Pubdate: Sat, 20 Jan 2018
Source: Toronto Sun (CN ON)
Copyright: 2018 Canoe Limited Partnership
Author: Greg Quinn
Page: 55


Fed regulations will inhibit marketing, businesses say

Recreational pot should be legal in Canada by summer, but it won't be

Producers trying to market their product face a battery of proposed
government restrictions similar to those governing the sale of
cigarettes. Labels may have to display graphic health warnings, adhere
to standardized lettering and limit the use of colors and "brand
elements." Celebrity endorsements and consumer testimonials are banned.

It's a reality check on an emerging industry that's seen dizzying
growth. Shares of Canopy Growth Corp. have more than tripled in the
past year. Its market value of C$7.2 billion ($5.8 billion) now
exceeds those of plane maker Bombardier, grocer Empire Co. and miner
Kinross Gold. For some investors, including Norman Levine at Portfolio
Management Corp., the branding restrictions make the stock

"You've got no advertising, you have plain packaging, how are you
going to differentiate yourself and grow your market?" said Levine,
whose company manages C$650 million.

Officials say their goal is to squeeze out criminal dealers, not
encourage more drug use by making it look fun. "This is really
predicated entirely upon a public health model, and not a commercial
model," said Bill Blair, the government's marijuana point man and a
former Toronto Police Chief. "We want to do a better job of protecting
our kids."

That doesn't wash with Joe Potter, co-founder of Trider's Craft Beer,
a family-owned brewer that sells a Brew-Deau brand with the likeness
of Prime Minister Justin Trudeau on the label at a Nova Scotia
farmer's market. The regulatory caution around marijuana will hurt the
market and is "behind the times," he said. "If they all have to
package exactly the same, boring packaging," he said, "that's going to
be a real issue."

It's a challenge for marketers such as Carol Levine, chief executive
of energi PR in Montreal, who says pot producers will have to limit
traditional advertising tools such as bright colors or cartoons of
celebrities. "That's what's going to make it so difficult, because
investors are going to want to see sales," she said.

Trudeau's Liberals are aiming to make marijuana legal around July. The
federal health ministry will end a public comment period on Jan. 20
for proposed marketing regulations that would support the legislation
still working through Parliament.

Canopy and Organigram Holdings were developing deals with rapper Snoop
Dogg and the owners of the cult Canadian TV show Trailer Park Boys,
respectively, when a federal task force recommended it should be
illegal to promote marijuana by linking it with glamor, excitement or

Greg Engel, Organigram chief executive officer, still plans to tie his
brand to the series known for drinking, smoking, profanity and general
misadventure. "We aren't looking for a celebrity endorsement per se,
we are creating a brand off of that group," he said.

Engel wants ad rules closer to those that govern alcohol, rather than
tobacco, which are more restrictive. In Canada, cigarette packages
feature warnings that include graphic images of diseases linked to
smoking, leaving less space for brand names. "They want to make sure
people are educated," Engel said by phone. "Well part of that
education is the branding that goes along with that product."

Justin Creally, co-founder of North Strategic in Toronto, says
advertising should focus on middle-aged users who want a safe product,
and try to get more exposure in the media and at public events as well
as using paid media campaigns. "Companies can tell stories about real
Canadians seeing the benefits, whether those are medical or
recreational," he said.

Duncan McGillivray at Strong Coffee Marketing in Edmonton suggested
producers keep product lines and target audiences simple. "There are
so many different strains being produced, it might start to confuse
consumers," he said. With major social media websites like YouTube
probably blocking explicit drug advertising, smaller online forums
such as discussion groups may be better.

Canada's recreational market may take years to mature and there will
be unexpected opportunities and setbacks, according to Caitlin Kealey,
CEO of MediaStyle in Ottawa. She advises having a longer-term strategy
because "the stigma around it may lessen over time."

Marijuana producers also said their sales pitch will focus on the
higher quality and reliability of legal product, a message that could
resonate with the recent surge in rise in fentanyl-related deaths.

Bruce Linton, Canopy chief executive officer, said he won't be flying
in Dogg to do promotions, but there may be more subtle ways to
advertise. "Can we have a birthday party for him and tie that to a
video? No. But can we have the product branded by a corporation which
is controlled by a named celebrity? Yes."
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