Advertising and the Cannabis Industry
Advertising is critical for a functioning legal cannabis market, and it is possible to establish a policy framework that promotes business growth and protects public safety.
Lawmakers aiming to combat the illicit cannabis market by implementing overly-restrictive advertising policies are likely doing more harm than good. The most effective way to help displace the illicit market through advertising policy is to ensure that legal operators can establish brand recognition and advertise their products. Advertising policies should ensure that, at a minimum, licensees are permitted to include information on pricing, available products, reasonable promotions, hours of operation and other information that is relevant to consumer purchasing decisions.
- Ensure that licensed businesses have sufficient flexibility to advertise across various mediums, including online and mobile platforms.
- Allow dispensaries to have visible storefronts and signage.
- Ensure that advertising standards facilitate online ordering for delivery and in-store pick-up.
- Prohibit cannabis advertisements from featuring individuals under the age of 21.
- Prohibit advertisements that appeal to youth audiences.
- Place reasonable restrictions on advertisements from making false or misleading claims on public health matters.
The importance of digital advertising
Digital advertising plays an important role in maintaining a competitive regulated cannabis market. Technology is a central pillar of consumer practices in the 21st century, and cannabis policies should support these consumer-facing technologies in order to shift consumption to the legal market. Digital advertising is increasingly dominant across the globe, and by 2020, worldwide digital advertising spending was projected to surpass both print and television.1
There is a growing segment of the population that exclusively purchases goods digitally. 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 purchase something online at least once a month.2 To meet the demands and preferences of modern consumers, cannabis businesses must be able to adapt to the dynamic nature of the digital economy.
1“Mobile Share of Website Visits Worldwide 2018.” Statista, Statista, 22 July 2019, www.statista.com/statistics/241462/global-mobile-phone-website-traffic-share/
2NPR/Marist Poll: Digital Economy. NPR/Marist, June 2018, maristpoll.marist.edu/npr-marist-poll-results-june-2018-digital-economy/#sthash.6HLBuzMO.dpbs.
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 employing digital advertising allows small businesses to remain viable in an industry that is increasingly dominated by large, well-capitalized, multi-state players. Digital advertising promotes competition by building brand awareness, fostering customer loyalty, and attracting new customers.
In the 21st century, consumers are relying more on digital platforms to make informed purchasing decisions. According to Salesforce, 85% of consumers conduct online research before purchasing something online, and 79% of consumers conduct on-line research before making an in-store purchase.3 An informed cannabis consumer base is in the best interest of regulators and lawmakers who wish to protect public health and safety. Cannabis products are diverse and often complex, so branding and advertising play an important role in educating consumers. A Deloitte study on the Canadian cannabis market found that 66% of consumers cited safety as their most important consideration when buying edibles.4 If licensed retailers are allowed to advertise their products along with information on laboratory testing, dosage recommendations, and potency, cannabis consumers will be able to identify brands they trust.
3“Salesforce 2017 Connected Shoppers Report.” Salesforce, Salesforce, 2017, www.salesforce.com/blog/2017/09/salesforce-2017-connected-shoppers-report.html.
4Nurturing New Growth: Canada Gets Ready for Cannabis 2.0. Deloitte, 2019, Nurturing New Growth: Canada Gets Ready for Cannabis 2.0.
Fostering a safe market with reasonable regulations
Policies can be implemented to mitigate public safety risks without being overly-restrictive and impeding on the ability of the legal market to conduct business.
- First, cannabis advertisements should not feature individuals under the age of 21, nor should they intentionally appeal to children in any manner. Requiring that all cannabis advertisements are targeted for adults 21 and older will help ensure that children are not exposed to unnecessary risks or content that encourages youth usage.
- Another policy that will help protect public health is explicitly prohibiting cannabis companies from using false or misleading claims regarding the health benefits of their products. Preserving public health is a primary concern for many lawmakers, and prohibiting misinformation in advertisements is a way to protect consumers from engaging in potentially harmful activities.
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