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 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 to help shift consumption to the legal market. Digital advertising is expected to reach 51% of global advertising spending in 2021, surpassing traditional media such as print and television.

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. 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 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 online research before making an in-store purchase. 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 can be 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. 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.

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. Current legal cannabis marketplaces are 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.

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