It’s no secret the cannabis industry has been growing. Eleven states have now legalized adult-use cannabis, and more are ready to follow. Many states have medical marijuana programs, and advocates are using that as a platform to keep pushing legalization forward.
As cannabis companies in legal states like Oregon have discovered, legalization has sometimes created more headaches than it’s solved. Although cannabis is legal at the state level, it remains illegal federally. Many businesses, including banks and insurance companies, don’t want to touch cannabis start-ups with a 10-foot pole.
State restrictions on marketing have created even more troubles for young cannabis companies. How can a company hope to grow a brand when advertisers keep shutting them down?
Those were some of the questions the Portland Advertising Federation (PAF) posed to their expert panel. Mary Jane Marketer’s own Jamie Hardin joined Rick Robinson of Billups, Jane Crisan of R2C Group, Jade Daniels of Ladies of Paradise, and Brett Schwager of Mendi to explore the challenges and opportunities facing the booming cannabis industry in Oregon and beyond.
Almost all of the panelists have been working with cannabis in the Pacific Northwest for some time. Wes Abney of Oregon Leaf, who acted as the moderator, has been documenting the history and growth of cannabis in the area since at least 2010.
While the panel noted the cannabis industry is growing up, there’s still lingering stigma. Some cannabis companies try to capitalize on this by appealing to hardcore users. Jane Crisan of R2C Group and Jade Daniels of Ladies of Paradise both comment on how cannabis companies need to start thinking outside the box.
Crisan suggests companies need to broaden their horizons, thinking about consumers who don’t already use their products. The hardcore set is already buying, so companies won’t find much space to grow their market there.
Daniels notes that focus on the hardcore set alienates other groups of consumers. She says her company advertises to their core demographic using their own, real customers. Pictures of scantily clad women might fly with some demographics, but female consumers aren’t going to be swayed. Instead, they want to hear from people like themselves.
Rick Robinson of Billups agrees, noting that if the industry wants to be seen as grown up, it needs to act that way. Appealing to the “stoner set” suggests immaturity. The view of cannabis as an immature and unprofessional industry will continue to hamper its growth, so companies might do better to find different angles, such as wellness.
On the Wrong Side of Tech Companies’ Banhammer
The stigma around cannabis probably contributes to the strict rules around advertising. Cannabis isn’t seen as a legitimate medicine, and many people still feel it’s used solely by people who want to “get high.”
The fact it’s illegal at the federal level, coupled with advertising restrictions in every legal state, has led to advertising policing by tech giants like Google and Amazon.
Daniels notes that her company has tried paid media, but they were continuously shut down. More specifically, she recalls an incident where she made a social media post about an event her business attended. The post was flagged and removed within 20 minutes.
Amazon’s algorithm is keyed to certain search phrases and terms. Mendi’s Brett Schwager notes this allows the eCommerce giant to shut down advertising for Mendi’s CBD products.
The concern makes some sense. While geographic filters are available on every platform, most networks can’t guarantee that cannabis advertising isn’t reaching people in states where the product is illegal or targeting minors.
There is light at the end of the tunnel, though, as Jamie Hardin of Mary Jane Marketer notes. “Google is beta-testing CBD ads,” she says, adding that, “Yelp won’t shut you down…probably. But that’s more for dispensaries.” There are still some avenues for cannabis companies hoping to use digital media.
What Can Cannabis Companies Do?
When it comes to digital media, Hardin notes that, “Once you’re on their radar, you’re on their radar. On the blacklist.” With states implementing billboard bans and tech companies creating blacklists, the cannabis industry is wondering how to keep growing.
In this climate, most of the panel agrees that building a brand is the smartest thing a company can do. As Crisan says, “It’s really about your brand. Brands will make [the industry] more reputable.”
That comes back to Robinson’s comments about the maturity of the industry. Companies who develop brands will be seen as more trustworthy. More discipline in almost every arena, including finances, will help regulators see the cannabis industry is serious and not just about “getting high.”
But how can the industry get these messages across if advertising is off the list?
Brands, Robinson suggests, need to realize they’re “not in the pot business … [it] has to be about something else.”
Lifting the Red Tape
Robinson’s emphasis on the cannabis industry needing “something else” is reflected in many of the rules and regulations about advertising.
Robinson says that showing flower or product needs to be avoided in most cases. Daniels notes that advertisers can show people holding joints. They just can’t be smoking product, similar to how alcohol advertising can show people with drinks, but not actually drinking them.
