Pain or Possibilities? Canadian Guidelines for Cannabis Products Packaging
On March 19th Health Canada released “Details of Proposed Label Display Requirements for Cannabis.”
The proposed regulations eliminate the possibility that packaging designers can let their imaginations soar to create intriguing and idiosyncratic products like those that have become the norm in Colorado. They specify that the most dominant design elements will be a red “standardized cannabis symbol” that looks like a traffic STOP sign, and a large health warning in a yellow panel.
Logos and slogans can be no larger than the standardized cannabis symbol and any text must be no larger than the font of the health warning and must be a single, uniform colour. Images and patterns are prohibited.
The design restrictions are strict, stricter than the current Access to Cannabis for Medical Purposes Regulations (ACMPR), but not as restrictive as the regulations for Canadian cigarette packaging that prohibit variations in packaging format and logos of any sort. At first glance, the regulations deal a blow to any hope that licensed producers can develop recognizable cannabis brands.
Additionally, it was announced that licensed micro-processors will have their annual production capped at 600 kg, which limits revenue. After you deduct estimates for tax, retailer margins, the costs of growing and using tamper-proof packaging, not much margin is left for marketing, overhead and the investors.
Cannabis producers need to build strong brands
Shouldn’t cannabis stocks be tanking and investors regretting their enthusiasm? No! While the regulations are restrictive they do not prohibit brand-building. Indeed, cannabis producers need to build strong brands, not only because of the value it adds to their business, it is a consumer expectation.
Consumers need to distinguish between products. The characteristics of cannabis, both the taste and physiological effects cannot be summed up by percentages of THC and CBD. The various physical forms, plus the different levels of terpenes and other components create a landscape for products reminiscent of the wine market with its hundreds of thousands of varieties and brands, with pricing from vin de table to the stratospherically premium.
Producers need to find ways to work within the regulations and at the same time help the consumer make informed product choices. The fundamentals of brand marketing will be crucial just as they are in all markets that are crowded and competitive. As a branding agency, Beakbane has always advocated starting with a strong “brand focus,” comprised of a brand name that is memorable and googlable along with a distinctive logo that leads to a brand proposition with a clear benefit and distinctive personality.
A brand focus is a foundation for all supporting tactics
A strong brand focus makes it easier to develop communications tactics that build awareness and create a pleasing brand experience. Tactics are not only easier to develop they end up being more effective. Here is an example from a market that is in many ways challenging. FullMast Men’s Health Clinics treat erectile dysfunction using a new therapy called SONICWAVE. They operate in the medical arena where there are strict regulatory constraints and also because it relates to sex there are restrictions on the types of advertising permitted. The name alone pretty much summarizes the brand proposition, which is then reinforced by online communications. FullMast’s brand focus is the foundation for all supporting tactics including print and radio advertising, making them unusually efficient.
While Canada’s proposed regulations for packaging graphics are massively restrictive the structural aspects are an opportunity. A lot can be communicated by the format of the packaging. Indeed, the success of one of our clients, Lindt Canada is not only based on the quality of their chocolate, it is propelled by constant innovation in packaging formats.
On the one hand, the introduction of onerous restrictions in Canada will constrain the development of the market, on the other hand, the regulations relating to product safety, contaminants from pesticides and heavy metals will provide much needed safeguards, heightening confidence in products from licensed producers.
Arguably, the packaging regulations are overdone and a pain, but in many ways, they are similar to what we are accustomed to when we develop packaging for beer and wine, bottled water, over the counter drugs and fertilizers for cannabis.
The business opportunities for licensed cannabis producers are undoubted. The market will explode in Canada with a huge variety of products and brands. Initially, consumers will find this confusing and perhaps overwhelming. Inevitably the market will crystallize with some of the licensed producers being taken out by competition and the burdens of compliance. Operators who take compliance seriously and capitalize on brand fundamentals will bloom!