Lightshade’s Iliff, Colorado location, one of the chain’s eight stores in the state.
Shannon BrooksLightshade opened in 2011 with a single medical dispensary and cultivation facility in Denver, Colorado. Three years later we expanded to offer recreational cannabis when adult use was legalized and implemented. In those early days, success had a relatively straightforward formula: You did everything possible to get a license and once you did, you hung a green cross out front of your store. I’m exaggerating, of course, but the point is true; simply being approved for licensing was the key to success. Demand was high, and margins were high too. Legal cannabis was a novelty and everyone wanted to try it. Tourists poured into the state and boosted sales since at that time it was only Colorado and Washington that had legalized adult-use cannabis. I wouldn’t say that business was easy, as we all know the challenges associated with operating in an extremely regulated industry, but many of the threats that exist today hadn’t yet materialized.
Over time, the legal market matured and the business landscape changed. The pattern has repeated itself in every legal state; normalization occurs as the novelty of legal cannabis wears off. Margins begin to drop as competition heats up and the market becomes saturated. Sales may not necessarily flatten, but the upward trajectory loses the steep incline it once had. Market leaders begin to emerge, while others stall, are acquired or go out of business. Three years ago, the signs of these market shifts were unavoidable, and we made the decision to change tactics to ensure Lightshade’s continued growth and success.
Research shows us that the traditional cannabis consumer demographic (largely those that had been cannabis consumers before legalization) are motivated primarily by price. Brand loyalty is less important, and they simply go to whichever dispensary has the lowest price or biggest discount. If we continued on our original path, it would be a race to the bottom. To remove ourselves from this battle, we decided the best path forward would be to shift our marketing strategy by expanding our targeting to include two of the fastest growing demographics: women ages 35 to 55 and senior citizens. They were both willing to pay more for products under the right circumstances and were much more interested in brand loyalty than our traditional demographics.
But how were we going to do it?
We started by revamping our branding and much of our marketing messaging to bring a new focus on cannabis education. Educating the consumer has always been important to us, but it was essential with these emerging demographics. We also launched our Corporate Social Responsibility program to connect on a deeper level with our community and give back.
We improved our customer experience by establishing additional training and product education programs for budtenders. We renovated our stores to be brighter, more comfortable and more inviting.
We shifted some of our advertising budget from cannabis-specific publications to those that aligned with healthy and active lifestyles. Much of our advertising was tailored to these potential new customers, and we put that messaging in the places where they were most likely to see and engage with it. But we didn’t want this strategy to alienate our existing customer base, so we have worked closely with our vendors to continue to offer some of the highest quality products for the best prices.
There is a common thread that emerged among all the market leaders in Colorado: They have invested heavily in high-quality marketing.
Whether you’re at the launch stage of your business or already operating in a mature market, it’s never too late to develop or refresh a marketing plan.