This article was updated in April 2020, to reflect the current situation with the coronavirus pandemic.
UPDATE: So here we are, roughly a year after the initial publication of this blog article. And boy, things are so very different. It’s absolutely incredible where we are at the moment, with the coronavirus pandemic, the lockdown of states and countries, and the forced closure of so many businesses.
The travel and tourism industry has been decimated, and it’s hard to say when we’re going to be able to start gathering in public again in large groups. It’s also hard to know whether or not people are intent on even doing such a thing.
What does this mean for the cannabis industry?
For starters, it means that anything we are producing or marketing needs to be virtual – which is a double whammy to an industry that thrives off its’ people interactions, and the camaraderie that we all feel under normal circumstances – the belief that we are all part of a group, a sometimes persecuted, often prosecuted, never down for the count, group.
It means that we need to find ways to replicate that feeling of togetherness, to maintain that spirit of unity, and to continue to produce a quality set of products for our medical customers needs; we also need to work together to create and distribute virtual meetings, product information videos, and all kinds of other materials that can be used in the midst of being locked down and unable to get out to talk to prospective customers and vendors.
Are we finished with trade shows and conferences?
Frankly, we already had enough trade shows, and the ROI from exhibiting and attending was starting to wear thin. This meant that we needed to look to doing our business more efficiently and more effectively, even before the problems with travel and gathering in groups became a worldwide concern.
It’s hard to know when we’ll start gathering together to exchange information, spend time with friends, share a bowl or a fine bud – but while we’re all on lockdown it doesn’t mean that we have to lose our businesses because we can’t get a bailout and are running low on funds. We need to be creative, work together, form new partnerships and utilize all the technology tools at our disposal.
If you’re working on a virtual event, talk to us. We have many tools – all of them mobile based – that can help you increase your attendance, engagement, garner sponsor dollars, help to coordinate speakers and time schedules, and the like.
We know it’s tough for everyone, so let’s talk about how we can help you.
Original post starts here:
Trade show saturation is about to become a very real thing in the cannabis industry.
Cannabis is the third ’emergent’ industry that I’ve been a part of in the last twenty years; the previous two are internet and mobile technologies, and there are some interesting parallels between all three of them. These parallels are what lead me to believe that we are rapidly approaching the trade show saturation point and that the law of diminishing returns is going to start kicking in, hard, before the end of this year.
In the vast majority of new industries, there are a few stages that will occur (haha, I know it sounds like I’m about to recite the five stages of grief, and maybe there’s a parallel to that situation as well!), almost without fail. The timeline is almost always the same because greenfield opportunities and brand new products or technology do run headlong into each other more often than we know, but likely not as often as we believe.
Cannabis has been around forever, I’ll grant you that. But it hasn’t been operating under the auspices of state and local ‘legality’, regardless of the federal government’s position. Gone are the days of weed dealers, and instead, we’ve arrived at the point where pretty much every large corporation that manufactures almost any type of manufacturing equipment – from food service to big ag to packaging and more – all have a presence at the cannabis industry trade shows.
Not sure what trade show saturation is exactly?
We have written about – and talked about in our podcast episodes – how difficult it is to measure ROI as a result of attending a trade show, and detailed just how long tail your returns are likely to be when you are calculating the cost of a booth versus the real gains your company sees from exhibiting. These are, at best, elusive numbers to pin down, since it’s impossible to know how many people saw your magazine ad before they saw your booth, or vice versa. And the more events on the calendar, the more likely we are to hit the trade show saturation point.
Before NCIA publishes any numbers on foot traffic and attendee count for the NCIA #CannabizSummit in San Jose last week, I’ll go ahead and say that it was the worst attended cannabis show I’ve been to in the past three plus years. There is also no way that NCIA will be able to convince me, or any other repeat exhibitors, that the head count was anything but dismal on the attendee side.
Yes, I know that the exhibitor booths were completely sold out. I know that a very high percentage of exhibitors did show up and the number of empty booths was very minimal (an achievement in the cannabis industry no matter how you look at it). Talking about trade show saturation does NOT take away from the achievements of NCIA, MJBiz, or any of the other companies that produce good shows that are generally well attended and often worth the money it costs to exhibit. I say often, because there comes a point in every company’s calculations, where determining of the money spent is generating enough new interest to validate the spend.
Too many shows, too little demographics.
In any greenfield opportunity, especially one with the potential that state legal cannabis has, there is always a gold rush mentality at the beginning. This period of time is when some of the best ideas, the most novel concepts, and the craziest promotions are hatched. This is also a period when many of the industry giants are able to solidify their positions, and to establish themselves as clear front runners.
