how-marijuana-companies-are-building-brand-loyalty-by-selling-seeds-to-consumers

Several cannabis companies have added marijuana seeds to their line of product offerings – even though the move, at first blush, might seem counterintuitive.

Why, for one, would marijuana companies want consumers to grow their own plants?

Yet, there’s a logic here: Consider how people who grow their own vegetables also shop for fresh veggies at a grocery store or farmers market.

“Everybody who’s got a home garden during the spring and the summer grows tomatoes. But 98% of the tomatoes they buy are at a store,” said Carl Giannone, co-founder of Trade Roots, a cannabis company based in Wareham, Massachusetts, that sells seeds direct to consumers.

“If growing tomatoes makes them want to buy tomatoes, then I want to let them grow.”

An increasing number of companies are offering seeds thanks to a change in federal policy. The move can be profitable for some, while others are doing it to build brand loyalty and share genetics.

In November, Berner, co-founder and CEO of international marijuana brand Cookies, announced at MJBizCon the company would begin selling seeds for home cultivation.

Cookies launched its seed bank the day after Thanksgiving, on Black Friday.

In an email to MJBizDaily, Berner said the launch “broke some internal records.”

“The demand is definitely there and it’s been strong,” he added.

Berner’s approach is to help cannabis fans take their enthusiasm to the next level.

“We want everyone to feel empowered to explore the plant and get into that next level of education when it comes to cultivation,” he wrote.

“It’s more than just buying clones. It’s about the experience from start to finish.”

Marketing is crucial

The cannabis seed business became a more viable option last year when the U.S. Drug Enforcement Administration clarified that it’s legal to sell and distribute cannabis seeds across the U.S., according to Florida-based cannabis cultivation consultant Ryan Douglas.

“A previous regulatory gray area is now crystal clear, and law-abiding cannabis companies are wise to seize this opportunity,” he told MJBizDaily via email.

Douglas sees the opportunity as coming down to marketing.

“If you have amazing cannabis genetics but no one knows you exist, you’re not going to sell any seeds,” he wrote.

“This opportunity can present a compelling business model for companies with recognizable brands that consumers associate with rare varieties or high-quality cannabis.”

According to Douglas, cannabis vendors can fetch anywhere from $5 to $20 a seed, and a well-pollinated plant can yield thousands of viable seeds.

That’s much better than in mainstream horticulture, where a 20-cent seed for vegetables or flowers is considered pricey.

“Given the going rate for desirable genetics and the sheer quantity of seeds produced from a small grow room, seed production can be a lucrative addition to any cannabis cultivation business,” Douglas said of seed providers.

The one drawback, according to Douglas: Cannabis seed production can’t compete at the moment with asexual vegetative plant propagation, where nurseries sell clones to growers, because sowing a hundred seeds of the same variety can result in multiple phenotypes and inconsistent genetic outcomes.

High Tide’s foray

In December, Canadian cannabis retailer High Tide announced it would begin selling marijuana seeds in the United States after the DEA said seeds fall under the legal definition of hemp, or less than 0.3% THC.

High Tide CEO Raj Grover said the company’s core customer for seeds is 19-35 years old.

In the United States, federal law mandates that the seeds can’t be sold for germination, only for novelty purposes.

“Seeds present a new and exciting complementary vertical for us,” Grover said.

“Our intention has always been to extend and strengthen our integrated value chain and provide our customers with a complete cannabis experience.”

High Tide doesn’t manufacture seeds. The company buys its seeds from an authorized seed manufacturer in the U.S.

Grover agreed with Douglas that having a strong brand and trusted genetics is important to making this a successful move.

“Just like our consumers have come to trust us for consumption accessories and CBD products, we want to gain their trust on the seed business as well,” he said.

“So we are cherry-picking absolutely the best and most highly sought-after brands of seeds.”

Grover said High Tide isn’t interested in adding clones or young plants to its product line.

“We are just going after the products that can be easily integrated into our current ecosystem and infrastructure,” he added. “Then also being retail focused, which has always been our strategy.”

Highlighting the breeder

For Giannone and Trade Roots in Massachusetts, the goal is to sell seeds at its store that relate to what the company is doing in its cultivation operation.

If a customer buys a flower strain they like, they might be able to find that seed and try to grow it at home. But not all of the strains are available in seed form.

The company employs breeders who work for it as cultivators. The cultivators produce seeds, which Trade Roots then sells.

Trade Roots’ packaging gives those breeders credit for developing the strain, so the consumer can recognize the breeder.

Their target consumer for seeds is the serious home grower or the professional breeder who can take the seed and crossbreed it to come up with a new hybrid strain.

Giannone said seeds are not a huge profit-maker, but they do it to support cannabis breeders.

“The purpose for us carrying those seeds,” he added, “is really to highlight the breeder and to shine a light on what is really going on here behind the scenes and to educate the consumer to what a strain is and what breeding is.”

Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.