Hemp THC Products: What You Need to Know

“The best practice is to follow the advice posted on every railroad crossing: Stop. Look. Listen.” Sam Keen, Philosopher

The Hemp THC horse has left the barn. The category is growing, dynamic and now almost $20B in size (source: Viridian). Yet, it is also in its infancy and is fraught with risk.

I have performed extensive industry research, talked to many retailers, wholesalers & brands as well as advised a few companies.

Below are 6 best practices:

1️⃣ Consumer-Driven Brand Differentiation

There are now hundreds of brands & SKUs in market. If you don’t have a meaningful, relevant point of difference in market and at point of sale, you will be in trouble.

Competing to win begins with choosing the right consumer segment, need state and geography to tackle.

2️⃣ Sales Activation

Fact is, there is only so much shelf space at the retailer and wholesaler to go around. Differentiated brands must be supported by a strong sales effort (for sell in) and proactive trade marketing (for sell through).

Sales excellence is about getting the product on shelf - and keeping it there.

3️⃣ Margin Management

It is inevitable: margin compression is coming due to competitive pressures and rising costs. Successful companies pay close attention to costs, competition and pricing levels.

Which brings us to…

4️⃣ Direct to Consumer Models

Hitting profitability in any DTC business is a challenge, due to tough unit economics. These include: the importance of high volumes, the need to be competitively priced, keeping your customer acquisition cost as low as possible and absorbing high shipping costs.

Companies that go DTC better have deep pockets, marketing elan and well-honed logistics.

5️⃣ Supply chain

Firms overlook this part of their business with peril. There are many vulnerabilities. For example, having access to quality distillate supply is not a given. Shortages (there have been some) can play havoc with your COGS as well as your ability to reliably serve your channel partners.

6️⃣ Agile Go-to-Market Strategies

Each market is different plus there are important differences within them. Even with a defined business model, you must account for key regulatory, consumer and channel variances across multiple geographies.

Focus is critical. It is costly, tough to scale and risky to compete everywhere in the same way.

It is obvious that markets come and go in a heartbeat. Winning companies today are the ones best able to pivot and then scale up. Look for regulatory clarity over ‘grey’ zones. Develop products (e.g., THC limits) and marketing tactics with overlap across target States.

Finally, build in operational and financial resilience including accurate demand-supply forecasting and regulatory monitoring.

Call me. I help Hemp THC companies capitalize on profitable growth opportunities while minimizing risk.

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