Tourism Will Fuel Global Demand For Canadian Marijuana Products

Canada’s first-mover advantage in marijuana legalization means more than just leading the proverbial “pack” in cannabis production. In fact, Canada’s true first-mover advantage in the cannabis space is much more nuanced. It lies in branding.

I briefly touched upon the importance of cannabis branding a little over a week ago. The ability for Canadian producers to create desirable brand experiences while the rest of the world (namely, the United States) is buried in red-tape is no small thing. It’s already driven billions of dollars of investment into Canadian marijuana companies, and by extension, the Canadian economy.

Branding is a complex beast. Typography, logos, marketing copy—and a number of existential questions aside—there’s geographical considerations. And while the smart LP’s are wise to the importance of premium retail locations, few are well-positioned or forward-thinking enough to capitalize upon place branding, or destination marketing (ie. Las Vegas and its reputation as a 24/7 party town).

Not only does Canada feature some of the most renowned tourist attractions in the world, but Canada’s various provinces spend a significant sum on attracting tourism—something that ambitious Canadian marijuana retailers can leverage to grow their brand.

Tourism and Canadian Cannabis

Canada’s tourism industry is nothing to scoff at.

According to Invest Alberta:

“The federal government estimates that tourism contributes as much to Canada’s wealth as agriculture, fishery and forestry combined.”

2014 Canadian Tourism Expenditures (% by province, international and domestic tourists)

Statistical data sourced from the Government of Canada.

When one controls for provincial retail regulations (ie. Ontario not licensing private retailers until April 1, 2019 and Québec prohibiting all private retail operations), it becomes clear that two provinces present particularly attractive opportunities for marijuana retail: Alberta and British Columbia.

A recent Bloomberg article discusses the potential of marijuana tourism and Canadian branding in British Columbia’s scenic Kootenay region:

“With stunning valleys ringed by snow-capped peaks and a relaxed outdoorsy vibe, the Kootenay region already draws visitors.

It’s easy to imagine tasting tours featuring pot sommeliers who offer guidance on the subtleties of the region’s brands.”

And just a 30 minute drive away lies Banff, Alberta, one of Canada’s top tourist destinations.

There appears to exist a natural, almost inevitable synergy between marijuana and outdoors tourism—a synergy that has been proven by the economic growth achieved by trailblazing states such as Colorado, which shares striking geographical similarities with the Banff and Kootenay area.

Colorado itself has already been transformed by cannabis tourism.

“Cannabis tourism is growing at a fast clip, drawing thousands of people — and millions of dollars — to states where adult use of cannabis is legal.

In Colorado alone, cannabis tourism has grown 51% since 2014, according to a report from the state’s department of revenue.”

This is not to say that tourists from all over the world will flock to Alberta and B.C. for multi-day marijuana-powered yoga retreats (although that is certainly “a thing”). It’s more so the fact that tourism can help foster international brand recognition and thus international demand for Canadian marijuana products.

Via “Unlocking the Potential for Canada’s Visitor Economy”, a recent McKinsey & Company report,

“Tourism can also build familiarity with a country’s products and help boost foreign demand for these goods—for example, German tourism in Spain has helped stimulate demand for Spanish wines in Germany.”

The opportunity is so big, in fact, that some of the world’s biggest marketers are getting involved.

Big Tobacco Lured By Marijuana Branding Potential

Marketers have been profiting off of this generation’s health-conscious trend for years. Now, it appears that Big Tobacco wants in on the action.

Just last week, Altria Group Inc. (NYSE: MO), the tobacco producing behemoth behind Marlboro cigarettes, recently invested C$2.4 billion into Cronos Group (TSX: CRON)(NASDAQ: CRON), one of Canada’s largest vertically integrated cannabis groups.

While marijuana still comes with its own set of potential health detriments, cannabis proponents suggest that controlled usage of the drug is much safer than tobacco, which has been clinically proven to cause cancer and a myriad of other adverse health conditions. Entering the marijuana market provides tobacco producers with unprecedented access into a more health-conscious, active segment of the lifestyle market—an area that has inherently incompatible with tobacco products.

Big Tobacco is a marketing powerhouse, and has been for decades. You can be sure that they will keep an acquisitive eye on marijuana branding developments in Canada… especially if they pertain to retailing in Alberta and British Columbia.

Western Canada Is An Incubator For Canadian Marijuana Brands

Branding is the crux of Canada’s competitiveness in the global marijuana industry. For Canadian marijuana producers, this is welcome news; Canada has gone to severe lengths (much to the detriment of its energy sector) to preserve its identity as an environmentally conscious, outdoors experience rich country. Alberta and British Columbia, at least for the time being, provide marijuana retailers with the most potentially lucrative branding opportunities—something that deep pocketed competitors (such as tobacco and alcohol) will be watching closely.