rewrite this title and make it good for SEOIndie cannabis operators vs. MSOs? Consumers don’t walk the talk

As cannabis businesses strive to establish brand loyalty, they’re learning that consumer purchasing habits don’t always align with stated preferences.

A recent survey by California-based medical marijuana telehealth platform NuggMD reveals that although consumers indicate a desire to support independent cannabis businesses – even if it means paying a premium – price and potency often win the battle for their dollars.

The survey of 602 marijuana consumers asked: Would you pay a premium for cannabis that’s cultivated, distributed and sold by small, independent businesses as opposed to large multistate operators?

More than half (51%) of respondents to NuggMD’s Cannabis Consumer Poll said they would pay a premium, and 41% said they would consider it. Only 6% of those surveyed said they would not pay a premium.

Although consumers indicated they would pay a premium for products produced by smaller, independent companies, when asked what’s important to them while shopping for marijuana products, 29% said price and 37% said price selection, according to NuggMD.

Andrew Graham, head of communications for NuggMD, said the company’s survey shows that independent marijuana operators have an edge in competitive markets if their branding is strong.

Big marijuana can learn from the little guys

But the poll also is instructive for MSOs.

“Cannabis consumers are willing to pay a premium for products that are local and independent of too much corporate influence, similar to the farm-to-table restaurant model that works so well in so many places,” Graham said.

“If MSOs can convince consumers that they’re ‘farms,’ too, then they can give customers what they want while also potentially capturing larger margins.”

Consumers want products that offer a sense of identity and purpose beyond mere functionality.

“I think (the survey responses speak) to overall consumer desire that you don’t want to get this homogenized commodity – they want some branding behind it,” said attorney Oren Bitan, co-chair of the marijuana and hemp industry group at Los Angeles-based law firm Buchalter.

“No one has necessarily developed deep loyalty to a brand.”

While there’s a clear desire for brands that resonate on a deeper level, achieving lasting customer loyalty is an elusive goal for many companies.

“Overall, what I’ve seen is price and potency have been the driving forces,” Bitan said.

“Anecdotally, people are loyal to brands, but overall, it’s who’s the cheapest and who’s the strongest.

“There’s been a push to change to low-dose products and targeting consumers who are willing to pay a little bit more and don’t want the strongest thing out there – like beverages.”

Convenience and value reign supreme

Avis Bulbulyan, CEO of California-based cannabis consulting firm Siva, said that while consumers say they would pay a premium for marijuana from independent businesses, the reality is that they purchase products at more affordable price points.

“People would choose to support a smaller business, but convenience and self-interest always overrides it,” he said.

Bulbulyan also notes that consumers don’t know the difference between MSOs and mom-and-pop marijuana businesses like people in the industry do.

“If you’re looking at general cannabis consumers, they’re going to be more interested in what they’re getting for their money versus who they’re supporting,” Bulbulyan said.

Consumers might be price conscious, but they’re also more educated than they’ve been in the past and demanding higher-quality marijuana, said Caleb Counts, CEO and co-founder of Connected Cannabis Co., a California-based commercial cultivator.

“What they care about is the highest quality for the best value – people are willing to pay a premium for the highest quality,” said Counts, who spoke at MJBizCon last December.

MSOs secured most of the licenses in states that limited business permits, so they didn’t have to grow the highest-quality cannabis, he said.

But that’s starting to change, and now they’re partnering with smaller operators to grow the cannabis they sell or license genetics from those operators, Counts noted.

His company grows cannabis independently in California and Arizona.

But Connected Cannabis partners with MSO Trulieve Cannabis Corp. in Florida, where the cost of a license is prohibitively high.

“They either have to drop prices or raise the quality, and that’s why they’re partnering with brands like ourselves,” Counts said.

“Market by market, it’s starting to break down. People are producing a higher-quality product more efficiently than what’s there.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.