This week’s Trailblazer is Chad Finkelstein, Partner of Dale & Lessmann, a law firm that provides reliable legal expertise in all aspects of the developing cannabis industry in Canada.
Questions with a Cannabis Industry Trailblazer
When did you first become involved in the cannabis industry and why?
I guess the cannabis industry sort of found me. My legal practice has always focused on franchising, licensing, distribution, and branding. So I’ve always done a lot of work involving retail strategy for restaurants, food service, and food and beverage supply chain, as well as a lot of work-related to advertising, marketing, law, compliance, brand protection, and trademarks.
Cannabis began to overlap with a number of those areas. Certainly, as you know, the industry developed where companies could get licensed to make not only their own product but also to make a product for others.
That became really similar to the white label deals we work on with food and beverage products where you contract a manufacturer to make something under your brand that ends up on retail shelves. So we did a lot of work relating to that supply chain, whether it was prerolls or edibles or beverages or topicals.
”Branding, brand protection, advertising, and marketing compliance is such a minefield in cannabis law.
So as legal advisors, we learned about it along with the rest of the industry as the regulations have developed, and as the interpretation and application of those laws started to very slowly offer small amounts of clarity here and there.
We were giving that advice and given all of our work in retail expansion strategy, we got really involved in early days with some of the chains that started to seek out real estate or franchisees. Then, when the retail lottery happened in Ontario, a lot of those deals, whether by design or inadvertently, were structured like traditional franchising and licensing models we had done before. So that’s how we really got involved in cannabis retail expansion strategy.
There are some unique regulatory components to cannabis, but the fundamentals of contracting out your packaging or manufacturing or production to somebody else, those fundamentals are still the same. So we were able to leverage that experience to help either the LP’s in supporting their own white-label clients or helping those brand owners who were looking for a production partner.
What has been the biggest challenge you have faced when working with cannabis companies/brands?
The biggest challenge in late 2018 and most of 2019 was the pace. I don’t say this, you know, to be critical of anybody, not an industry, not of media, not regulators, not of investors, but there was obviously tremendous enthusiasm for the potential of a lot of these cannabis companies and there were so many of them, and so many investors looking to throw quite a lot of money around. So much of it was spurred on by a kind of relentless media profile, which spurred more investor interest, which spurred regulation, which, if it was drafted in a hurry, spurred more uncertainty and more media profile and more investor uncertainty.
”It all just happened so fast all the time and the biggest challenge that I found was keeping up with the relentless pace for deals that were not likely to be going anywhere.
We would get asked to do multiple letters of intent (LOIs) per week for different companies, oftentimes because signing an LOI led to a press release. There were a number of companies that I think were guided by wanting to keep up with all the other press releases, wanted to keep up with all the media profiles, which sometimes led to deals being agreed to in principle, on a speculative basis, and then never materializing.
To effect so much deal-making and negotiation on spec I think was a considerable challenge. As the cannabis market changed and as the investor market changed in late 2019 into 2020, that’s been tempered quite a lot. We’re not getting asked to just turn out LOI after LOI in contemplation of chasing a potential deal that may never happen.
That’s been a lot more measured, which is great, but I would say that from my perspective as the person who sits behind a desk and drafts these contracts, the biggest challenge that I’ve faced was trying to strike too many speculative deals way too fast.
If you could change one of the current Canadian or American marketing restrictions on cannabis, which would it be?
I don’t want to change anything necessarily. I would just say that the regulations for marketing cannabis in Canada were drafted before the legal sale of cannabis was allowed. So people are often critical of provincial federal regulators for the opaqueness of some of these regulations and difficulty in understanding how they would get interpreted or applied. That’s not a regulator’s fault. They were drafted before they had any actual legal market activity they could rely on in how to apply those regulations and those rules.
”These laws are still in their infancy and we're all still figuring it out together, regulators included.
Over time, Health Canada has shown a willingness to correspond and communicate openly with the industry when something that somebody may have done was definitely or potentially offside.
There’s been a lot of warning letters and you can typically follow up on them with a conversation with someone in Health Canada. You may or may not get an answer you’re going to like, but it’s better than getting a sanction, fine, suspension or revocation.
I would like to see continued open correspondence and communications from regulators in the industry to ensure that we all work on refining the application interpretation and enforcement of these laws rather than someone doing something that they thought was defensible and being on the receiving end of some massive penalty that they could never have seen coming.
In your observation, what marketing techniques or channels have been most effective for cannabis companies looking to connect with consumers?
I’m not really the person who creates the content or comes up with the ideas, although I love the conversations with those people, so maybe I’ll give an example of something that I didn’t work on that I thought was pretty great.
Given all of the marketing restrictions that exist and the evolution of those restrictions, as laws change or you see enforcement activity and you start to see some of that clarity that I was alluding to earlier, being able to tell a brand story and engage with a customer in a way that’s really unconventional is the goal and it’s not an easy goal to achieve.
”I thought that when Superette launched their packaging recycling program that it was very cool and innovative.
There’s lots of good social consciousness associated with the recycling program, but they were able to get their name out there by virtue of announcing the program in a way that wasn’t necessarily a promotion or marketing. Those terms are set out in the Cannabis Act and they could start to tell that story and start to connect with customers in a way that maybe differentiates themselves from other stores that didn’t have that program.
That program means a certain thing, it tells a story. A customer can start to understand what that brand stands for, what they do, and why you might want to support them. I thought that was really cool and very innovative the way they launched that program in a way that didn’t come near violating the provisions of the Cannabis Act.
Are there any other Trailblazers in the cannabis industry that you follow?
There’s plenty of people who speak in generalities and slogans, and there are those people who speak with a lot of precision and specificity. Anybody who speaks with precision and specificity, no matter what it is you’re talking about, I will always listen to that person.
I have a great deal of respect for any lawyer or consultant, whether it’s on Twitter or other media interviews or articles or presentations, who can talk in specific terms about specific elements of getting licensed or about the compliant cannabis field rather than in the generalities or buzzwords or slogans.
What is one tip or piece of advice you would give to lawyers looking to enter the cannabis industry?
Certainly, every lawyer in the country wants the opportunity to try to be viewed as a leader in the area they work in and I would say that in my experience, I have found that the cannabis legal community has been very collaborative and there seems to be enough work to go around. There have been enough conferences to speak at, enough articles to write, enough media interest in cannabis to get all lawyers the quotes they need.
”There seems to be enough work to go around a group of lawyers and as a result of that, I haven’t found some of some of the hypercompetition that exists in other industries or other practice areas.
So as a new lawyer coming in, if you’re coming in from an existing legal practice or industry, if you think that you need to be cutthroat or underhanded about it or disparage your competition, it’s really quite a friendly community. I’ve really enjoyed the people I’ve met, even if they’re “competitors”.
For any lawyer starting to look into a cannabis practice, I would say just be a nice person and get welcomed into the fold, as opposed to trying to get a little too hyper-competitive about it, otherwise, you’ll end up getting a pretty bad reputation and no one’s going to want to work with you.
A big thank you to Chad for participating as this week’s Trailblazer! Stay tuned for another interview with a cannabis marketing Trailblazer next Thursday in the ADCANN blog.
Interested in working with one of these talented cannabis marketers? Check out our Agency Directory for a list of all the agencies that specialize in working with cannabis companies.
