating to the efficiency of your ongoing production times and labour costs, especially when particular aspects of the regulations prescribe certain info to be on the Principal Display Panel (or Principal Display Surface if you are working with small immediate containers). Generally the more “common” components that a packaging system has, the more affordable it becomes. We’ve seen several cannabis products employ mylar bags pre-printed with predictable warning components and brand elements that can be used across several SKUs and batches – just apply the brand name, CBD/THC stats and go!
We recommend looking at the classic COST + QUALITY + SPEED triad when discussing variable data compliance solutions. Boxes and containers can be inkjet printed in black (high speed but high cost and lower quality). You can add a sticker from a 3rd party vendor (high quality but low speed and medium to high cost). You can print your own labels on a commercial grade printer (low to medium cost and high speed but lower quality. Variable data solutions almost always have only two of these variables optimized max. If you think you’ve got a solution that claims to have it all – run, it’s a trap!
#3 Never underestimate barcodes
Barcodes can often be the last thing you want to think about when it comes to product development. Global Trade item Numbers, X-dimensions, omnidirectional scanning… this subject matter can get very dry and very confusing. Though the nature of barcodes and GTINs can be a bit boring at the best of times, this doesn’t change the fact that accurate, well-considered barcodes and product numbers are CRUCIAL to the long-term success of your products and start-up as a whole. Much like vengeful bounty hunters, they WILL come back to get you if you don’t handle them with care.
It’s best to speak and act from a place of confidence. Stop trying to figuratively complete the Kessel Run in 12 parsecs. Slow down and learn everything you can about how barcodes work before attempting to build them into your manufacturing processes. Consult provincial distributor vendor guides to ensure that you are meeting the standards of the provinces you will be entering. You can even find creative ways of making case and retail unit labels and barcodes that are universal to all distributors and retailers! Familiarize yourself with GS1 and know how to build a GTIN organizational system. Above all else, know which codes you are using for what packaging level and why. Put the work in and it will pay off tenfold. If you are looking for a great place to start, check out Decoded – our elegant guide to learning the secrets of barcode mastery.
#4 Do not develop a product without performing a competitive analysis for price
Profitability is the new name of the game for the intra-pandemic regulated cannabis market. This urgency is now trickling down to retailers as illicit market brands and shops continue to steadily compete for consumer dollars. Also, unlike the rhydonium-crazy Galactic Empire, consumer demand for cannabis in Canada is slightly more subdued – at least for new consumers who are more at the point of curiosity than insistence.
We’ve seen a trend towards the saturation of some product categories in 2021 with several new value plays coming to market which attempt to pique the interest of these potential future consumers and more price-sensitive existing consumers. As more value brands enter the space, it will make price exercises essential to ensure that market demand and brand positioning truly support proposed prices. Distributors and retailers are in the driver’s seat right now and price is driving them – so consider carefully before making bold assumptions about what people will pay for your “premium quality” product. Yea, we’ve never heard that label before. There is literally nothing worse than building an amazing product that you’ve doomed because it is priced out of the market – except maybe an interstellar superweapon made with a conveniently located fatal design flaw.
#5 Stay away from “me too” thinking when it comes to brands and product positioning
Akin to issues arising from assuming that your product/brand commands a certain price, trend-chasing can be a similarly fatal practice. Before you pull the trigger on your version of that new competitor SKU that is currently “crushing it” in market, remember that there is a 2-month lag with NNCP submissions. If you think you know what’s coming down the pipe based on today’s information – you don’t.
In general, avoid getting caught up in flavour of the month type product development. You will get to the party too late. Like, “where did Alderaan go,” too late. Products and brands should make sense for your company’s style and capabilities. Yes trends can be leveraged, but always try and look at them from a longevity perspective. Will this trend persist? Will consumers continue to favour this type of product format, flavour, or experience 18 months from now. If not, what will they transition to? Aim for that future place.
#6 Avoid brand and product names built on lifestyles or things that could be considered appealing to children
The regulations quite ambiguously outline certain limitations for what shouldn’t be used to promote a cannabis brand, including what the Brand Element and marketing support assets are based on. In general, the rule of thumb is no terms or brand imagery that can be viewed as conveying positive or negative emotions about certain “lifestyles”, no animals, no public figure associations, no terms that specify or prescribe frequency or times of use, and no dessert-type product names.
Though some of this might seem obvious, a lot of the time it isn’t. For example, at what point do you draw the line of lifestyle versus not lifestyle. Does a forest full of trees evoke an outdoor-adventure lifestyle – or are they just trees. Does a skyscraper imply a high-roller lifestyle – or is it just a building? We’ve seen recent products that have built their entire brands on emotion-based notions, but is this allowed because the regulations say you can’t convey emotions about lifestyles specifically? Much of the nuance of these restrictions come down to interpretation, so fire up the shield generators and be ready to defend your position with Health Canada, based precisely on the language they specify. Also, when in doubt – keep out.
#7 Never feel secure in your cashflow
Want to know how to make 1 million dollars in the Canadian cannabis industry? Start with three million dollars and wait. You laugh, but it’s almost fact. We’ve seen several real-life instances demonstrating that achieving goals and becoming profitable in the regulated Canadian cannabis space often takes twice as long and costs twice as much than anyone was ready for. We’re sure the Empire didn’t plan on the Death Star costing 1.3 sextillion dollars!
Despite what your best projections might say, always double down on saved funds and alternative revenue streams to ensure that you are equipped to handle the inevitable delays, speed bumps, and roadblocks that will arise. Always plan out your Cost of Goods Sold well before an order for packaging ever goes out and ensure you have a firm grip on special province-specific fees and excise tax projections.
In case you are looking for an easy way to estimate your excise costs, we recommend trying our easy to use Excise Tax Calculator.
#8 Don’t keep your Quality Assurance and Operations departments separate
Quality assurance personnel are like the Jedi: wise, skillful, and one with the regulatory force. Use them well by not front-loading them in your product development cycle and then pinching the loop. We’ve found it extremely helpful to involve QA’s directly as SKUs and market entry is being planned out so they can understand how products will be adapted to each province and provide brand name suggestions or prepare alternate “backup” NNCP submissions as required. Keeping ongoing communications and active review processes between operations and QA can help prevent big mistakes while promoting an engaged and collaborative work culture.
The number one reason for market recalls is not contaminations, defects, or anything nefarious; it is for having incorrect data on your labels. These mistakes are completely preventable by integrating a strong QA flow throughout the product development and production process. Since QAs are the closest to the regs they are simply your best source for compliance interpretation and risk management that you have.
#9 Never assume that communities will welcome your product with open arms
Much like any decent galactic rebellion, the development of a emerging consumer industry takes time – especially with bureaucratic overlords breathing down your neck. There is still much stigma surrounding cannabis and much work to be done to convince the mainstream that this product can be safe, worth their hard-earned dollars, and just as legitimate as alcohol as a means to unwind or celebrate. Even for softer more accessible product categories like topicals, misinformation runs rampant – check out our cannabis topicals and skin science guide if you are curious to learn more about how these products work.
Rather than take a fixed stance, engage with dissenters to learn what about the cannabis industry they are opposed to. Have a representative from your company spearhead participation in municipal, provincial and federal policy discussions and events to help further the cause and educate as many people as possible. Though some brands choose to work with traditional “stoner” language we prefer to use less polarizing vernacular that offers inviting and easy entry points to new consumers while working to demystify and destigmatize the consumption of cannabis.