The Battle for Cannabis Shelf Space Moves Online

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The use of ‘pay to play’ practices in the cannabis industry ultimately hurts small farmers and BIPOC businesses.

 

Are the days of browsing at stores for pleasure now firmly behind us? Sadly, it’s certainly possible — at least for the foreseeable future.

It’s difficult, for instance, to envision a trip to the grocery store these days as being anything other than profoundly stressful. The old allures, be they friendly deli counter chats or precious minutes spent scrutinizing the produce for blemishes, likely no longer hold the charm they once did.

Enter the rise of shopping services like Instacart.

Absent any social appeal in shopping for themselves, those with the means to do so are now letting the groceries come to them. As a result, services like Instacart are reporting record numbers. This new, pandemic-defined delivery market is one rife with labor issues and, by its own nature, one prone to change at any moment.

Regardless, one result that is thus far clear: customers are quickly growing more comfortable with the prospect of making their purchasing choices remotely. Now some are asking the inevitable: given the chance to eventually go back to pre-pandemic shopping behaviors, will people instead decide to simply continue buying everything online?

If so, that’s bad news for any cannabis brands relying on premium placement in dispensaries to sell their goods and attract customers.

This practice, known colloquially as ‘pay to play,’ is nothing new to the larger retail economy. In many bookstores, for instance, publishers pay to have titles featured in window displays and on countertops. With cannabis, giving a brand a prominent retail spotlight takes on even greater value when one factors in that most traditional means of advertising — including Facebook — remain off-limits to legal weed companies.

Thus, catching a customer’s eye at a dispensary thanks to a snazzy display or product placed on a store’s best-moving shelves is one of the ways affluent cannabis brands can legally saturate the market.

As a result, some companies are apparently paying small fortunes to get their gummies and concentrate lines top-billing. Also known as “slotting fees,” Marijuana Business Daily reports the widespread practice “requires brands to pay anywhere from $500 to $15,000 a month for premium space on cannabis retailers’ shelves.”

Detractors of slotting fees — which are not illegal but rarely publicly acknowledged — argue the practice favors larger companies who can, quite literally, pay to play.

The use of slotting fees rose in tandem with the popularity of cannabis vaping products, according to Marijuana Business Daily, as the latter created a “retail shelf space crunch.” While the subsequent VAPI scare sent sales for the product category into a nosedive, a continual influx of new brands ensured the use of slotting fees remains both viable and immensely profitable for pot shops.

One question: what happens now?

Sure, slotting fees paid on a monthly basis are no longer going to exist if no one is stepping foot inside a dispensary. That said, an increasingly virtual cannabis commerce experience seemingly also favors brands who can afford what amounts to the digital equivalent of the practice. Far from providing any answers to the situation, it only leads to new, pressing questions.

Among them: Are there alternatives that offer a more equal playing field? Is it incumbent on dispensaries to reject the practice? If so, what is the solution for pot shops who will be forced to shutter if not for slotting fee revenue?

These are ethical questions, certainly, but practical ones as well. In lieu of the best, most democratic approach, the time for alternatives of all stripes appears fast at hand.

After all, it is not hyperbole to say that the window to make your mark as a cannabis brand in America has already begun to close.

Each time the industry contracts, only the strong survive. To confuse the strong with the worthy, however, is a most grievous error. While some of the companies who enjoy a large share of the market earned their place, others leapfrogged the process by simply being too big to ignore.

Now both are fighting for customers’ attention on digital shelves. The question: will the change be of benefit to brands with fewer zeros in their bank accounts or merely more of the same? Only time — and perhaps dollars — will tell.

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