The Pot Market Is Blazing New Trails

The marijuana space is growing considerably, as more and more states permit recreational use, but serious obstacles remain

By David Ward

Jon Krause/theispot.com

With an increasing number of states moving toward legalizing recreational use of pot and publishers growing more accepting of cannabis-themed advertising, marijuana brands are headed for the mainstream. After a rough patch that saw key pot stocks come crashing down to earth, cannabis marketing is on a major roll.

To date, 16 states plus the District of Columbia have legalized marijuana for both recreational and medical use, with New York being the latest to give pot the green light. And media platforms are getting more comfortable with cannabis-related advertising and content, such as the Food Network’s Chopped 420 and Discovery’s Growing Belushi, which follows Jim Belushi’s new role as a cannabis farmer.

Consumer appetite for new products is expanding, with brands like Cookies, the vape- and cannabis-products provider STIIIZY, and Willie’s Reserve from country crooner and cannabis enthusiast Willie Nelson, joining the fray in search of wallet share.

“The supply and variety are catching up to the point where customers have multiple choices,” says Mike Bibbey, director of marketing at Ethos Cannabis, which operates both recreational and medicinal retail outlets. “We are starting to see some better product marketing in that market but, for the most part, consumers are choosing based on perceived quality and past experience with a brand.”

The surge is happening despite the fact that, under federal law, cannabis is considered a Schedule I drug, the same category as heroin and countless opioids.

“Cannabis advertising is illegal under the Controlled Substances Act, and even though federal regulators are not pursuing such advertising in states with adult-use, a national campaign would be a brazen move that might prompt some action, particularly if the campaign were reaching states where cannabis remains illegal,” says Neil Austin, co-chair and partner in the advertising and marketing practice at law firm Foley Hoag LLP.

Given that reality, most of the best-known cannabis brands are primarily regional products. “There are a few national brands emerging, but these are more the exception than the rule,” says Bethany Gomez, managing director at the cannabis/CBD strategic research firm Brightfield Group. “You have to recreate your entire supply chain within each state, which makes it very difficult to scale.”

Tessa Adams, CMO at cannabis-concentrate brand Moxie, currently sells its product in four states, with licenses in nine. She says that despite state-by-state differences regarding advertising, she looks to keep ad creative consistent throughout the country.

“Because the messaging you can do surrounding cannabis is restricted, it makes more of a challenge to have those brand conversations with consumers,” she says. “It’s fairly easy to gain brand love, but that doesn’t necessarily drive purchase or loyalty the way it might in the CPG space.”

 

Influencer Marketing Is Crucial

For clues as to how cannabis might eventually emerge as an everyday product, marketers need not look further than the cannabinol (CBD) space. CBD provides the health/medical benefits of cannabis without the THC that provides the psychoactive effect.

But CBD products still face some roadblocks on the ad front. “We’re finding that major platforms such as Facebook and Instagram are slow to accept these types of products and currently the only workaround is to run campaigns via influencer marketing,” says Drew Pedersen, associate director at MNI Targeted Media, which now has a programmatic ad exchange for cannabis and CBD marketers called CannabX. “Going this route allows for individuals to promote the products, bypassing the stringent rules set forth for the brands directly.”

Angela Mustone, CEO and founder of HighOnLove, says she relies on organic social posts, which the major platforms allow, as well as sampling programs with influencers, to drive awareness for her line on CBD-infused stimulating gels, lotions, and other products for women.

Moxie also uses organic posts on Facebook, Instagram, and Google. “You have to be very strategic in figuring what these platforms will allow,” Adams says. “Even a single word can trigger something.”

She also points to the benefits of in-store signage and other retail-centric promotions because many consumers make their purchase decision at pot dispensaries, assisted by a “bud tender” showing various types of cannabis.

 

Reading the Tea Leaves

As attitudes toward marijuana consumption evolve, Shaun Gibbons, EVP and head of media operations at Digilant, says more digital publishers are loosening or ending those advertising restrictions.

