Currently, advertisers of cannabis and related products face an uncertain business climate. While the burgeoning market shows signs of continued robust growth, businesses also face something of a crazy-quilt of federal and state regulations on marketing and advertising their products. It’s important to familiarize yourself with that legal landscape before you invest in a traditional or digital advertising campaign.
The State of the Cannabis Industry Today
Marijuana and cannabis products such as edibles, CBD oils and other products are now legal in 33 states for one or both of two possible purposes: recreational or medical. Cannabis usersreached 123 million in 2017, an increase of 85% since 2009; industry revenues reached $10 billion in 2018 and are projected to exceed $20 billion by 2021. Additional states are expected to enact more liberal cannabis laws this year or next, including Connecticut, Illinois, New York, New Jersey and Rhode Island.
From 2017 to 2018, cannabis advertising increased by 24% to $4.2 million. Yet the cannabis industry faces strict and extensive regulation. In addition, because it still carries negative connotations for many in the U.S., traditional publishers and media may be leery of accepting cannabis ads, for fear of scaring off their other, more traditional advertisers.
The industry is still in its nascent stages, so it’s a good time to begin capitalizing on growing interest in cannabis products among consumers in order to stake a claim in this booming marketplace. However, this is crucial inflection point for the industry. New and existing brands are beginning to face competition from well-established consumer product brands who are beginning to enter the cannabis field. This increased competition combined with the restrictions on advertising together creates substantial amounts of resistance and tension for marketers.
The federal U.S. government still categorizes marijuana as an illicit substance that may not be sold or bought for consumer use, despite the widespread state reversals. As a result, no print ads or marketing material may be sent through the U.S. mail.
Moreover, the Controlled Substances Act, codified at Title 21, Section 843(c) of the U.S. Code of Laws, prohibits the placement “in any newspaper, magazine, handbill, or other publications, any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule I controlled substance.”
So far, no business entity or individual has been federally prosecuted for publishing a cannabis-related ad in a state that’s decriminalized its use and sale.
State and Local Regulations
The state regulatory framework is a complex array of varied restrictions and different approaches. Most states that have legalized cannabis for either recreational or medical purposes will not allow ads to depict the actual use of the product by an individual. Most states also prohibit advertisers from claiming any specific therapeutic effects or health advantages, at least insofar as the claims are not solidly supported by medical evidence.
Some states, such as California, only allow advertisements on sites, channels or platforms where a specific percentage of the audience is at least 21 years of age. In California, for example, that percentage is 72%, while in Colorado it is 30%.
Nevada and Pennsylvania have pre-advertising approval procedures in place. New York requires the submission of the proposed ad thirty days prior to publication, while not specifically providing for prior approval.
Some states restrict the content of ads. For example, Minnesota allows advertising and the placement of business names and logos on medical cannabis sites. However, the name and logo must not contain any depiction or references to cannabis or paraphernalia, nor may the ads include a visual depiction of any traditional medical symbology, such as the caduceus.
Keep in mind that new legislation may well be introduced for consideration at the state level. Consequently, it’s important to update the research into your applicable state laws and pending legislation on a regular basis to ensure your business is in full compliance.
Digital advertising and marketing is still probably the best route for cannabis advertisers. Placing ads on major networks or on individual blogs, websites and video channels, or trying to drive traffic to your own site through search engine optimization, email marketing or other channels can all be effective for cannabis businesses.
Facebook does not currently permit advertising of marijuana-related businesses, whether digital, mail-order or brick and mortar. The site is reportedly exploring loosening that restriction to permit licensed medical and recreational marijuana retailers to run ad campaigns on Facebook’s powerful advertising network.
Previously the site reversed course to allow pages that include the words “cannabis” or “marijuana” to show up in its search results, at least for pages that had gone through the site’s verification process. So even if ads themselves are not yet permitted on the site, your business can still make good use of the platform by creating a business page and, once it’s verified, populating it with informative and entertaining content, images, news updates and other valuable information your audience will appreciate.
Other social media networks such as Twitter, Instagram and Pinterest are also potentially viable platforms for a cannabis-related business, depending on the specific demographics of your target audience. For example, Pinterest users tend to identify as female, so if your products naturally appeal to women, it pays to create and pin beautiful images to the site, linking back to your website for lead capture and nurturing.
Cannabis businesses may also be particularly well-aligned with the native advertising strategy. It involves creating content that presents your advertising message in educational, entertaining form, then publishing that native ad on a site whose audience overlaps with your targeted prospects. This approach helps you control your own narrative as well as avoid the “banner blindness” that makes users ignore website ads.
The bottom line for most cannabis-related businesses and advertisers is to first understand the regulatory scheme that your state has adopted and then, within the context of those regulations, get creative. Look for opportunities to get your marketing message to your targeted audience in fresh, memorable ways that satisfy the regulatory framework in your state.