Could running ads for cannabis products put digital publishers in the crosshairs of federal regulators? It’s a question that more and more publishers are asking, even as marijuana legalization continues to spread across the U.S.
Although marijuana has been fully legalized in 11 states, and it’s available for medical usage in 22 states, the drug is still considered a schedule 1 substance at the federal level. With the legal status of marijuana in flux from state to state, digital publishers like Facebook, Twitter, Google, and Snap are looking into how they can profit—legally—off the growing industry, without running afoul of federal regulations.
Boutique dispensaries are eager to run display advertising on popular publishing platforms, however they’re finding more acceptance, and opportunities, with out-of-home advertising. In 2018, cannabis advertisers, including clinics and dispensaries, spent $3.5 million on outdoor advertising, far above the second and third most popular channels, which were spot TV and local magazines.
Legally speaking, marijuana products can be advertised in places tobacco products cannot. But because of federal regulations, and advertising rules that vary from state to state, platforms like Twitter have banned ads for marijuana altogether. Marijuana and CBD companies are currently restricted from advertising on Google, Facebook, and Instagram, as well.
Together, Facebook and Google account for 57% of the U.S. digital ad market. Without being able to advertise on the largest digital advertising platforms, marijuana businesses are relying more heavily on partnerships with social media influencers who can promote their products organically, along with other brands in their industries and out-of-home products, like billboards.
“[Cannabis advertising regulations] are evolving quickly,” says Gino Sesto, CEO and founder of Dash Two, a Los Angeles-based digital and outdoor advertising media buying agency.
In a bid to help businesses in the cannabis industry understand what is, and isn’t, legal in from an advertising perspective, Dash Two released its own guide to marijuana advertising laws. The company says it will keep its guide updated as the laws continue to evolve.
Currently, TV stations, magazines, newspapers, websites, and billboard vendors have the ability to decide whether they want to accept cannabis advertising dollars. However, because rejecting cannabis ads has not been proven to violate free speech, it’s not uncommon for publishers to turn down advertising from businesses in the cannabis industry.
Sesto predicts that legislation to deal with these issues will come down the pipeline eventually, with state governments taking cues from alcohol advertising policies to put something in place for cannabis.
“Often legislatures act on something that has happened, such as a billboard that generates controversy, so they can establish a precedent in dealing with these issues,” Sesto says. “As we move forward, you will probably see more uniform guidelines across states, though we’re not at that point now.”
Sesto believes it will be easier for legislatures to deal with issues that come up if they can look at how other states handled those same issues, and then adopt similar policies.
One place state legislators may look is Colorado. Because Colorado was the first state to legalize marijuana, it remains ground zero for the industry. Colorado’s Marijuana Enforcement Division of Law Enforcement has enacted strict limitations on advertising, including restrictions on mobile or otherwise location-based advertising, unsolicited internet pop-up ads, banners on mass-market websites, and unsolicited leaflets.
In California, TV, digital, print, and radio ads for marijuana can only run if at least 71.6% of the audience is over 21 years old.
Sesto says the biggest misconception about marijuana advertising laws is simply the belief that every state has these regulations in place. The area is much more in flux that most people realize.
Currently, cannabis businesses are being conservative in their approach to advertising—out of necessity—but that could change as regulations are formalized in the future.
“They want to see how much leeway there will be in this type of advertising.” he says. “There will obviously be variances between states that have medical-only and recreational cannabis. The ones with the latter tend to be more liberal states, and you can see that in some of the campaigns. They’re more fun, less formal.”