5 Things You Probably Don't Know About Cannabis Compliance
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Cannabis companies continue to fight an uphill battle regarding how they can market their products to consumers. The absence of federal regulation leaves individual states to design their own guidelines and requirements, and, naturally, those vary. This creates difficulties when expanding a business into new markets because designing product, branding, and marketing against a set of different—and sometimes contradictory—rules goes against the standard principles and economies of scale.
The current landscape has a number of laws and regulations that differ by jurisdiction at the state and local level. When looking at compliance in advertising, we like to categorize it into three segments: creative, placement, and targeting. More specifically: What is allowed and required to be said, where can the ad appear, and who can the ad reach.
Cannabis is not the only industry with stringent rules, and being compliant is only step one when launching a marketing initiative. Below are five reasons advertisers need to look beyond compliance when thinking about how to drive sales.
1. Compliance is not just a feature.
Being compliant is the law; it's a requirement. It is not advanced reporting or free creative services. Compliance is a requirement to be able to run ads legally for your client. All advertising verticals, not just cannabis, must obey state and local laws that are applicable to the respective obligations under the contract. To uphold and maintain the law is not something an advertiser should be charged extra for— it should be part of the offering. Maintaining compliance is standard in that it also ensures that a company is reaching the people who are legally allowed to purchase its products. Without compliance, there is the risk of delivering ads to an audience that cannot purchase or is unlikely to be interested in the business.
2. Compliance does not equal performance.
Just because a media campaign is compliant doesn’t mean the ads are going to drive sales, leads, or in-store visits. When evaluating marketing technology, choose the platform that is driving the most efficient results. There is no shortage of 21+ individuals in the United States, and less so a shortage of compliant ad inventory that allows THC and CBD promotion. Finding the right audience to engage with the ads and convert into customers is the real challenge. Navigating compliance is a small task in comparison to finding the right inventory, consumer, and messaging in order to drive performance. This is why it is common to see companies that guarantee compliance, but very few that guarantee performance.
3. Compliance does not protect you from fraud.
In more mature advertising markets where compliance is not a hot topic, the conversation is commonly centered around fraud. Juniper Research predicts $100B in digital advertising will be lost to ad fraud worldwide by 2023. This could be in the form of domain spoofing, providing falsified location or audience data, faking or stacking impression delivery, or click farms and bots that imitate real clicks. Most platforms and vendors will utilize a number of existing technologies and have built-in best practices to avoid fraud to ensure human traffic. Ask your marketing partner what solutions they deploy to mitigate this risk.
4. Compliance does not guarantee accurate targeting.
While the advertiser has control of the messaging and creative, and most platforms provide transparency on the inventory to ensure ads are placed on compliant and quality sites, targeting is more of a black box for advertisers. With targeting, some common regulations include not crossing state lines and not delivering ads within 1,000 feet of certain locations that over-index for minors (schools, playgrounds, etc). Both of these restrictions require advanced technology to not only deliver ads via location data but ensure that the location data is precise and accurate. This requires advertising platforms to go above and beyond standard geo-fencing and deploy location verification tools. Much of the compliant ad inventory available to current marketers does not provide accurate location data, making it impossible to ensure measures like staying within state lines and avoiding minors are maintained.
5. Compliance does not just pertain to cannabis.
On top of the restrictions that exist specifically for advertising cannabis, there are other federal and state regulations that relate to data privacy, patient data management, consent management, interest-based targeting/retargeting, and standard opt-out procedures. In addition to working with companies that understand cannabis, you should look for partners with expertise in handling Personally Identifiable Information (PII), Protected Health Information (PHI), previous experience with The Health Insurance Portability and Accountability Act (HIPAA), and have solutions for securely managing data and properly obtaining consumer consent for programs like The California Consumer Privacy Act (CCPA). Companies familiar with these programs and initiatives are best suited to understand the sensitivities in handling consumer-level data. They often provide industry-specific datasets, along with granular measurement tools, to help quantify media performance and ensure your marketing dollars are utilized in a fully compliant way, maximizing return on the investment.