Will Canopy Growth Corp. Become the Nike Inc. of the Recreational Marijuana Market in Canada?

Canopy Growth Corp. (TSX:WEED) seems to have looked to Nike Inc. (NYSE:NKE) for inspiration on how to create a powerful brand.

| More on:
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The power of branding

When you think of the athletic equipment and apparel market, chances are the first company that comes to mind is Nike Inc. (NYSE:NKE). This is no accident or coincidence!  Nike has spent billions of dollars maintaining and strengthening its brand image. The company does this through endorsements, cleverly placed sponsorship deals, and by acquiring or partnering with other strong brands, such as Apple Inc. with Apple Watch Nike+.

Canopy takes a page from Nike

Canopy Growth Corp. (TSX:WEED) seems to have looked to Nike for inspiration on how to create a powerful brand. Canopy has arguably spent more time and money than any other Canadian LP trying to create a strong brand.

When compared to other LPs, such as Aphria Inc. or Organigram Holdings Inc., Canopy has acquired significantly more notable brands to add for its portfolio and overall brand image. Canopy is essentially doing what Nike has successfully done for years, by partnering with other strong brands(Leafs by Snoop) and buying existing brands, such as Mettrum.

This aggressive branding strategy has put Canopy in a great position going forward and has enabled the company to claim the largest customer base of all Canadian LPs.

Closer look at Leafs by Snoop

Canopy partnered with Snoop Dogg last year in an agreement that will allow Canopy to sell three varieties of Leafs by Snoop as well as the ability to have exclusive use of some of the company’s brands and content.

The whole idea of this partnership, from Canopy’s point of view, is that it is aligning its brand with Snoop’s. Canopy is creating an emotional tie with Leafs by Snoop and, in turn, an emotional relationship with Snoop’s fan base, which currently sits at roughly 17 million based on Twitter.

Snoop Dogg is arguably one of the most culturally significant pop figures that exists when talking about marijuana. To have the ability to partner with a brand that has the cultural power that Leafs by Snoop has, not to mention the Twitter following, is a big advantage to Canopy’s overall brand image.

What if only plain packaging is allowed?

Much talk has occurred regarding the topic of plain packaging, or a total lack of ability for LPs to brand and market their products. Many of the top LPs have already begun lobbying the government to allow some sort of marketing/branding on packaging. If the government, in fact, does allow LPs to visually market their various products on packaging, I would argue that Canopy is, by far, positioned the best.

If the government chooses a model in which only plain packaging is allowed, then Canopy may have wasted a lot of time and money trying to create a culturally relevant brand image. Imagine sports shoes that can’t be placed in bright, flashy, attractive packages, that can’t be endorsed by celebrities online, and that can’t be marketed and promoted on television. In this case, would anyone care if the Nike checkmark was on a shoe? Probably not.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Stephen Zeagman has no position in any stocks mentioned. David Gardner owns shares of Apple. Tom Gardner owns shares of Twitter. The Motley Fool owns shares of Apple, Nike, and Twitter.

More on Investing

potted green plant grows up in arrow shape
Stocks for Beginners

1 Canadian Growth Stock That Could Double Your Money in an Economic Recovery

The market downturn is an opportunity to lock growth during the economic recovery. This stock is a blend of value,…

Read more »

Bank sign on traditional europe building facade

RRSP Investors: Here’s the Best Canadian Bank Stock for Your Buck

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock is getting far too cheap to ignore after the latest spill in the big Canadian…

Read more »

analyze data
Dividend Stocks

2 Safe Dividend Stocks That Could Help You Fight Inflation

A dependable stream of passive income is one way to help offset rising inflation rates. Here are two top dividend…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Stay Invested in a Recession: Increase Positions in 2 Value Stocks

The suggestion of market analysts is to increase positions in two value stocks if you want to stay invested amid…

Read more »

Diagonal chain made of zeros and ones. Cryptocurrency and mining.

Is This the End for Crypto?

Bitcoin (CRYPTO:ETH) is in the midst of its worst crash in years. Is this the end?

Read more »

Business success with growing, rising charts and businessman in background

4 Growth Stocks That Could Make You RICH by 2030

Canadians should take advantage of discounted growth stocks like goeasy Ltd. (TSX:GSY) and others in this summer bear market.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Dividend Stocks to Buy as Inflation Surges in Canada

If you're worried about how surging inflation may impact your portfolio, here are three of the best dividend stocks to…

Read more »

You Should Know This
Dividend Stocks

High Inflation: The Good and the Bad for Canadians

Consider tucking away some of your long-term savings in quality dividend stocks like Brookfield Infrastructure in this correction.

Read more »