As states increasingly move to legalize marijuana, new opportunities are opening up for brands and sellers to market cannabis to a wider audience.
But as innovation in marijuana—from new products to distribution and growing practices—proliferates in states like Colorado, California and Washington where the drug is legal, that doesn’t mean tech and advertising platforms are open for business. During a panel at South by Southwest about technology in the cannabis industry, it became clear that there are significant hurdles in marketing marijuana. Facebook, Instagram and Google have all cracked down on allowing marijuana brands to run advertising, even in the states where weed is legal.
“Operators like Facebook, Instagram are pulling accounts all the time or Facebook won’t even let you start advertising,” said Cy Scott, CEO and co-founder of Headset, an analytics company that works with cannabis brands to provide sales data. “It’s worse than alcohol or tobacco—you see beer commercials all the time [where] everyone looks like they’re having a good time and enjoying alcohol, but you don’t see that with cannabis.”
1. Ditching digital ads
In a world where startup and challenger companies are building their brands through digital advertising, how can cannabis marketers do the same?
“You have a handful of websites; you have print ads, which are abnormally popular, [and] dispensaries spend more on a cost-per-impression basis than a Super Bowl commercial to get into a local print publication,” Joel Milton, CEO of Baker Technologies, told Adweek after the panel. “We put iPads in store to capture customer information [like] cellphone number, contact info and product preferences.”
2. In-store experiential
Scott said in-store demonstration days, whereby consumers can learn about the products in either a retailer or a dispensary, can be effective for cannabis brands.
From there, brands can analyze how much interest consumers have based on both sales the same day and sales in subsequent days. The data can also be used to inform future product lines.
“Measuring marketing can be difficult given the channel, regardless, but given the limited channels and in-store being a primary driver for them, we’ve been able to give them technology to look at their sales numbers at that store as it happens,” Scott said.
3. Tech-savvy stores
While advertising remains a challenge, cannabis brands are also “leapfrogging” traditional retailers that have relied on the same point-of-sale technology for decades.
Milton cited near-field communication (or NFC), mobile payments and text messaging programs as examples of technology that’s easier for nimble-minded cannabis brands to set up than legacy brands. In exchange, marijuana brands get demographic, sales and preference data they can use to build out customer-relationship-management (CRM) databases.
Someone who prefers edibles to flowers could be segmented to receive an offer on a new chocolate bar, for instance.
“Trying to utilize product preferences—the same way that Amazon does a really good job of showing you products that you’re interested in—we try to do the same thing to serve more targeted content,” Milton said.
4. Branding loyalty
Morgan Paxhia, managing director of Poseidon Asset Management, an investment firm that specializes in cannabis, compared some of the challenges in marketing marijuana to selling alcohol.
Big brands have chased and acquired craft beers, for example, to keep up with consumers’ changing tastes. One of the challenges with craft beer though is that it’s hard to build brand loyalty when consumers have so many choices, and craft beer fans like to try multiple flavors. As cannabis becomes more mainstream, Paxhia sees an opportunity for weed brands to capitalize on that challenge and win over consumers with high-quality products.
However, Paxhia continued, “There is still a massive need in the logistics and infrastructure need to power these large-platform brands. When you post cultivation, there still is a tremendous amount of work before that gets to the final market, and I think there’s a lot of innovation that can happen in that vertical.”