Just like other industries, cannabis is proving true to this formula. There are any number of companies who exhibit at all of the major and many of the minor shows without fail. They are always in attendance, they always have big booths, big swag giveaways, big parties, or some combination of these elements. You cannot miss them, even if you only walk around with one eye open and half a brain registering who is on the floor.
Once the ‘big’ companies establish a presence at trade shows, it becomes difficult to go back. In addition to the lack of attendees in San Jose, there was also a lot of commenting on a company that did not have a booth at the show – and these guys have big booths with lots of bright fixtures and a thumping sound system at all the major shows. Their failure to appear was remarked upon more than their continued presence with their big white booth would have been.
One bit of credit I will happily give to NCIA, ICBC, and MJBiz is that they target businesses inside the industry and (almost) exclusively market to other industry professionals when attempting to sell attendee badges. IndoExpo, for instance, does a Saturday business and a Sunday consumer show – creating a situation that is nearly impossible for B2B or B2C companies to work with effectively. We’d love to do a table/booth on the Saturday but we will never do that since we have zero reason to exhibit on Sunday and we’re not going to pay the same price to trek all the way to Portland or Denver to do half the show as we would to do the whole thing.
My prediction – contraction in show sizes and attendance for 2020.
Obviously we cannot continue to have at least one new show added to the calendar every month going forward; not if shows are meant to draw large crowds and mix business with consumer companies under the same roof without separation. I’m not even sure we can add shows to the calendar that are focused on B2B at this point, at least not without weeding out some of the less successful shows that are currently in production.
I’m not against shows, but I do think that as the industry starts to self-segregate based on factors like company type, end user base, available marketing dollars and so on, we’re going to start to see that a lot of the shows find exhibitors harder to get signed on, and that it becomes even more difficult to sell big booth spots; I believe that a lot of companies will decide that it’s easier to bring a single prop and some video marketing materials with them than it is to lug around room sized industrial equipment; as we start to reach an overall market saturation this will become even more prevalent.
Unique and original ideas will become key to increasing market share.
I’m not talking about reinventing the wheel, but as the industry matures (and it is maturing at an alarming rate) it will become vastly more important that current customers are cultivated, and that those customers become an equal priority with acquiring new buyers. There will always be an influx of new money and new faces into the industry, but with the finite number of licenses available in most states and locales, it’s not going to take all that long for the companies who are licensed and run dispensaries or processing facilities or distribution networks to determine what sort of equipment they want to use, can afford, and are able to finance (if need be). So we are looking at a finite window of opportunity for most companies who offer these products.
Once the finite number of licenses are issued across the states, then many of the consultants and application specialists are going to be without enough work to put food on their tables – in Arizona, for instance, the medical license opportunities are now determined by the number of new traditional pharmacies that are opened in the state – for every 14 new Walgreen, CVS, etc there will be one new dispensary license created. The only way that number can be turned on its head is to go with recreational licensing, and that’s at least 2020 before it can even be put to a public vote. It’s possible that the state legislature may decide to attempt to jump ahead of the people’s ballot measures, but that remains to be seen.
The math is clearly not in favor of continuing to promote more, and larger, trade shows for the cannabis industry. Once the current crop of licenses are complete, more than half of the US will be in stasis, and we’re not even going to talk about the problems with the FDA and CBD in this article, or how that will likely slow down at least a substantial portion of the industry until the dust has settled and either Congress makes CBD legal or the FDA shuts it down for the most part.
All is not lost; trade show saturation doesn’t mean we should stop having shows altogether.
Quite the opposite, in my opinion. As the industry starts to mature and the companies who are going to remain viable begin to emerge, it’s the perfect opportunity for companies to explore other means and methods of expanding their business, increasing their sales, and sharpening up their bottom lines. If the current government sentiment holds – that cannabis can be left alone in a semi-regulated world – then there is still at least 2-3 years of good earning potential for any number of solid companies with half decent management.
In the meantime, I think – again, my opinion – that the FDA may prove to be a much bigger problem for the industry than the FTC, DEA, and Treasury departments put together. Their current enforcement and guidance actions in regards to CBD that’s been made marginally less illegal by the Farm Bill (2018) demonstrates a clear understanding on the agency’s part of just how effective they can be in putting the brakes on the business without a lot of effort on their part.
It’s also very clear that the FDA believes its much easier to go after a target like Curaleaf than it is to attack Walgreens, Walmart, CVS, or Amazon directly. More on that in another post later on this summer.
The chief takeaway here is that the industry is maturing, and at a very rapid pace. Licenses are issued in finite numbers, the industry has to learn to work more as a business and less as a party. It’s still fairly easy to make good money in this environment. Don’t waste your money booking giant booths and bringing lots of employees and equipment.
Big booths are a diminishing return. Trade show attendance is likely to start trending downwards. All is not lost, you just need to rethink your show strategy. Let’s chat about that.