Marketing Challenges in the Marijuana Industry

For businesses in the marijuana industry, the list of marketing challenges that have to be overcome in order to raise awareness, recognition, sales, and loyalty for brands and products is very long. As part of a highly regulated industry, marijuana marketing requires a deep understanding of local and state laws to ensure the companies behind the promoted brands stay out of trouble.

This might seem like an insurmountable task given the long lists of highly restrictive laws states have for marketing marijuana and marijuana-related products, but marijuana is not the only highly regulated industry. The pharmaceutical, alcohol, cigarettes and nicotine products, finance, insurance, and gambling industries are also highly regulated. However, the marijuana industry is a bit different than other industries since it’s still illegal at the federal level. For this reason, businesses across the marijuana supply chain face more marketing challenges from the black market.

Picture this – you own a business in a highly-regulated industry where you’re forced to compete against black market sellers. As a law-abiding business owner, you follow the rules related to advertising and marketing which severely limit your ability to promote your products and services both online and offline. At the same time, your black market competitors aren’t following the rules. Instead, they’re buying up ad space and spreading the word about their illegal operations. Sure, they might get a letter from the state’s cannabis regulatory body telling them to stop it, but remember, they’re already operating illegally. Such a letter is unlikely to have much of an effect. The result is your licensed and legitimate business loses sales and struggles to stay open while the black market continues to flourish.

This scenario is exactly what California marijuana dispensaries and retailers complained to California lawmakers earlier this year. At various Cannabis Advisory Committee panels across the state, marijuana license holders shared stories of being unable to compete against unlicensed retailers who aren’t limited by the same restrictive advertising rules.

According to the state’s Bureau of Cannabis Control, more than 500 warning letters and emails were sent to people who the Bureau believed had been operating without licenses, and the enforcement team was focusing strongly on advertising violations across the state, which are jeopardizing the regulated cannabis market.

What are these restrictive marketing-related laws that licensed marijuana businesses have to comply with that makes promotion difficult and competing against the black market even harder? Here are some common limitations that states have in place to restrict marijuana marketing:

• No advertising marijuana products within 1,000 feet (or another specific distance) of a school or area where children often spend time, which often includes television, radio, or print ads that could be seen, heard, or distributed in those areas
• No advertising on public or private vehicles
• No marketing to children, which also means no using toys, inflatables, cartoon characters, or anything else that appeals to children in marketing efforts
• No mascots (human, animal, or mechanical such as inflatable tubes, people in costumes, or sign spinners)
• No billboard advertising (some states make an exception for marijuana retailers)
• All ads must include text that says marijuana products can only be purchased by people who are 21 years of age or older
• No indoor advertisements unless minors are not permitted in the facility
• No advertising in arenas, stadiums, state fairs, shopping malls, arcades, and farmers markets

Some states get extremely specific in their marijuana marketing rules. For example, in California, you can’t use an indoor, outdoor, or digital ad or marketing piece unless the licensee responsible for it is legibly identified on it. That means at a minimum, the license number should be included on the ad or marketing piece. In addition, ads placed on television (broadcast or cable), print, digital, or radio can’t be shown if at least 71.6% of the audience is not expected to be age 21 or older. You can follow the link to see more California marijuana advertising rules.

Bottom-line, these laws do the job they’re intended for – significantly limiting the marketing of marijuana businesses and products. Unfortunately, they can also significantly help the black market, which ultimately, hurts consumers, businesses, and the state’s economy.

What Should Marijuana Businesses Do?

Despite the many regulations, marijuana businesses can still promote their brands and products. They just have to get back to basics and get creative. Ultimately, the secret to success when marketing in a highly regulated industry is twofold:

• Promote a lifestyle rather than product or service benefits.
• Educate, don’t sell.

For marijuana businesses, print advertising in industry publications and marijuana-friendly publications presents an excellent opportunity to raise brand awareness among highly targeted audiences. In addition, highly strategic direct mail (i.e., direct mail that the USPS will actually deliver) offers a big opportunity for marijuana businesses. Many of these traditional marketing tactics are overlooked by businesses today, but for highly regulated businesses, they’re the foundation of a successful marketing plan.

All hope isn’t lost for digital marketing either. Marijuana advertisers just have to be very familiar with their state and local marketing rules for marijuana marketing. They also need to think outside-the-box. For example, content marketing is essential. In states that allow marijuana businesses to publish blogs, blogging should be a top priority.

Next, writing articles for other websites by reaching out to sites where a business’s target audience already spends time is very important. This will help businesses build credibility and brand trust that can lead to word-of-mouth marketing and sales. Keep in mind, the content should not be promotional. It should be educational, so people will want to share it with their own connections (and so the business stays out of legal trouble).

Next, businesses should think about social media, which is usually very tricky in the marijuana industry. If a business is allowed to create Twitter, Facebook, Instagram, YouTube, and other social media profiles and pages, then they absolutely should do so. If they’re not allowed to publish promotional content, they should use social media as a way to share the business’s educational content as well as educational content from other influencers. Be extremely careful and follow the social media platform’s rules for marijuana businesses exactly.

For digital advertising, businesses look for marijuana-friendly websites or use marijuana friendly ad networks such as Mantis or Adistry. Publishing sponsored posts (i.e., native advertising) on blogs where target audiences spend time is another great way to put a marijuana brand in front of wider audiences (as long as those websites don’t market to children and allow the business to target its local area).

It’s also important to invest in search engine optimization (SEO) to build organic traffic to the business’s website. Furthermore, marijuana businesses should make sure their websites are well-designed, secure, and mobile-friendly. Most people view web content on a mobile device in 2017, so it’s essential that a marijuana business’s website presents a professional, trustworthy impression on desktop and mobile devices.

Tied to a great website is high-quality email marketing. Start by creating a useful piece of content that your target audience is likely to want and offer it to them for free on your website in exchange for their email addresses. Let them know that by downloading your free piece of content, they’ll be opting into your email subscriber list. Next, use your subscriber list to send educational content (at least 80% of your messages) and promotional content (no more than 20% of your messages).

For email marketing to be successful, the trick is to make sure you’re using an email marketing tool that will allow you to send messages related to the marijuana industry. Most email marketing providers don’t allow this (their terms of service state that sending content related to illegal substances is not allowed). With that in mind, be sure to use a tool like the email marketing tool offered by Cannabiz Media, so there is no chance that the provider will ban your account without notice because you’ve violated their terms of service.

Local community service, advocacy, educational seminars, and sponsorships are also extremely effective for marijuana business marketing. In addition, businesses should position their leaders as experts in the marijuana field. By using public relations and media outreach to book interviews and speaking engagements, they can increase brand awareness and word-of-mouth marketing significantly.

A key part of marijuana business marketing is building trust with consumers and changing the perception of the marijuana industry to make the products more mainstream. Public speaking, seminars, sponsorships, and community service can go a long way to make that happen.

The Future of Marijuana Marketing

Marijuana marketing challenges aren’t going to disappear any time in the near future. Rules will still vary from state-to-state, so marijuana businesses must educate themselves about the regulations that apply to them before investing time and money into any marketing campaigns. Unfortunately, operating with strict marketing regulations is a cost of doing business in a highly-regulated industry like marijuana.

If you decide to work with a marketing agency to help you, make sure the person you work with fully understands the marijuana industry, your customers, and the many restrictions your business faces in its marketing, sales, and operations.

Have you invested in marketing your brand in the marijuana industry? What challenges did you face? Share your thoughts in the comments below.

Originally published 6/9/17. Updated 12/14/18.