Opening of a cannabis agency in Chicago, in the Silicon Valley of the pot
For decades, Chicago’s advertising companies have thrived on the high concentration of city-based food and beverage customers, from Molson Coors to Kraft Heinz. Today, a start-up is trying to capitalize on what could be Windy City’s next big industrial cluster: cannabis.
The agency, called Receptor Brands, offers end-to-end services for cannabis brands, including strategy, branding, design, digital and content creation, as it tries to win business at a time when large holding company stores are still cautious. to do work for a category that remains illegal at the federal level.
Single-product-focused stores are a rare breed in the agency industry due to long-standing practices that tend to prevent agencies from working for two competing brands. But conflict rules seem to be easing as clients shift more to short-term, project-oriented work. This is especially true in the cannabis industry, where brands operate in a rapidly changing environment as they constantly adapt to new regulations as more states legalize pot.
Receptor has been running quietly for months and has attracted project work from two Midwest-based cannabis marketers: Cresco Labs, a large, publicly-traded, vertically integrated company headquartered in Chicago that operates in multiple states. ; and Red Arrow Farm, a Michigan-based cannabis producer. Chicago-based Spence Labs is also on its client list, which works with dispensaries to create cashless payment systems.
Receptor has ties to Chicago-based sports marketing agency Revolution, including the fact that Kent Thomas, Revolution’s former senior vice president for business intelligence, now runs Receptor as a managing partner. Revolution was one of the first agencies to launch an esports unit, a trend other stores are now following.
While esports and cannabis share similar characteristics – both are new and growing industries in which digital marketing is essential – the pot market presents unique challenges, including the fact that it operates in a so-called market. gray, which means it’s only legal in certain states, and the rules of the game vary widely from state to state.
But Chicago has become a breeding ground for cannabis traders, who have grown up in the city following the legalization of recreational marijuana by Illinois effective January 1, 2020. A growing crop of domestic players and regional cannabis companies now inhabit the city, including three of the five largest publicly traded marijuana companies in the United States: Cresco, Green Thumb Industries and Verano Holdings. The increase has led some experts to dub Chicago “the Silicon Valley of the pot”, as recently reported by Crain’s Chicago Business.
“Chicago has been at the center of the cannabis industry,” Alan Brochstein, founder of Houston-based 420 Investor, which covers cannabis companies, told Crain’s. “It is figuratively a bridge between the entire capital of the east coast and the legacy (cannabis industry) of the west coast.”
Many Midwestern companies have recruited marketing talent from Chicago-based consumer packaged goods companies as the industry attempts to professionalize its practices and move beyond its past as a stoner culture. Cresco’s commercial director is Greg Butler, who previously headed Miller Lite marketing for Molson Coors; the company’s senior vice president of brand marketing is Cory Rothschild, who joined Cresco from Gatorade, owned by PepsiCo, which is run from Chicago.
Receptor reproduces this talent acquisition strategy on the agency side. At the head of the agency, along with Thomas, Allison Disney, a Chicago-based Energy BBDO alumnus whose Omnicom agency career included stints working for CPG giants including SC Johnson, Mars and Johnson. & Johnson. Another Energy BBDO vet, Jake Setlak, oversees the creative strategy and brand experience for Receptor.
âThe marketing talent in Chicago on the brand side and the agency side is second to none,â Disney said. And “more and more people are heading into the cannabis space.”
Disney first became interested in the pot trade during dinner-time conversations with her husband, Ryan Disney, who is a plant biologist and now works for Red Arrow Farm. Cannabis âhas certainly become normalized in our homes as a topic of conversation after its involvement. Slowly but surely I started to see the opportunity, âsays Disney.
When it comes to the marketing of weed, Disney draws parallels with its previous work on behalf of large global clients, such as Mars, who have had to navigate the different game states in each country they operate in. it is about regulations or consumer tastes. With the pot, these differences exist in every state. âThese brands that started in California but are moving east with legalization – they have very mature brands in the West and they are launching as entirely new entities in states where people don’t have visited California, âshe says.
Receptor is trying to get into cannabis as most department stores owned by holding companies stand idle, awaiting federal legalization before diving head first. Among the obstacles these stores face is the fact that some do not want to get into hot water with large federal government customers. There are potential complications with transferring money between state lines for income derived from an illegal product at the federal level. Large, publicly traded media companies like Facebook and Twitter have also been left on the sidelines when it comes to accepting marijuana ads, making media buying more difficult.
âEach platform has its own policy on advertising and communication about cannabis,â explains Disney. âIt forced us to be more innovative.
One of the agency’s plans for Cresco is to hire local artists to paint murals inside the company’s Sunnyside brand of dispensaries, including in Rockford, Ill. And Philadelphia.