When the pandemic began last Spring, Mary Jane’s Medicinals, which sells CBD and cannabis-infused topicals, took a big hit. April was “one of our worst months of sales ever,” said chief executive and founder Dahlia Mertens. A rebound soon followed though and by August sales were as high as they had ever been. The company’s growth this fall has been dramatic she said, doubling to $100,000+ in income for the month November. Now the holidays are approaching.
2020 might be a very green Christmas for the cannabis industry.
Mitch Baruchowitz, managing partner at Merida Capital Holdings, a New York-based private equity fund working in the sector, believes more cannabis products will be sold this holiday season than any before. Several diverse factors contribute he said. Acceptance of cannabis has continued to grow along with legalization, evidenced by recent ballot wins in both right and left-leaning states. That opens new markets to millions of potential consumers. Cannabis production and sales were deemed essential businesses in the pandemic, keep sales from dropping. And cannabis purchases do have some seasonality, with holiday purchases growing over the past few years according to Headset, an industry research group.
Still, the complicated and regulation-laden industry isn’t a money-printing machine. Customer loyalty and name recognition play a large role, so building a strong brand name is important Mertens said. “People want to spend money on a product that they already know works,” she said. As “one of the OG topical producers in the cannabis space,” the company benefitted from this. The business also recently launched a new product, Super Strength Nano Salve, which has been performing very well.
Brand is important but a strong company requires more than high quality products, good prices and attractive packaging said Greg James, publisher of Marijuana Venture and Sun Grower magazine. The business mechanics – how reliable the company is at fulfilling orders quickly, how efficient their back office operates matters just as much. “It’s no different than Proctor and Gamble,” he said.
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Resources also play a role in company health and some of the newer brands didn’t have the cash resources to stick out the original sales dip said Mertens.
The holidays are a good time for cannabis companies to experiment with prices according to the Headset research. While value shoppers looking for the most “buzz for the buck,” are an important customer segment all year long, people are willing to pay more for a holiday gift according to the report.