Packaging & Branding

Is It Stealth Branding?

Caleb Summeril
Written by Caleb Summeril

As cannabis legalization gains footing across the U.S., more brands are pursuing expansion and growth beyond their home markets. A steady rise in revenue increases output within any industry, and business evolution 101 tells companies to extend and escalate production to meet market and consumer demand.The overall success of the cannabis industry has caused many companies and business owners within to scheme up plans to expand and take advantage of new opportunities and customers.

Conflicting regulations have caused similar products to pop up in legal states under different brand names, prompting the possibility of stealth branding to skirt compliance regulations. Companies such as  Flavrx in California seem to have nearly identical counterparts in a different state (see Washington based Flav).  A successful business deserves to expand how it sees fit but needs to be careful when such expansion happens. A cannabis mogul looking to start a west coast empire needs to heed caution as the transportation and sale of products across state lines remains illegal.

Even between bordering legal states there are potential serious legal consequences at any attempt of selling a product originating in one state to another where it is also legal. Packaging and brand similarities in different states have led to rumors of sly branding practices to sell the same product in varying locations. These rumors are difficult to prove and while a real possibility until further federal prosecution or acceptance of state laws, a larger possibility is that of cannabis companies expanding their products and brand awareness by adopting franchise-like tactics to observe regulations and avoid federal investigation.

Royalty/Consulting agreements are possible to affiliate a cannabis brand with another already in existence or to form another in a new state. These agreements are often more expensive and demanding than traditional franchise dealings but allow a legal and practical method for companies to expand horizons while easily navigating current hurdles. While stealth branding may exist on some levels, more companies seem to side on caution and traverse the evolving industry via allowable avenues.

Sources

BioTrack THC.  How Can I Expand My Cannabis Brand Across State Lines. https://www.biotrack.com/how-can-i-expand-my-cannabis-brand-across-state-lines/ (accessed Nov 9, 2018)

 

US Const. Article VI, paragraph 2.

https://www.law.cornell.edu/constitution/articlevi

About the author

Caleb Summeril

Caleb Summeril

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