Industry Leaders Assert Cannabis Faces a Conversion, Not Marketing, Challenge
Industry leaders argue that cannabis businesses must focus on converting existing consumers to the legal market, not on expensive marketing campaigns aimed at creating new demand
Key Points
- 1Industry experts contend the cannabis sector misdiagnosed its core challenge as a demand problem
- 2Federal data shows 22.3% of Americans aged 12 and older used cannabis in the past year
- 3Legal cannabis supply is projected to surpass illicit supply only by 2026 or 2027
- 4Operators are urged to focus on retail conversion and merchandising rather than national branding
A leading voice in the cannabis industry has challenged the prevailing wisdom on how to grow the sector, arguing that operators have spent years investing in the wrong business discipline. According to the commentary reported by High Times, industry players mistakenly believed they had a demand problem that required heavy marketing to solve, when in reality, cannabis customers already existed and simply needed to be converted to the legal market. "The customers for cannabis already existed. They had existed for a long time. The work in front of an operator was never persuasion. It was conversion," the operator stated, underscoring the longstanding demand for cannabis products
The misconception, industry experts say, was rooted in the idea that national cannabis brands could emerge in the same way as alcohol brands did after Prohibition. Many operators funneled resources into creative marketing campaigns, packaging, and lifestyle branding, expecting to capture a new wave of consumers. However, history shows that national alcohol brands were established long before Prohibition ended, and the regulatory environment for cannabis is far more restrictive, making the alcohol playbook inapplicable. "Cannabis can’t run the alcohol playbook, period. Different era, far more regulation," the operator noted, highlighting the hurdles posed by state-by-state licensing and strict distribution laws
Recent data reinforces this perspective, with the federal government’s 2024 National Survey on Drug Use and Health reporting that 22.3 percent of Americans aged 12 and older—about 64 million people—used cannabis in the past year. Most of these consumers are not newcomers, but long-standing users who have shifted between illicit and legal markets. Whitney Economics predicts that legal cannabis supply will not surpass illicit supply until 2026 or 2027, even as mature markets continue to grapple with significant illicit competition. The challenge for operators, therefore, is to convert existing demand into legal sales, not to manufacture new consumers
The article argues that true business growth lies in retail-level strategies focused on merchandising and customer experience, rather than broad, costly marketing campaigns. Local outreach, product assortment, and in-store experience are cited as key levers for increasing foot traffic and customer loyalty. The author points out, "That work is local, retail-level, and shows up in foot traffic and basket size on a timeline you can actually measure," emphasizing that tangible results come from disciplined retail practices rather than abstract brand awareness metrics
OG Lab’s analysis supports the argument that the future of the cannabis industry will be defined by operators who prioritize customer conversion and retention over mass-market branding. As regulatory frameworks remain fragmented and national branding remains elusive, success will likely depend on a hands-on approach at the store level. For industry players, this shift may require rethinking resource allocation and adopting proven retail tactics to capture the demand that has always existed