“Cannabis advertisers can build manual site lists of endemic publishers, but they can also get access to pre-approved PMP (private marketplace) inventory through companies like Acuity Ads,” he says, citing the ad inventory on dedicated cannabis ad networks like Traffic Roots. “If the inventory quality is uncertain, layering on exclusion and inclusion lists and investing in PMP inventory is a great place to take back some control of where your ad creatives are running.”

MNI’s Pedersen stresses that, akin to alcoholic beverages, digital cannabis ads targeting people under 21 are uniformly banned across all states.

Nevertheless, the market is easing up. “A few months back, advertisers were not allowed to show pot leaves in their creative,” Pedersen says. “As of today, this is now possible — evidence that supports the evolving nuances of the digital space for cannabis/CBD.”

Jared Mirsky, CEO and founder of cannabis-focused branding agency Wick & Mortar, says that connected TV (CTV) is beginning to emerge as a more cannabis-friendly ad channel than linear TV, which remains under the Federal Communications Commission regulations. “It’s not just ads” he says. “Many of these CTV platforms are starved for cannabis-related content.”

Mirsky also recommends that brands partner with dispensaries on text-based programs that can both build brand awareness and drive in-store traffic.

“The sophistication of cannabis advertising is going to come quick, so the sooner brands begin testing and learning, in a compliant way, the better positioned they will be to edge out the rising competition.”
— Shaun Gibbons, EVP and head of media operations at Digilant

For all of the strides in cannabis marketing, Adams of Moxie says advertisers still lack a better understanding of the purchase funnel and detailed knowledge of how consumers gravitate toward cannabis for both health and lifestyle reasons.

“The analytics are not where they need to be, but you’re seeing more robust resources emerging all the time,” she says. “We’re still not getting that store-level data and seeing how consumers engage brands at retail.”

Major companies such as Altria, Constellation Brands, and Anheuser-Busch have invested billions into the Canadian cannabis market, which is being used to develop products, partners, and brands for initial launch in Canada. These companies are eager to tap into the big prize — the U.S. cannabis market — but are waiting until federal laws change to avoid putting their core businesses at risk, Gomez says.

Gibbons has a different take, saying there are opportunities for current cannabis marketers to leverage major CPG brand tactics, such as app-targeting, podcast ads, and performance marketing, to target the different use cases and buyer personas emerging in the pot market.

“The sophistication of cannabis advertising is going to come quick,” he says. “So the sooner brands begin testing and learning, in a compliant way, the better positioned they will be in to edge out the rising competition.”

 


 

INTRO TO PSYCH

States Move to Decriminalize Psychedelics

What a trip for drug advertising. Late last year Oregon became the first state to legalize the active ingredient in so-called magic mushrooms.

Oregon joins a growing list of states that are moving to decriminalize psychedelics such as psilocybin mushrooms, LSD, and MDMA, for adults 21 and older. For instance, legislation is currently wending its way through the California state assembly that would decriminalize possessing or sharing a wide range of psychedelics. In 2019, Denver become the first U.S. city to decriminalize psychedelic mushrooms.

The various state initiatives come amid the reemergence of psychedelic-enhanced therapy, as well as the groundswell for psychedelic research throughout academia.

Despite the advances, Jared Mirsky of the Seattle-based cannabis branding agency Wick & Mortar, says psychedelics will be a very niche consumer market. But there’s some interest in psychedelic-themed content, if not exactly advertising.

Mirsky cites plans by the cannabis-themed SocialClubTV to spin off a psychedelic themed show, AlteredTV, that focuses on psilocybin, LSD, and other mind-altering drugs.

“There’s already a legal product out there, Psychedelic Water, that has kava and other psychedelic ingredients,” he adds. “Those could end up being steppingstones, similar to the path that CBD paved for THC cannabis products.”

Neil Austin, co-chair and partner in the advertising and marketing practice at law firm Foley Hoag LLP, says any state allowing retail psychedelic sales would need to create new regulations. He says he would be surprised if states went beyond decriminalizing possession, adding, “I am skeptical that we will ever see a time when it would be safe to advertise psychedelics.”
— D.W.

 


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