Cann: High Hopes for Cannabis Infused Beverages

Founded in 2018 by Jake Bullock and Luke Anderson, Cann sold “social tonics,” or cannabis-infused beverages. By 2022, the company had several notable celebrity investors and talent partners, had sold over 10 million beverages to consumers, was distributing in six states and two Canadian provinces, and had closed on a $27 million Series A funding round. Moreover, Anderson and Bullock had their eyes set on expanding into New York and New Jersey, both of which legalized recreational sale and use of cannabis in 2021 and appeared to be a promising new market for Cann. However, Cann faced significant challenges to growing the business. First, cannabis was illegal at the federal level in the U.S., and the laws varied across states regarding the manufacturing, packaging, sale, distribution, and use of recreational cannabis. Second, distribution of recreational cannabis was still limited primarily to licensed dispensaries. There were also severe limitations on advertising cannabis, even in states where consumption was legal, and individual media properties and platforms commonly rejected or prohibited advertisements for cannabis products. Finally, Anderson and Bullock were trying to create an entirely new category for cannabis consumption and position themselves as an alternative to alcohol. Could they convince mainstream consumers to integrate cannabis drinks into their social imbibing? How should they allocate their marketing spend to give themselves the best chance of success? Which markets should they focus on serving and how should they position the product?