Advertising and the Cannabis Industry

Advertising is critical to a well-functioning, legal cannabis market, as it allows licensed businesses to compete against the unregulated market, build brand awareness, foster customer loyalty, and increase revenue. 

Advertising also helps consumers and patients identify licensed cannabis brands and retailers, which is key in shifting consumption to the legal market. While there may be concerns about cannabis advertising directly or inadvertently promoting harmful consumption or reaching youth audiences, careful policy formulation can support legal cannabis businesses and protect public health and safety. 

Policy Recommendations

  • Ensure that licensed businesses have sufficient flexibility to advertise across various mediums, including digital and mobile platforms

  • Prohibit cannabis advertisements from featuring individuals under the age of 21 and appealing to youth audiences.
  • Require digital platforms featuring cannabis businesses to be
    age-restricted.
  • Allow dispensaries to have visible storefronts and signage.
  • Ensure that advertising policies facilitate online ordering for delivery and in-store pick-up.
  • Place reasonable restrictions on advertisements from making false or misleading claims on public health matters.
  • Allow advertisements to describe the intended effect of a cannabis product.

The Importance of Digital Advertising

Digital advertising plays an essential role in supporting a competitive, regulated cannabis industry and shifting consumption to the legal market. Digital advertising is expected to exceed 60% of global advertising spending in 2022, surpassing traditional media such as print and television. All businesses, including cannabis, are relying more on online channels to reach consumers, and policies should enable cannabis businesses to advertise on digital and mobile platforms. 

Further, digital marketplaces and online shopping platforms have become a preferred way for consumers to research and purchase products. According to a recent NPR/Marist survey, 76% of U.S. adults have purchased something online in their lifetime, and 25% of all U.S. adults buy something online at least once a month. To meet the demands and preferences of modern consumers, cannabis businesses must be able to adapt to the dynamic nature of the digital economy.

Digital Advertising Helps Small Businesses and Supports Consumer Knowledge

With the increasing popularity of social media and online platforms over traditional media outlets, the importance of digital advertising for small businesses cannot be overstated. Maintaining an online presence and digital advertising helps small businesses compete against larger, well-capitalized multi-state operators. Digital advertising promotes competition by building brand awareness, fostering customer loyalty, and attracting new customers.

An informed cannabis consumer base is in the best interest of regulators and lawmakers who wish to protect public health and safety, and advertising can help educate consumers. According to Salesforce, 85% of consumers conduct online research before purchasing something online, and 79% conduct online research before making an in-store purchase.  If licensed retailers can advertise their products along with information on laboratory testing, dosage recommendations, and potency, consumers will have a better understanding of what they’re purchasing and will be better able to identify products and brands they trust.

Fostering a Safe Market With Reasonable Regulations

Supporting licensed cannabis businesses by allowing advertising and protecting public health and safety are not mutually exclusive policy goals. The legal cannabis industry is already highly regulated to protect the public, from strict laboratory testing standards to childproof packaging requirements. Common sense advertising rules, such as bans on advertisements appealing to children and prohibiting false claims, should be adopted, but banning cannabis advertising altogether will do nothing to protect consumers and the public. In fact, without advertising to help consumers identify legal products and retailers, consumers will likely continue purchasing from the illicit market, where products are untested and possibly less safe.

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