And still reach plenty of consumers.

Crystal Cox/Business Insider

Experts say cannabis is uniquely positioned to serve two sides of the consumer market: medical and recreational. 
However, entrepreneurs believe that the industry will skew medical as more customers recognize the product as a medicinal tool that can potentially treat common illnesses like chronic pain, anxiety, and depression.
With ambiguous federal regulations surrounding medical claims, cannabis brands are using lifestyle marketing as a workaround to broaden their customer base, trending toward a health and wellness focus. 
While it’s possible to serve both sectors, consumer education and a strong communication strategy will be vital for your cannabis business to flourish.
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Those heavily involved in the cannabis industry view the market as a medical space above all else. However, the COVID-19 pandemic has served as a boom for recreational marijuana, leading it to be folded into the vice market along with alcohol and tobacco products. 

Industry players are waiting to see if the customer demographics for the global cannabis market, which is projected to reach $42.7 billion by 2024, will skew medical or recreational. Many believe the possibility of two markets remains, with the medical side winning out over time. 

Coree Schmitz, the general manager of Stillwater Brands, a Colorado-based THC and CBD edibles company that recently announced an expansion to its exclusive licensing agreement with leading cannabis brand The Green Organic Dutchman Holdings Ltd., sees marijuana serving the public in a fashion unlike any other product.

"Unlike a majority of other vice or recreational products, cannabis has true medical attributes that make it unique on both sides of the user experience, be it medical use or recreational use," she said. 

Mike Sassano, the founder of Nevada cultivation brand Solaris Farms, explained that many customers consume marijuana for medical purposes, whether it’s apparent or not. 

"That is not to say that there aren’t purely recreational users also, but cannabis is very much a medicinal tool in general," said Sassano, who’s also chairman of the board for Somai Pharma. "Even most vice users enjoy cannabis to chill out and destress, not to party."

Henri Sant-Cassia, a partner at early-stage plant medicine investment firm The Conscious Fund, noted that despite large customer pools in both sectors, the medical market is poised to be a much more lucrative venture. 

"Vice customers can grow their own or use the usual illegal sources," Sant-Cassia said. "It is tough to run a profitable large-scale enterprise, but in the medical sphere, particularly with specific formulations, there are far fewer alternatives." Specific medical markets do allow for home growing, Sant-Cassia added, which could hamper business prospects in certain regions. 

Without clear market direction, businesses have found a workaround
Sassano considers a lack of federal clarity a significant pain point since brands can’t market themselves as a medical option to the public.

"Currently, only lifestyle branding is available to the majority of cannabis brands," Sassano said. "But we are starting to see many gravitating toward a health and wellness focus as a workaround to truly clinical marketing. This is a sector that’s blowing up." 

Sassano noted products not labeled as medical products, but instead geared toward sleep and calm, as items fueling the "workarounds" in the sector.

Lakisha Jenkins is a traditional naturopath, or natural remedies healer, and registered herbalist who’s been involved in the California cannabis marketplace since 2006. Jenkins, whose accolades include serving as a founding member and the first person elected as president of the California Cannabis Industry Association, sees the market’s look being determined by the consumers. 

"Being an owner operator in California for over a decade allowed me to realize the fact that consumer demand, more than in other industries, dictates the growth of the cannabis market, which is highly medicinal from a regulatory standpoint," Jenkins said. "The current trend is to recognize cannabis as a product with therapeutic or medicinal value, and I believe this will continue as most markets that come online, both domestically in the USA and globally."

Market opportunities for both sectors, with medical seeming most lucrative
While most acknowledged that the medical cannabis market is the primary focus and driver, there is room for adult-use, lifestyle-focused brands and products. 

Mike Bibbey, vice president of marketing for US multistate operator Ethos Cannabis, noted that brands can, and do, work in both sectors. To address market confusion as to which demographic the product serves, Bibbey said that companies must be clear and direct with their branding and marketing efforts. 

"It is important for brands to identify their primary audience, medical or recreational, craft their brand and communication strategy to that primary audience, and provide as much information as possible to both consumers and dispensary personnel to keep consumers informed on intended product use and effects," he said.

Proponents of the medical side of the market include Jenkins, who suggested brands focus on a consumer education narrative to remain solvent in the space. 

"With a strict focus on the adult-use market as a target, brands will limit themselves to a very small portion of the population," Jenkins said. "Whereas focus on the nutritional, medicinal, or therapeutic benefits coupled with consumer education and empowerment when it comes to product choice on dose and delivery offers greater market penetration."

Not every brand has its focus on the therapeutic side of the market. Schmitz, for example, prefers to avoid making medical claims with Stillwater Brands products.

"We will always take the stance that we are not doctors, and we do not tell our customers what cannabis will do for them," Schmitz said. Instead, she said that the company focuses on producing consistent, food-science principled products.

Despite the track record of adult-use marketplaces hampering medical market sales, respondents, like Sassano, believe that medical will be the dominant space in time.

"As medical research and development continue to the point where cannabis will be one of the main tools available to treat common illnesses like chronic pain, anxiety, and depression, you will see the medical market rise to prominence," Sassano said.
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