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Premium Cannabis Brands Are Going All In With Celebrity Endorsements

Jan 20, 2021 • 7:22 AM EST
4 MIN READ  •  By Michael Berger
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The cannabis industry is one of the most attractive growth markets and we believe that it is still in the early innings of a major growth cycle. According to an analyst report from Cowen and Company, the overall market for cannabis and cannabinoid derivatives is expected to reach $34 billion by 2025 and we believe this is a conservative estimate.

Going, forward, the US cannabis industry is positioned to record strong growth under a democratic administration, and we are favorable on the current trend. One of the more interesting trends that we identified is related to the number of celebrities that are launching cannabis brands and are executing on a strategy to capitalize on a burgeoning industry.

From Snoop Dogg to Seth Rogan, several high-profile celebrities were early movers on the cannabis industry, and this is a trend that has become more significant over the last two years. We are favorable on how these celebrities are benefiting from the strength of their respective fan base and will monitor how these brands are able to gain traction.

Today, we want to highlight 3 premium cannabis brands that are backed by a celebrity and provide more insight on how this trend has evolved over the last few years. Although we do not expect every celebrity backed cannabis brand to perform well, we believe these brands are better positioned to be successful over the long-term.

Canopy Growth and Snoop Dogg

In 2016, Canopy Growth Corporation (WEED.TO) (CGC) became one of the first Canadian Licensed Producers (LPs) to launch a cannabis brand that was backed by a celebrity. The agreement was with Snoop Dogg and the brand did not perform as well as expected. Through this venture, we believe that Canopy Growth learned a lot about the challenges that are associated with launching a celebrity backed cannabis brand.

Prior to forming a relationship with Canopy Growth, Snoop Dogg was a well-known cannabis user and activist. Although the agreement with the Canadian LP did not perform well, Snoop Dogg was paid in stock and due to the performance of Canopy Growth, this proved to be a smart decision.

A few years after the agreement was announced, Snoop Dogg launched a cannabis venture capital firm called Casa Verde to make seed and Series A investments in ancillary companies (non-plant touching businesses). One of Casa Verde’s initial investments was LeafLink, a business-to-business marketplace that’s designed to connect cannabis brands with retailers on a single platform. LeafLink is considered to be a high-profile ancillary cannabis company and we are impressed with his ability to identify attractive investment opportunities.

In late 2020, Casa Verde Capital reported to have completed an $100 million financing for its second investment fund (according to documents filed with the SEC). Currently, Casa Verde has not announced any targets for the new venture capital fund, but we expect this to change in the near future.

Martha Stewart Launches a CBD Brand

Martha Stewart is another high-profile celebrity to enter the cannabis industry. Like Snoop Dogg, she entered into an agreement with Canopy Growth that is focused on the cannabidiol (CBD) vertical. The agreement comes several years after the Canadian LP announced the relationship with Snoop Dogg and the relationship with Martha Stewart has already proved to be a value driver for the company.

A few months ago, Canopy Growth announced an important milestone and reported to have released its Martha Stewart CBD Wellness Gummies Sampler. We are favorable on the relationship with Martha Stewart due to the size of her following and will monitor how the brand performs this year.

One of the reasons we consider Martha Stewart to be a strategic partner is related to the demographic of her fan base. We believe that she appeals to the baby boomer generation and expect Canopy Growth to benefit from having leverage to this demographic. So far, the average age of cannabis consumers is younger than Martha Stewart’s fan base and we are favorable on how this further differentiates Canopy Growth from other operators in the sector.

Gage Cannabis and Cookies is an Emerging Growth Story

Gage Cannabis a leading operator in Michigan and has formed an exclusive partnership with one of the best-known cannabis brands, Cookies. The leading cannabis brand was started by California rapper Berner and has a massive following. From the quality of the genetics to the packaging of the finished product, Cookies has been nothing short of an execution story and has a cult-like following.

Last year, Gage opened a Cookies branded flagship cannabis dispensary in the heart of Detroit and we are bullish on this opportunity. The flower that is sold by Cookies is very expensive when compared to other brands and the high price point has not impacted the amount of demand for it.

We believe that Gage Cannabis has the necessary traits to be successful in the cannabis industry and will continue to closely monitor the operation. The company is led by a management team that has a proven track record of success and we are favorable on this aspect of the story. We believe that Gage has attractive growth prospects, a favorable risk-reward profile, and is an opportunity to be aware of.

If you are interested in learning more about celebrities that are forming cannabis brands, please email support@technical420.com with the subject “Celebrity Backed Cannabis Brands” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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