3 Advertising Pitfalls in the Cannabis Industry

Cannabis is bursting into the mainstream and sales are skyrocketing. In Oregon, we saw $240 million in gross cannabis sales in 2016. 2017 is looking at an even larger market to choose from. Competition is going to be fierce and advertising is how many businesses will begin to distinguish themselves from the rest.

Advertising has long been the tool for businesses to get their names out there and is a large part of any organization's marketing strategies. Advertisers face a difficult journey ahead as they navigate the perils of cannabis marketing. Federally speaking, all cannabis advertising is illegal and that's just the first hurdle to face. States with recreational and medical cannabis laws often adopt their own regulations on what can be advertised, how cannabis can be advertised and where it can advertised. Social media is no different. Facebook and Instagram have waged a war on cannabis themed pages, closing them on a regular basis. We, at GreenSea, for example, are already on our fourth Instagram page.

Let's take a look at three common pitfalls to advertising in the cannabis industry and how we can set ourselves apart from the pack:

Social Media Hazards

Social media is one of the most cost-effective ways small businesses have to advertise. Even if you don't pay for Facebook or Twitter ads, posting regularly to your accounts will increase brand awareness and can help drive sales. In 2012, Jim Keenan of ASG found that 78.6 percent of sales representatives using social media to sell product outperformed those who weren't using social media. This surprised not only Keenan himself, but just about every marketer that year - just check out this Forbes article on the study. Now, the number of people with at least one social media profile around the world has been estimated to be an incredible 1.96 billion. This increase has given many businesses across all sectors an effective and low cost marketing channel.

Unfortunately, this isn't true for the cannabis industry. In a previous article titled The Perils of Marketing Cannabis on Social Media: What Not To Do, we discussed the inquisition of Facebook and Instagram campaigning against the cannabis industry. To successfully advertise on social media platforms, all mention of cannabis use (and the product itself) has to be avoided. Warnings needs to be placed at the bottom of all posts and company biographies, your account should be private and no one under 21 should be allowed to view your page. Still, your account can be deleted without reason or provocation. Some alternatives have popped up in recent years, most popular among them being Massroots. Massroots is the first social media platform that is open to all cannabis users. Here is where you will be able to share consumption and product photos.

So, should I create social media pages if my company works with cannabis?

Of course. Customers want to experience your story and connect with your brand. If your page is shut down, this could encourage public support. Our only warning is that, until cannabis is federally legal, be prepared to incorporate guerrilla marketing strategies with your existing corporate marketing strategies to encourage brand recognition and support. The largest cannabis brands have boast a strong social media presence, but they also are involved on a ground level given the plant's illicit federal status. Your company, if you are hoping to be competitive, should share similar strategy.

State Regulations

States who have legalized cannabis (whether for recreational or medical use) have their own regulations regarding cannabis advertising. Each state has very different thoughts on how and when cannabis should be marketed. From limiting what publications ads can be in, to where billboards can be placed, each state has focused on preventing children from being exposed to cannabis marketing in every regard. Much like the tobacco industry, under current American law, cannabis advertising is illegal under federal law.

  • Washington - Retailers can only hang one sign to announce their presence; advertising must not show over-consumption or underage use; manufacturers can't advertise on public transportation or on public grounds (effectively eliminating billboard advertising); advertising must not be within 1000 feet of a school; no giveaways or branded merchandising sales are allowed; no claims to the potential therapeutic benefits of cannabis; finally, a state sanctioned warning message must be displayed on all advertising.
  • Colorado - Advertising on television, internet & radio is specifically banned unless the retailer can ensure that no more than 30% of the audience is underage; no claims to therapeutic benefits of cannabis; billboards are specifically banned; no outdoor advertising of cannabis retailers unless sign is on the same property as the establishment; finally no online pop-up advertising.
  • Oregon - Advertising on television, internet & radio is specifically banned unless the retailer can ensure that no more than 30% of the audience is underage; no claims to therapeutic benefits of cannabis; no promotion of cross-state transportation of cannabis; cannot show consumption based on intoxicating effects or promoting of over-consumption; finally, a state sanctioned warning message must be displayed on all advertising.

As you can see from the few examples above, states are implementing stringent advertising regulations for the industry. States that have enacted legal cannabis programs are taking every effort to prevent children from seeing cannabis ads and to prevent any sensationalization of cannabis use. They also do not allow any claims of using cannabis for medicinal purposes, regardless of research. While this is certainly frustrating for advertisers, your company should still continue to market and brand itself as best it can. Why not distribute free stickers and forms of SWAG to the budtenders at dispensaries you want to associate your brand with? Set-up a booth at cannabis events or dispensaries. There are always ways to remain compliant and effective if you can get creative.

Federal Schedule I Status

The most dangerous thing about cannabis is its federally illegal status as a Schedule I substance under the Controlled Substances Act (CSA). Under Section 403(c)(1) of the CSA, the federal government is to prevent any advertisement of a controlled substance (including cannabis) in any newspaper, magazine, handbill or other publication, even if that activity is legal under state law.

That means every advertisement featuring cannabis is illegal under federal law. It also means that everyone who runs a cannabis ad, designs a cannabis ad, delivers something with cannabis ads or participates with the cannabis industry in any way is technically committing a felony. Under former President Obama's administration, the Cole Memorandum effectively stated that the federal government would not pursue those in violation so long as the state of which the person or organization was operating within had allowed for the creation of a medical and/or recreational cannabis industry. Now, under the new Trump Administration with Jeff Sessions as Attorney General, it is unclear whether or not the Cole Memorandum will remain instated. This could provide further difficulties for those advertising in legal cannabis industries.

While this can be frightening on a personal level, from a business and branding perspective, it is very important to create a story your audience can connect to. One way to create a story is to reveal honest, personal details and become relatable in the mind of your consumer. What's more empowering than an honest story of a cannabis company pushing the boundary to create a long-lasting cannabis industry? Creatively playing off of your disadvantages can lead to a powerful, lasting message with your core audience.