Introduction

A solid marketing program is essential to the growth of any business, but especially new businesses. Few industries are witnessing as many new entrants to market as the burgeoning cannabis trade, and every one of them is looking to digital marketing to help them claim a slice of the estimated $7.1 billion pie.

In this document, we take a comprehensive look at how you can use digital marketing tactics - including SMS marketing - to position your business as an industry leader; we’ll help you navigate the tangled web of advertising restrictions so you can create a marketing campaign that packs a punch without breaking any laws.

We’ll also examine the current legal status of cannabis from state to state, and find out what the future looks like for one of the country’s major growth industries.

As the cannabis industry gains legitimacy and scale, brand marketing has proven the most effective way for dispensaries to stand out in what is already a crowded market. If, as many industry analysts predict, cannabis becomes federally declassified as a controlled substance and allowed to go on sale nationwide, competition will be fierce.

We’re not there yet. But with a growing number of states legalizing cannabis for medical and recreational purposes, there is plenty of room for expansion into new markets; any small-to-medium-sized business seeking to withstand the impact of corporatization once federal legislation does pass is well advised to act now in order to get a strong foothold.

Until recently, growers, dispensaries, retailers and specialty product businesses relied largely on word of mouth and online directories like Weedmaps.com. As the industry has gained legitimacy in more regions, growth has become increasingly dependent on marketing the product as a household brand.

Some estimates indicate that nine out of ten existing cannabis companies will grow this year - an astonishing prediction given the average failure rate of businesses. In order to capitalize on this growth and ensure you stand out from the crowd, an effective brand marketing program, one based on all available data, is absolutely essential.

Let’s dig in.

Medical Marijuana, Commodified Cannabis

Marketers love to throw the weight of history behind their products. A good backstory lends authenticity and gravitas. A product or brand enduring across multiple generations means they’ve stood the test of time. It’s no accident that brands with a long enough history to boast about it use the word ‘established’ rather than ‘founded’ or ‘formed’ to describe the year they began trading.

Younger companies spend a significant number of marketing dollars cementing the notion of being an ‘established’ brand. They look to household names like Coca-Cola and Colgate (est. 1886 and 1806 respectively) for marketing inspiration. One rots your teeth, the other cleans them, and yet these seemingly opposed forces are trusted by the public by sheer dint of their staying power.

Most businesses dream of one day bearing a legend that points back a couple of centuries to its formation. Imagine the authenticity implied by a product that has its origins many thousands of years ago.

Cannabis, in fact, has that authenticity. It’s been harvested, picked, smoked, eaten, rubbed, burned, bought and sold for millennia. Everyone from Shakespeare to Rameses II has partaken and, apart from a brief blip during the post-Victorian era, the weed has been traded without prohibition in every corner of the world.

That ‘brief blip’ of moral authoritarianism appears to be drawing to a close. Jurisdictions around the world are gradually easing off on their punitive approach to a plant that most people now agree is at worst relatively harmless, and at best a panacea for all manner of ills. In the US, several states have relaxed their laws, with initiatives ranging from decriminalization and medical application to outright recreational legalization. It seems only a matter of time before Federal law follows suit.

So how did we get here?

Before we get into the state of the cannabis industry today, we’re going to take a quick trawl through the recorded history of cannabis (of course, the plant’s relationship with humans will stretch back much further than we can know). From a marketing standpoint, knowing the history of cannabis as a commodity can spark brand new ideas on how to promote the plant as a 21st century product. Understand the history of cannabis and it may help you stake a claim to its future…

2737 B.C.

Chinese legend has it that Emperor Shen Neng was among the first leaders of the ancient world whose court officially prescribed cannabis tea to treat illnesses ranging from gout and rheumatism to malaria and memory loss.

2000-1400 B.C.

India’s long and deep association with cannabis serves to highlight just what Johnny-Come-Latelys we in the West are. For some four thousand years, Indians have used the plant for medicinal, spiritual and recreational purposes. A mix of cannabis paste, ghee, milk and spices (called bhang) remains a central part of Ayurvedic medicine. Like alcohol in the West, the drink was embedded in the culture for far too long to make criminalization feasible, although the cultivation of cannabis and sale of bhang is now government regulated.

1550 B.C.

Egyptian scholars make note of medical cannabis as an effective treatment for glaucoma and inflammation. They also used it for enemas, a practice that’s surely just waiting for the right marketing strategy to make a comeback.

