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 have complained to California lawmakers about in recent months according to Cheryl Miller of Law.com. At various Cannabis Advisory Committee panels across the state, marijuana license holders have 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 have been sent to people who the Bureau believes have been operating without licenses, and the enforcement team is focusing strongly on advertising violations across the state, which are jeopardizing the regulated cannabis market.
For businesses in the marijuana industry, this story isn’t unusual. 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, 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. I spent a decade of my career directing marketing programs for some of the largest financial companies in the world, and I can assure you that regulations made it very difficult to hype product benefits in the most effective way. Instead, messages were watered down by the legal team who, understandably, wanted to avoid more class action lawsuits.
However, the marijuana industry is a bit different than other industries since it’s still illegal at the federal level. For example, Washington State, where medical and recreational marijuana are legal, released revised marijuana laws that went into effect on June 23, 2017. These laws affected marijuana growers, processors, and retailers across the state, and the list of restrictions related to advertising and marketing was quite long. Some of the rules that marijuana license holders in Washington State must follow include:
- Marijuana businesses must disclose all intellectual property licensing deals to the Washington State Liquor and Cannabis Board
- No advertising marijuana products within 1,000 feet of a school or area where children often spend time, which 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 that targets tourists
- 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 unless the business is a marijuana retailer
- All outdoor advertising may only include text that identifies the marijuana licensee’s business name, the business’s location, and the type or nature of the business
- 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
Most of these rules are not unusual when compared to other states’ laws. 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 to promote a lifestyle rather than product or service benefits.
For marijuana businesses, the first step is to leverage print advertising in industry publications and marijuana-friendly publications. Furthermore, highly strategic direct mail 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.
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 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 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, 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.
Have you invested in marketing campaigns in the marijuana industry? What challenges did you face? Share your thoughts in the comments below.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.