Willie Nelson's Pot Brand Raises $12 Million to Fund Expansion

(Bloomberg) -- Celebrities who flaunted their pot smoking for decades when it was taboo are now cashing in on the legal cannabis boom.

GCH Inc., a Colorado firm that markets country music legend Willie Nelson’s brand of weed, said on Wednesday that it has raised $12 million to expand beyond its current market of Colorado, Washington, Nevada and Oregon. That brings its total funding to $29.5 million. Earlier this month, a private equity firm backed by billionaire Peter Thiel said it has amassed $200 million for its cannabis portfolio, which includes the official brand of the late reggae star Bob Marley.

From comedians Cheech & Chong to the rapper Snoop Dogg, pot-smoking artists are finding that celebrity branding can work just as well as in the cannabis market as it does for soft drinks, sneakers and insurance companies -- and maybe even better. For now at least, having a big name behind a product can break through the clutter of cannabis strains like Gorilla Glue and Mob Boss, according to Allen Adamson, co-founder of Metaforce, a marketing consulting company.

“It’s a quick way to get a story and some name recognition and a bit of trust,” he said. “It’s the jump-start way to brand and market this type of product.”

Beyond Stoners

It makes sense that celebrity branding would be popular in the nascent pot industry as businesses work to promote a product that was once sold only by illicit drug dealers. For companies to prosper, they’ll have to extend pot’s appeal beyond the traditional stoner set, and having a famous name behind a product can help.

That’s why Tuatara Capital, a cannabis-focused firm based in New York, decided to invest in GCH, the company behind Willie’s Reserve, according to Al Foreman, a partner at Tuatara.

As the industry works to attract new consumers, Tuatara is focused on brands such as GCH “that can convey quality and that can actually provide consumers with a trusted path to a cannabis experience,” he said.

Nelson, a pioneer of outlaw country music who has been arrested several times for marijuana possession, brings a level of authenticity to the market, Foreman said.

“He has been a defender of cannabis and people’s individual rights for pretty much as long as he’s been making music,” he said.

Nelson isn’t finished making name-brand weed. GCH’s latest fundraising round will go toward creating new types of products, including a line of Nelson’s pot that’s grown outdoors in an environmentally friendly manner.

Initial Skepticism

The 84-year-old singer plays a bigger role at GCH than just celebrity endorser: He is a co-founder and owner of the business. The company was formed after an initial meeting around a breakfast table with Willie and his wife, said Chief Executive Officer Andrew Davison.

Davison said he was initially skeptical of creating a company based on a celebrity brand. After all, it doesn’t work that well for many product categories.

“When I go buy a car on the lot, I don’t buy a Johnny Cash Ford F-150,” Davison said.

But Nelson’s background as an activist and marijuana advocate is unique, he said.

“It became very apparent quickly that consumers need ways to understand how to participate in the category,” Davison said. “They need brands that they can trust and they can build a relationship with so they can have consistent product, consistent dosage, and they can explore and learn this category with a guide. Willie Nelson is the perfect guide.”

Even if it proves successful for some, the celebrity branding strategy won’t last forever, Metaforce’s Adamson said. As with any other consumer product, once a marketing scheme floods the market, it loses the pizzazz that made it work in the first place.

“It works for the first one or two, just like everything else,” he said. “The minute everyone does the same thing, it becomes generic.”

To contact the reporter on this story: Jennifer Kaplan in Los Angeles at jkaplan84@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Mark Schoifet

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