Advertising is crucial in any industry, but when it comes to cannabis, the rules can be different. Like alcohol and tobacco companies, legal cannabis companies are often limited to where and how they can advertise their products and services.
"Cannabis is still illegal on a federal level in the United States, so it is up to each state to regulate restrictions around advertising," Matt Gray, CEO of HERB, told Business News Daily. "Additionally, advertising for a cannabis company depends on the medium. Cannabis advertising on the radio is illegal, and cannabis ads promoting sales or distribution over the internet as a whole is technically illegal as well."
This can make branding and marketing more difficult. Still, the industry has adapted to the varying and ever-changing rules by launching innovative marketing strategies.
"As with any industry, business owners have to make granular choices when it comes to their online marketing dollars," said Courtney Capellan, digital analyst at Jetty Extracts. "But even if cannabis business owners can afford the full-suite of marketing tactics [like] social media, SEO, SEM, PPC, ecommerce, IT/web developers, content strategy and lead generation – they can't necessarily utilize them to their full potential."
The lay of the land
Like all regulations facing the legal cannabis industry, advertising regulations vary state by state and tend to change as quickly as they're implemented. Matt Rizzetta, CEO of North 6th Agency, said companies are continuously adapting to the regulatory landscape and looking for potential changes on the horizon in their states.
"A lot of companies make bets in advertising and branding … on marketing channels that are not vulnerable to any sort of regulatory changes," Rizzetta said. "It's constantly evolving. What's legal today could be illegal tomorrow; it's incredibly frenetic and unpredictable."
That has lead cannabis companies large and small to focus more heavily on channels like social media; earned media, such as awards and appearances in publications; speaking opportunities and content marketing, Rizzetta said. While the future is unclear, he said, these areas tend to be more insulated from regulatory shifts, meaning companies' investments are generally considered safer.
"We're still very much in an evolutionary stage when it comes to cannabis branding and marketing," Rizzetta said. "It's an interesting time, seeing a lot of brands very well known in industry circles now trying to elevate to become mainstream brands."
Content marketing drives organic search traffic to a company's website by boosting their position in search algorithms. Not only does content marketing draw in potential new customers, but it presents a company as an authoritative source of quality information.
"Your website content needs to speak to two groups in order to be effective: consumers and Google," said Stella Morrison, founder of SCS Creative. "The best content marketing maximizes your ability to reach both of these audiences with one set of material. It signals to search engines that your business is active and a key player in your industry or community, while presenting compelling information to current and future clients who are looking for your services."
For cannabis, content marketing tends to be a viable option because it lives on the company website, rather than appearing in a third-party channel. This means there is no real advertisement being purchased; instead, content marketing generally appears as a blog, which is far less restricted.
"One of the great advantages of SEO and content marketing is that you can run a successful campaign online without needing to purchase ads," Morrison said. "Content focuses on organic search growth, where there are no third parties that may have qualms, legal or otherwise, about accepting funds from a business that's only legal in certain locales."
Earned media is voluntary; it is unpaid exposure acquired through channels like interviews with publications, awards and speaking opportunities. These types of media placements help build the prestige of the brand and expose the public to them without making a direct appeal to purchase goods or services.
"Employing [earned media] strategies – getting into news stories as a thought leader or an expert, for example – can be done regardless of regulatory environment," Rizzetta said.
Even though earned media might reach a narrower audience, those typically engaging in those stories are more likely to engage with or even have sway in the industry. For this reason, building brand prestige through earned media can have a big payoff down the line.
Niche marketing allows companies to reach out directly to an audience that's already engaged with the industry. This has proven to be a common way for companies to avoid restrictions around broad-based platforms as well as generate leads from a base that is already highly interested.
Another difficulty facing cannabis companies is age-restricted advertising. For example, in Colorado, advertisements are prohibited through channels that are likely to have 30 percent or greater viewership by those under the age of 21. This makes it difficult to find truly legal places to purchase ads. Many companies take to expos and trade publications where the audience is tailor made for the industry.
"Due to these potential pitfalls, many cannabis companies are most comfortable advertising to cannabis-specific trade organizations and print publications," said Steve Janjic, CEO of Amercanex. "They also sponsor cannabis trade shows and conferences."
"One key strategy is to work with indoor events where adults are in attendance," added Todd Mitchem, senior government and community affairs liaison for cannabis at TMC Partners. "I personally like to sponsor galas and events where lawmakers are present. This gives me a chance to be seen as responsible, smart and mainstream."
Cannabis has been the fastest growing industry in the nation, and to continue that breakneck pace, many believe mainstream advertising will be essential.
"The simple fact that adult recreational consumption is legal, along with word-of-mouth, have been more than enough to drive double and even triple digit month over month growth in these early days of our industry," Rob Fess, director of marketing at Tradiv, said. "However, as the industry begins to evolve and the products gain more mainstream acceptance, advertising will be key to the success of the types of businesses that will thrive."
Although advertising limitations have presented a speedbump to the industry's growth, Serge Chistov, financial partner of the Honest Marijuana Company doesn't believe those limitations have turned into a stop sign for industry players.
"There is still so much room for growth even within the restrictive advertising laws," Chistov said. "Cannapreneurs should keep in mind that you don't have to be everywhere — your advertising doesn't have to be on a billboard on the local interstate highway for your business to be successful."