1213 B.C.

When the mummy of Rameses II was discovered in 1881, archaeologists found cannabis pollen among the Pharoah’s artifacts, proving that Egyptian use of the plant went right to the top.

200 A.D.

A Chinese surgeon named Hua Tuo is the first recorded example of a physician using cannabis as a pain reliever during surgery. The plant was ground into a powder, mixed with wine and administered to the patient as a pre-surgery drink.

650-1450 A.D.

Cannabis was used widely throughout the Middle Ages, both in Europe and the Middle East. Many Muslims smoked hashish purely for recreational purposes (alcohol, of course, being forbidden in the Islamic world) and Europeans integrated cannabis into medicinal concoctions designed to treat a wide range of ailments, including jaundice and coughing.

16th Century

Spaniards introduced cannabis to South America, but North American colonizers traded only in hemp, a non-psychoactive variant of the plant grown for industrial purposes like textiles, paper, ropes and paint. The fun stuff came much later.

17th Century

Several pipes excavated from William Shakespeare’s garden in Stratford-upon-Avon indicated cannabis traces, suggesting the Bard - like artists throughout history - enjoyed a toke to get the creative juices flowing.

1799

When Napoleon invaded Egypt, he took with him a scientific expedition with two objectives: steal the Rosetta Stone, and pick up some weed s’il vous plaît. This could be considered Year Zero for the plant gaining widespread acceptance in Western medicine.

1840

An Irish doctor named William O’Shaughnessy introduced medical cannabis to the Victorians. It is widely reported that Queen Victoria used it to relieve menstrual cramps. Other ailments treated with cannabis included rheumatism, muscle spasms and insomnia.

1906

The U.S. Food and Drug Administration (FDA) is created, signaling a major shift in America’s drug policy. Though set up principally to deal with widespread addiction to narcotics like opium, the FDA also cracked down on cannabis use. It was around this time that Mexican immigrants brought cannabis - or, as they called it, ‘marijuana’ - to the country, helping to popularize it, and undoubtedly fueling much of the establishment paranoia about the plant. Cannabis use came to be associated with criminality and the underclass, prompting authorities to ratchet up their efforts to crack down on it over the next few decades.

1911

Massachusetts becomes the first state to outlaw cannabis, amidst an atmosphere of prohibitionism sweeping the nation.

1936

“Reefer Madness” is released. This now-legendary public information film - funded by a small church group - was intended to scare parents by making hysterical, unfounded claims about the effects of cannabis.

1937

The Federal government’s first attempt to regulate cannabis came in the form of the 1937 “Marihuana Tax Act,” which imposed regulations and taxes on growers, sellers and buyers of cannabis. Although it technically upheld the right to use cannabis for medicinal purposes, the effect was chilling: few doctors could bear the extra burdens imposed by the law, so they simply stopped writing prescriptions.

1970

Cannabis is categorized as a Schedule I drug, along with LSD and heroin, and listed as having no accepted medical use - despite millennia of evidence to the contrary. The government also restricts further research into the medical applications of the plant.

While research into medical cannabis is still hobbled by legal restrictions, recent studies have explored the plant’s therapeutic aspects. A 2014 study found that over 90% of Californians who were prescribed cannabis reported that it helped treat a serious medical condition. A quick glance at the history of this magical little plant, which has been circulating as a medicine for thousands of years all over the world, tells us they’re probably not kidding.

Recreational and Medical Initiatives Nationwide: A State by State Breakdown

Sixty-one percent of United States citizens live in states with reformed marijuana laws. These laws allow for the use of medical cannabis, fines instead of jail time for possession of marijuana, and legal and regulated recreational marijuana use for adults. Polls indicate that most Americans support the legalization of marijuana, with 86% supporting its medical use, and lawmakers are becoming increasingly aware of public approval of policy reforms pertaining to marijuana.

During this past year, more than 20 legislatures at the state level have improved their state’s marijuana policies. Some of the most notable developments were Illinois’ enactment of a decriminalization law, and Ohio and Pennsylvania passing comprehensive medical marijuana laws. These laws made the two states 24th and 25th in the line of states with viable medical cannabis laws. In Louisiana, Governor John Bel Edwards signed several companion bills that have the potential to result in a working medical cannabis program.

