Thom Brodeur, CEO at N2 Packaging Systems- Interview Series
“I'm glad to see it and grateful that we're recognizing the absolute evolution of the cannabis industry as one that is becoming increasingly more mainstream and will continue to become part of the daily lexicon of people here and around the world. The more we do to ensure the industry ‘grows up' properly, the better it will contribute as it matures into adulthood.”
– Thom Brodeur
How a product is packaged will affect how customers perceive both the brand and the quality of the product. When it comes to cannabis, packaging has even greater ramifications as the industry has strict laws to govern how producers go about packing cannabis products. Each package should have child safety features, be discrete and should meet state requirements for labeling. In addition, cannabis products can easily lose their freshness and potency if they are not packaged correctly. While stale cannabis cannot be sold, dry cannabis has less weight and will therefore sell at a lower price (less grams).
As Thomas from N2 Packaging Systems puts it, “packaging is simpler for other industries and a bit more complex for the cannabis industry.” Granted, Thomas has extensive experience in the cannabis and CBD industry, having played a key role in a CBD venture as well as being the CEO of N2 Packaging Systems. We spoke to him to get a deeper understanding of challenges and opportunities that exist in “packaging for the emerging cannabis industry.”
As an intro, how did your career path lead you to cannabis packaging?
As cliché as it may sound, quite accidentally. I didn't wake up one day and say “I think now with everything I've done in my career, I should take a look at the cannabis packaging space and see what I can do next.” But, what is true is that the collective experiences I've had over the years in roles as a marketer, business developer, operational leader most definitely prepared me for what I do at N2. Cannabis packaging itself wasn't on the radar but the connecting of dots happened because several shareholders of N2 are common shareholders of a cannabis-adjacent CBD company that I run. They identified a few areas of opportunity that N2 was approaching in its evolution / growth and felt that my skill-set and experience might be helpful. And, here I am.
Cannabis packaging is a nightmare for most cannabis business. How does it compare to packaging in other industries?
I wish I could speak with more authority on this, but all I can share is my perspective, and that is this. Packaging is, for the most part, considered a commodity by most companies who require it, and with that comes an expected but often frustrating issue around creating ‘value' for customers. Despite the unique rules, regulations and requirements of cannabis packaging the mindset of the customer is often still… “I need this to be as cheap as possible.” So, in a nutshell, I think packaging is simpler for other industries and a bit more complex for the cannabis industry, but there doesn't seem to be an understanding with many cannabis industry operators and MSOs that in order to meet the unique demands and nuances of packaging for their products, pricing and value consideration should meet these demands and nuances.
How important is technology when it comes to cannabis packaging?
Packaging notwithstanding and having come up spending most of my career in tech, I've always believed that technology is critical. It can and should disrupt the ‘old way' of doing things to pave better paths forward, or, at a minimum, it should improve the efficiency and efficacy of anything it touches. N2's technology advances in cannabis packaging have created an opportunity for MSOs, grows and cannabis brand houses to differentiate their premium and mid-market products, create more consumer brand loyalty, extend the shelf life of their products, dramatically reduce net mass / weight loss and shrinkage [not shrink] of their products, and do all of that sustainably and in an environment-friendly way. All of this, when done right, with N2's proprietary nitrogen-infused packaging solutions, lead directly to profit enhancement for our customers and that's why we're growing as fast as we are.
Eco friendly packaging: costs versus benefits. Does it pay off in the long run to invest in Eco-friendly packaging?
This sort of goes to my comment above. On the surface, it ‘appears' that Eco-friendly packaging costs more because the sticker price is higher than commodity packaging. But, what we're seeing more and more is that sophisticated cannabis operators are doing more of the math and are finding that the cost of our Eco-centric packaging factors in the direct and indirect benefits of improved brand loyalty with consumers through an overall better unboxing / opening experience; product loss and waste mitigation; elimination of a need for product ‘overfill' to compensate for net mass loss; elimination of compliance costs [i.e.: fines, fees, etc.] for non-compliant packaging, and so forth.
We've had a number of our largest MSOs come back to us with comments like… “We’ve done the math and when we factor these other costs that we weren't tracking to this level of detail, it costs us nearly nothing to provide our products in a premium packaging solution.” That's music to our ears and exactly why we do what we do. Eco-friendly isn't the enemy. Old thinking and a mindset of “well it just costs more” has to shift, because when you net it out, commodity packaging may be cheaper on the surface, but what are you losing by making a short-sighted decision?
The industry is beset by supply chain issues. How are cannabis companies responding to this challenge?
Look, EVERY industry is beset with supply chain issues right now. This isn't unique to the cannabis industry. So, we're all working hard to ensure supply. What N2 has done is re-shored over half of our manufacturing and production to sites in North America so our customers don't get stuck in the “slow boat from China” or “clogged shipping lanes” situations we've seen develop over the past 24 months. One of the reasons we're seeing higher inbound requests coming to us over just the past several months is that we have a domestic supply guarantee that seems to be resonating with grows, MSOs and cannabis brand houses that want to work with us because they like the security of our supply promise.
Is it important to set cannabis packaging standards as the industry matures? It is. And N2 is actively participating with ASTM and other industry organizations that determine these standards. The more of us in the packaging industry that participate in the standards-making process, the better. Otherwise, we run the risk of having decisions made ‘for' us vs. ‘by' us.
How can cannabis businesses save costs on packaging?
We think the smartest way to do this is to have a blended approach to packaging assortment. Buy your commodity packaging product for your ‘value' brands, and invest in premium packaging for your upmarket brands. On a blended basis you will be saving money and creating better overall experiences for your customers thereby increasing their loyalty and repeat purchase. The profitability of repeat customers is material to a business and naturally will lend itself to a cost savings longer term.
The cannabis industry is largely unregulated. How does this affect cannabis packaging?
There are some pretty rigorous requirements on cannabis packaging already related to child safety, senior accessibility and net weight mass retention, and so we at N2 feel like packaging has the opportunity to lead the discourse on regulation since we represent the ‘first impression' a brand makes on the end consumer.
You seem to be passionate about Leadership. Why is the case and are there obvious leadership gaps in the legal cannabis industry?
Thank you for recognizing that. Yes, leadership is something I'm very passionate about. There are managers and there are leaders and I think we all understand the fundamental differences and the value of having both in any industry, company, organization or initiative. I don't have a position on the lack or gaps in the legal cannabis industry leadership sphere necessarily. What I've observed, however, is that the professionalization of the legal cannabis industry is happening at an aggressive clip compared to other industries that I've observed or have served in, and I'm glad to see it. Increasingly more folks are leaving their ‘corporate' roles in major agriculture, CPG and services businesses to lend their expertise, experience and skill to helping shape a more robust and professional legal cannabis industry. I'm glad to see it and grateful that we're recognizing the absolute evolution of the cannabis industry as one that is becoming more and more mainstream and will continue to become part of the daily lexicon of people here and around the world. The more we do to ensure the industry ‘grows up' properly, the better it will contribute as it matures into adulthood.
Thank you for the great interview and for all of the work that you have done to help move this industry forward, readers who wish to follow what Thom is doing can check N2 Packaging Systems.