This is an opportunity that comes around once in a lifetime,” says Cass Riese, co-founder, principal and director of business development at Pot-O-Coffee, a fast-growing, legalized cannabis-infused beverage brand that offers a range of products, including coffee, of course, teas and cocoa. We spoke at Pot-O-Coffee’s headquarters in Southern California, a location, I found, peculiar, considering that the state only allows cannabis for medicinal use.
“It’s true,” Riese says. “In California, you need a med card to even enter a dispensary and that’s inhibiting.” He also argues that the political climate is changing and that California will soon be the most important state player in the U.S. cannabis market. A sentiment that Los Angeles Times reporter Robin Abcarian would agree with.
In her article, “California is poised to become the center of cannabis culture,” Abcarian explains that the state’s medical marijuana industry “already produces and sells more pot than any other state including Colorado, Washington and Oregon, which have all legalized adult recreational use of marijuana. In California, we could see a tenfold increase in what is already a billion-dollar-plus industry, and this despite the continuing federal classification of marijuana as a dangerous substance with no medical value.” (Read the full article at www.latimes.com/local/abcarian/la-me-abcarian-cannabis-book-20160516-story.html)
This tenfold increase would come with the passing of the “Control, Regulate and Tax Adult Use of Marijuana Act” on the November ballot. Commonly known as the Adult Use of Marijuana Act, it’s designed to allow nonmedical marijuana for responsible adult use, and establish a strict regulatory system, modeled after the medical marijuana legislation passed with bipartisan support and signed into California state law in 2015, to facilitate the transition to a legal market. The Adult Use of Marijuana Act Initiative has attracted the attention and support of a range of organizations, including the CA Medical Association, and most famously of Facebook early investor and former president Sean Parker. (Read more about the Adult Use of Marijuana Act at www.letsgetitrightca.org)
The movement toward recreational marijuana in California is also indicative of how quickly this budding market is expected to grow across the nation. According to the National Conference of State Legislatures, a total of 24 states, the District of Columbia and Guam now allow for comprehensive public medical marijuana and cannabis programs. At the time of publication, NCSL didn’t count Ohio’s bill, which had passed both Ohio House and State chambers.
The flipside of this high-growth market
While cannabis brands on the leading edge of the legalization movement are benefitting from fast-growing expansions, they are doing so without the benefit of federal oversight (marijuana remains classified as a Schedule 1 substance under the Controlled Substances Act, making distribution of marijuana a federal offense).
Cannabis brands face a cacophony of regulations that prohibit them from conducting business like other consumer packaged goods companies, making them like explorers finding new ways to survive and thrive.
The issues, Riese and his partners face every day, range from financial to marketing and package development to distribution. “There’s no banking in this industry, and you have to explain that to suppliers when you approach them,” Riese says. “Every state with legal cannabis sales also has their own rules and regs. Because we need to constantly follow new compliance rules, we’re constantly adding, subtracting words, verbiage, coffee symbols on our packages.” Additionally, because legalization is at the state level versus the federal, cannabis brands cannot distribute infused-product across state lines.
Not content with local distribution only, Pot-O-Coffee developed a business model where it uses a combination of intellectual property licensing and non-infused product distribution to expand its footprint. “We will supply our licensees with everything but the cannabis oil,” Riese explains. “That has to be added in each state, where it’s legal. We supply the licensees with the boxes, with the K-cups, with the K-cup lids, everything, even the recipe for our special secret sauce, if you will, our formulation process.
“If you first enjoyed Pot-O-Coffee here in California and you’re going skiing in Vail, there’s no reason why that you should have a different brand experience,” he adds. “There won’t be a difference in taste or a different coffee used in the Colorado version. And you will instantly recognize the box.”
When designing the logo, which is prominently displayed on Pot-O-Coffee packaging, Riese and his in-house designers, took inspiration from outside the beverage category. “We looked at Tide and its bullseye logo,” he says. “We wanted that same quick reorganization, and we wanted that logo lockup to communicate that the product is both coffee and is cannabis infused.
“Another word for cannabis is ‘flower,’” he explains. “So we thought how do we integrate that with coffee visually? We ended up taking coffee beans and arranging them into the shape of a flower. That was very important because it tells the whole story instantly of what is inside the box.”
Every element of the package was carefully considered by Riese. “We wanted to ground it that’s why we put a black bottom on the box, and then as you go up into the packaging the white stripe conveys the product’s purity, color-coded backgrounds help identify varietals but it also delivers a bit of ‘wow’ to the design, and the stripes behind the logos almost look like a ribbon,” he adds. “The overall effect is something like a present and evokes the desire to grab the box and open it.
Delivering the brand experience without advertising
“Brand experience is extremely important because we want the consumer to always be happy with it,” Riese says. “We want the consumers to look at us as the Starbucks of the infused-coffee industry in how we go about having a quality product, having a box that speaks to you through a package design that you want to take home. The package is actually something that you might even want to leave on your counter. It’s a cool symbol. It isn’t your traditional bag of coffee. It speaks for the individual I am and I want to share it with my friends.”
Unlike Starbucks, Pot-O-Coffee cannot launch a supporting advertising campaign. “National advertising is not allowed in print and TV commercials,” Riese explains. “Most customers find us on social media or at a trade show, or they see our package inside the dispensaries. This is why packaging is so important to us! It needs to resonate with a wide spectrum of people but in a very limited space of where we’re allowed to present. We had to explore the boundaries then bring them in and execute on what we felt was going to a design that people would respond to. You can have the most beautiful package design work in the world, but if it’s not connecting with the consumer, it’s meaningless. And in our business, probably more than others, the end result needs to be a package design that sells.”
Shortly before publication, Riese announced that Pot-O-Coffee has signed an agreement with Evolab, which will enable product distribution to Colorado in addition to California. The brand also expects to sign a licensing agreement within the next month that would allow distribution in Washington and Oregon. Additionally, Riese reports that the brand is positioned to make its entrance into the lucrative Nevada market with prospective partner Vegas Valley Growers (VVG).