As state governments soften their stance on cannabis use, federal law stands firm on its illegality. This presents both challenges and opportunities for marketers.
By Kelly Shermach
Recognizing the complications manufacturers, distributors and retailers will face as legislation evolves, Snipp Interactive Inc. launched a Cannabis Marketing Resource Centre. It draws on the Toronto company’s experience in other regulated industries
—alcohol, pharmaceuticals, tobacco, arms and ammunition.
Cannabis marketers heed regulation, says Snipp CEO Atul Sabharwal, “especially since it’s not completely clear yet as to what is and what is not allowed.” Although he expects rules similar to those that apply to the firm’s other specialties, “the scrutiny is bound to be more given it’s a new industry,” he says.
Nix on national advertising
Unlike alcohol and tobacco, though, cannabis is illegal at the federal level. That hinders national brand development, says Bryna Dahlin, partner at Flener IP & Business Law, Chicago. Plus, among the 29 states that have legalized cannabis, advertising and marketing guidance varies. Some say nothing; others practically prohibit marketing, she says.
“Attracting customers will be based almost entirely on buzz, no pun intended”
As with alcohol, regulators limit tactics to create awareness and encourage cannabis purchase. “Attracting customers will be based almost entirely on buzz, no pun intended,” says Robert Passikoff, president of Brand Keys Inc., New York.
So marketing works to drive referrals, brand loyalty and retention. Snipp’s digital promotion platform emphasizes these activities. “We are well suited to help this industry move forward without having to reinvent the wheel,” Sabharwal says.
Brand attribute building
Cannabis marketers need to recognize and serve customers’ preferences, says Aldy Keene, president and CEO of The Loyalty Research Center, Indianapolis. Fast-food franchises ultimately won diners through consistent taste, quality, distribution and experience. It will be the same for cannabis, Keene predicts.
And the expectations of marijuana consumers have increased as growers cultivate varieties to please any palate, Passikoff says. So Snipp works with B2B clients to attract premium suppliers, drive distribution and incent prescribing doctors.
BOGO a no-go
Competition among sellers has yet to reach a high. But some companies like the dispensary Native Roots already have introduced loyalty programs, Sabharwal says. “Very soon the need for more sophisticated capabilities like market segmentation, basket analysis, clustering, targeting, etc., will be required to create and maintain competitive advantage,” he adds.
Dahlin, the attorney, attests that marketers want to comply with marketing regulations, including those in flux. And they readily go to regulators with questions “to understand the ramifications of marketing a product that’s illegal at the federal level.”
For instance, marketers may establish a presence and following on Facebook or Instagram and be shut down. “There’s not much rhyme or reason as to what accounts they will shut down or allow,” Dahlin says. And social media prohibitions of cannabis advertising and general red tape in marketing likely won’t change, she says, until cannabis moves off Schedule 1 on the federal Controlled Substances Act.
Kelly Shermach is a Reporter for The Wise Marketer