If cannabis advertising isn’t about “pot” or “getting high,” though, what is it about? Here, the panel echoes earlier suggestions: wellness and clinical. Recreation and fun is still on the list, but brands must walk a line between “fun” and “immature.”
Other restrictions come from departments of health and safety. While plenty of research suggests CBD and cannabis more generally have medicinal uses, making claims about what cannabis can or can’t do is likely a ticket to the blacklist. It may even net some companies a fine.
Hardin says one of the best things advertisers can do is focus on stirring emotion. “That’s what stays in our memories,” she explains. “I can’t pick a strain out of a line up—so you need to make sure your message connects emotionally.”
An emotional message doesn’t necessarily need to be delivered with images of people smoking or pictures of product. Not only does that lift the red tape, it frees advertisers to get more creative.
What Kind of Advertising Is There?
Another big question for cannabis companies is how they can advertise in such a strictly regulated and heavily policed market. Abney mentions a billboard ban in Washington state. So, what options are available to cannabis companies?
The panel suggests different ways cannabis companies can advertise and build their brands:
- Developing partnerships with non-cannabis companies
- Influencer marketing
- Organic digital marketing, such as social media or SEO
- Out of home marketing
These advertising avenues have another advantage, namely that they’re often less expensive than buying billboards or radio spots anyway.
Daniels emphasizes authenticity, particularly when working with a celebrity or influencer. Hardin echoes that and added that when considering partnerships, cannabis brands “need to keep in mind the following: fit, reach, cost and willingness to partner for a successful influencer relationship.”
It’s important to keep in mind that regulations change between states. Crisan advises that brands “go in carefully” and “know the rules by state.”
Who’s Doing It Right?
The cannabis industry is, in many ways, still in its infancy. Advertising has yet to really “grow up,” especially as brands try to work around ever-shifting regulations. More than that, companies are trying to discover what works and what doesn’t.
Robinson points to the example of MedMen. The brand adopted a pithy voice that made the category accessible to a wide range of people, including older customers and women. Daniels champions the work of Let’s Blum on social media.
Hardin gives Serra as an example of a company doing partnerships the right way. Serra joined forces with Jacobsen Sea Salt and Stumptown Coffee to create edibles. By working with two non-cannabis companies, Serra expanded their audience reach and demonstrated their legitimacy.
She also mentions Heally, a web-based company that connects patients and doctors across many states. With a focus on health and wellness, Heally delivers more than just cannabis products to its audience. The company is also a fantastic resource for anyone looking to improve their wellness.
Schwager suggests that companies should be on the lookout for gaps in the market. Mendi came into the market because they “saw a void” they felt they were in a unique position to fill.
That harks back to Crisan’s advice to focus on the brand. Brand identities are built on differentiators, or unique selling prospects. What makes you stand out? Hardin advises discovering audience pain points and speaking directly to those. What does the company do to address those particular customer troubles?
Of course, if companies want to pay for advertising, they need the cash to fund those campaigns. Despite the growth in the cannabis industry, financial woes are common.
Other industries present part of the problem. Banks, for example, routinely deny cannabis companies accounts. Hardin recounts that Stripe refused to do business with her, simply because her agency website mentioned cannabis. As a marketing agency, Hardin doesn’t grow, sell, or produce cannabis. The mere association with the industry was too much for the popular payment processor though.
Daniels says she’s run into issues with payment processors like PayPal and Square, who have shuttered her accounts. Here, the lingering stigma of cannabis’s legal status looms largest—many financial institutions fear being involved in criminal activity.
There may be light at the end of the tunnel here as well. The federal government has passed legislation that protects banks that choose to back cannabis industry players.
The insurance industry has also been skittish when it comes to cannabis. Daniels recounts theft of $8,000 worth of product from a retail store. The insurance company refused to pay.
Where Is Cannabis Going?
With the industry booming, it seems like cannabis has nowhere to go but up. As the panel experts note, though, there are very real challenges that need to be addressed. Unfortunately, many of them have to be addressed by other industries and lawmakers. The cannabis industry, for example, can’t fix federal rules preventing banks from funding them.
There are many things that cannabis companies can do though. One of the best moves is to work at building a brand and find ways to advertise, even in a strictly regulated market. With ingenuity and a mature attitude, cannabis industry players can demonstrate they’re leaving behind their grow-op days and growing up.