Unfair Marketing Restrictions Are Stunting the Growth of Cannabis Brands
Free Book Preview Cannabis Capital
It’s hard to build a national brand under any circumstances. But the cannabis industry is forced to market with one hand -- and a foot -- tied behind its back.
There are two primary problems when it comes to marketing medical, and even adult use, cannabis -- while it remains illegal under federal law. First, abiding by the laws and regulations of 33 separate states places severe hardships on businesses acting in good faith. Second, some bad actors take advantage of the confusing and contradictory regulations, risking the reputation of the rest of the industry.
Navigating each state’s individual rules while also building your business beyond a single, local market is a massive undertaking in these conditions. That’s because advertising and marketing laws vary by state, and in some cases even by municipality. There are different requirements about what can be said -- or what must be said -- for each product category, depending on location. This makes cannabis advertising much more expensive, because there’s simply no scalability. Ads and marketing material must be individually crafted to meet local requirements.
But even if you could come up with a single ad that satisfied every state, you’d hit a roadblock at the advertising platforms. Channels open to other industries are forbidden to cannabis, limiting the industry in ways both big and small. Online giants such as Google, Facebook and Instagram refuse to accept cannabis ads. Smaller platforms, unwilling to take the risk of an added compliance burden, follow their lead. Radio and TV stations which broadcast across state lines are unavailable platforms because of the federal regulations.
Billboards have been the one advertising saving grace with companies pre-clearing inventory to make sure it complies with local regulations.
There’s some reward, but a lot more risk for these companies as long as the federal government lists cannabis a Schedule 1 drug -- ranked on the same tier as heroin. These marketing limitations make cost-effective and compliant marketing tactics hard to develop -- down to the product level. Companies are often severely limited in what they say on their packaging (and those restrictions vary by state). They often have multiple warnings they have to include, which take up valuable label space. These issues restrict cannabis to micro-targeted advertising, rather than appealing to a mass market. This is an extraordinary challenge, particularly for a brand new industry.
The expensive and complicated machinations are prohibitive on all fronts, from the inconsistent and often conflicting regulatory standards from state to state, to the vast number of approvals required for each ad or piece of marketing material. Cannabis has more restrictions than Big Pharma, despite the fact that cannabis has significantly fewer and less drastic potential side effects than most federally legal drugs advertised on television. Even PSA’s and education-based content are difficult to disseminate. In addition, larger players with a commitment to regulatory standards tend to be disadvantaged against smaller players who are more willing to push the envelope.
Rather than continuing to thrash around -- or wait for a deus ex politician -- the industry should adopt a set of national advertising and marketing standards. That would eliminate the need for each company to come up with its own interpretation of laws. A unified standard would distinguish the companies operating in good faith from the less scrupulous companies whose questionable practices, such as marketing to minors or running Google search ads through AdWords express accounts, give the industry a bad name.
Alcohol and tobacco models are a good place to start, since current regulations around them both meet the needs of customers and protect public safety. Companies that invest the effort and money to ensure compliance, despite the myriad difficulties, deserve the opportunity to thrive. Right now, those acting in good faith are being held back by the difficulty of meeting a minimum of 33 different sets of rules, regulations and laws. That’s stunting their return on investment and their ability to succeed.