Marijuana policy reform, however, is not only left to the legislators. This November, voters will be able to decide their state's’ policies for marijuana in at least nine states. Arizona, California, Maine, Massachusetts, and Nevada will have initiatives on their ballots to regulate marijuana in a way that's similar to alcohol. Arkansas, Florida, and North Dakota will see medical marijuana initiatives on their ballots. Missouri advocates are heading to court to try to get their initiatives on the ballot in time for the November election. In Montana, voters will be able to consider a restoration of their medical cannabis access.

A Domino Effect

Colorado and Washington are bellwether states when it comes to marijuana policy reform, but Massachusetts has been a leader on many other issues. Given that pattern, we may see it embrace policies in Colorado and Washington, and become the trigger for a domino effect of policy reform across the eastern seaboard. Stan Rosenberg, Senate president, says that this is partly due to Massachusetts being the largest state in New England. He offers that it’s not unreasonable to expect legislation around marijuana to unfold in a similar progressive way.

Massachusetts will likely be one of the next states to legalize marijuana. Voters will decide if recreational use of weed should be made legal, and Colorado-based Sage Analytics says that a legalization in Massachusetts could effortlessly sweep through the Eastern United States in the years ahead. Marijuana has already been approved for medicinal use in Massachusetts, but it did take three years for the first dispensary to open in the state. Now, locals will be able to decide whether or not to legalize pot, and the state sales tax on marijuana is also under consideration. Activist group The Campaign to Regulate Marijuana Like Alcohol says that a higher tax would cover the costs of a new commission that would regulate any retails stores selling marijuana.

It’s logical that marijuana legalization in Massachusetts would spread to nearby states, in terms policy and economics. Patients in neighboring East Coast states would likely travel to Massachusetts for their weed, which would add to that state’s tax income and give concern to their own state governments. Keep in mind that in 2015, Colorado was able to raise a significant amount of money from marijuana taxes -- upwards of $70 million, which is nearly twice the amount that alcohol taxes brought in.

Changing Attitudes, Changing Times

Over the past few years, there has been a strong push nationwide to legalize marijuana, and the surge is swift. Attitudes toward pot are changing, which is encouraging, but there have been some disappointing setbacks and roadblocks. This year’s ballots contain many initiatives that would end the prohibition of marijuana at state levels, but the consensus is up in the air on how the federal government will act with regard to reclassification of cannabis or its legalization.

Colorado and Washington began the wave of legalization that rapidly spread to Alaska and Oregon. California and many other states will likely have legal weed laws on the books by the end of the year, but many states aren’t convinced that legalizing pot is a good thing. With such a steadfast position against legal marijuana from states like Georgia, Nebraska, Oklahoma, and Tennessee among others, it’s not clear what will change the minds of voters and legislators in those regions . Perhaps a change at the federal level will be the catalyst for progress in states that have, and plan to keep, harsh penalties for pot use. Creating a legal change across the board is challenging, but the sea change seems to be inevitable.

Economic Impact of Full Federal Legalization

Existing federal law is a challenge to marijuana use and income in two ways. Despite the fact that Colorado and Washington have already seen considerate increases in tax revenues from the legalization of marijuana, and that a 25% tax rate on retail marijuana sales would equal approximately $8.8 billion in revenue, the federal government has been an ongoing obstacle to realizing this income. First, marijuana is still considered a dangerous drug with high potential for abuse and not acceptable for medical use, according to Schedule I of the Controlled Substances Act. Since federal law takes precedence over state law, anyone selling or possessing weed gets absolutely no protection from legalization at a state level.

Second, federal tax law gets in the way. Current federal laws single out legal marijuana retailers and assign them a significantly higher tax burden than other kinds of legal businesses, making it impossible for them to deduct business expenses because they sell products that are classified as drugs on Schedules I and II of the Controlled Substances Act. This act was intended to prevent drug-dealing kingpins from deducting yachts and guns, not business owners and marijuana retailers trying to comply with the law.

Legislators in bellwether states like Colorado and Washington advise other states to seek legalization through legislation, rather than ballot initiative, to avoid potential problems with changing unyielding language that voters approve. They also caution to be wary of revenue estimates, stating that it can take time to establish flourishing tax incomes like those predicted.

As we head into the 2016 Election, an important presidential election year, it’s imperative that marijuana retailers keep their eyes on initiatives that will impact their businesses and fuel continued changes in attitude and policy nationwide. Legal marijuana is a hot topic in 2016 and it will likely be on election night. The following is where states currently lie, and each state’s outlook, in regards to marijuana legalization . . .

 

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