Growing state cannabis industry faces advertising limits to reach new customers

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As Michigan’s marijuana market matures, area industry professionals say standing out via advertising and marketing is becoming more important.

But cannabis can’t be advertised in Michigan in the same way as many other products. Dispensaries and other marijuana-related businesses face rules by state regulators as well as a variety of restrictions by online and social media companies.

That makes it tougher for the industry to bring in new customers.

“What you’re saying in your advertising is where it gets very heavily regulated and is very much a challenge for this industry as opposed to other industries,” said Jayme Taylor, marketing and communications director of Lansing-based Carbidex, which grows marijuana and sells related products through its chain of three dispensaries that operate as The Botanical Co.

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Jayme Taylor, marketing and communications director of Lansing-based Carbidex, said the company focuses marketing efforts on targeted advertising through social media, to reach customers. The company grows, processes and sells marijuana.

The need to market

Michigan’s marijuana marketplace is maturing quickly, with significant competition among dispensaries in many communities.

“I think the market is getting crowded and it’s just going to get more crowded,” said Brian Town, founder and CEO of Lansing-based Michigan Creative, a marketing agency that works with three cannabis brands.

Michigan voters legalized cannabis for recreational use in 2018 — a decade after opening the door to medical use. Marijuana sales steadily increased from late 2019, when the first legal recreational sales began, to mid-2021, when sales began to plateau, according to data from the Michigan Cannabis Regulatory Agency. More than $150 million in marijuana was sold in Michigan in March 2022.

Cannabis businesses need to find ways to set themselves apart to compete for customers, Town said. At the same time, these businesses have to navigate regulations on advertising and marketing from the state’s Cannabis Regulatory Agency.

Medical cannabis advertisements cannot target those under age 18 and recreational advertisements can’t target those under age 21, according to CRA regulations. Dispensaries have to be sure that no more than 30% of the overall audience of an ad is younger than those ages.

Advertisements must include warnings approved by the agency and any claims of health benefits should be supported by scientific evidence with the approval of the Food and Drug Administration.

The agency came out with new guidelines last year that forced changes to any packaging that could appeal to children, said Mike Berro, founder and CEO of Ferndale-based Qonkur, a cannabis-specific marketing agency serving Michigan-based and national cannabis brands.

This means cannabis brands can’t use cartoon characters or pictures of child-like snacks like fruit or candy, Berro said. Edible cannabis products can’t resemble children’s snacks, like gummy bears or crackers.

A Skymint billboard stands in the parking lot of Preuss Pets in Lansing.

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While dispensaries use traditional media like newspaper and billboards to advertise their products, many local companies also do a significant amount of marketing via digital platforms such as apps and social media. State regulations, in addition to rules by individual platforms, govern advertisements for marijuana products.

Similar to other regulated substances, like alcohol and tobacco, packaging also must include warnings for pregnant women and instructions to keep out of reach of children, Berro said.

“We go above and beyond for a lot of our clients when it comes to compliance,” Berro said. “We go above the limits of what’s required, and we add things that aren’t required yet that probably will be required later down the line.”

Navigating ad regulations

Homegrown Cannabis Co. has maneuvered changing state regulations since it became Lansing’s first licensed recreational provisioning center in early 2020, manager Chris Kretschmer said. Kretschmer said the company’s interactions with the regulatory agency have been positive.

Kretschmer said Homegrown Cannabis takes caution when advertising, Kretschmer said.

“Before we put anything on a billboard, we get it approved through (the agency),” Kretschmer said. “We’re always going to err on the side of caution.”

The front desk at cannabis dispensary Pincanna.

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Michigan dispensaries like Pincanna, which has a location in East Lansing, can’t advertise marijuana products in the same way as many other goods. They face rules by state regulators and a variety of restrictions by online and social media companies that govern what they can say and where they can say it.

Advertising in the community at events like parades or farmer’s markets also proves difficult, said Andrew Hall, COO of Pincanna, an East Lansing dispensary offering medical and recreational cannabis.

Instead, Hall relies heavily on social media. The company focuses on Instagram, where it posts curated images of marijuana plants and Pincanna’s marijuana farms. The company promotes specials and “flower drops,” where it debuts new strains of cannabis for customers to try. Hall also advertises through local newspapers.

Community reputation is also an important part of business promotion, Hall said. Pincanna avoids advertising or hosting events on Michigan State’s campus to be respectful of community opinion, Hall said.

Despite the popularity of social media platforms, Instagram, Facebook and others also have their own rules for advertising cannabis products that may limit posting photos of marijuana or linking to purchasing methods.

Images of cannabis posted for educational purposes can often avoid social media guideline violations, marketing professionals said. Pincanna’s Instagram posts feature a disclaimer that states the product is not for sale and photos and videos are for educational purposes.

A City Pulse newspaper lays on a side table.

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Dispensaries can advertise their products in local newspapers and other traditional media sources. But state regulations require that no more than 30% of the audience of such media is younger than 21 for recreational dispensaries to advertise their goods.

If an account violates a social media platform’s guidelines, the user’s account could be shut down and their platform of thousands of followers could be erased without explanation, Qonkur’s Berro said. Qonkur has drafted internal guidelines for its clients using social media, including tips like hashtags to avoid and guideline-compliant captions.

“We’re following every single guideline to make sure all the accounts are in accordance with local and federal laws and regulations, and even these platforms’ policies,” Berro said.

New cannabis advertising options on the horizon

The advertising and marketing landscape has changed since the early days of legalized recreational use in Michigan, Berro said. Highway drivers may now notice cannabis billboards, but marketing strategies are starting to turn away from billboard marketing as options like in-app ads, push notifications and other digital ads grow as an option, Berro said.

Qonkur is helping its brands move away from social media as a revenue generator, Berro said. Instead, he said cannabis brands may be better off using social media to highlight the cannabis experience and rely on their website to generate revenue. By hosting events and increasing brand awareness, the cannabis brand’s website can be the main revenue generator with less regulations to navigate, Berro said.

Berro said he finds it isn’t about a brand with the coolest Instagram or brand clothing, but that a strong web presence is unmatched.

Brian Town leans against his office fireplace.

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“Telling that story of who you are, and why you’re the best is super important,” said Brian Town, founder and CEO of Lansing-based Michigan Creative, an ad agency that works with some cannabis brands. But he said state regulations and rules by online social media platforms can make that work more difficult.

Michigan Creative navigates regulations and the saturated market by helping brands tell their story, Town said. For non-cannabis companies, the marketing agency would typically turn to Google and Facebook ads, Town said, but those platforms aren’t necessarily the top choice for marijuana dispensaries since they don’t take ads that promote the sale or use of marijuana.

With fewer options, it’s even more important for cannabis brands to have a plan for how best to tell their story, he said.

Michigan Creative has used geofencing as one tactic, creating a virtual circle around a location to target people within that area via their phones, Town said. User IDs are anonymous, but for example, a person may attend a cannabis conference and geofencing is used to target people at the conference via in-app ads, he said.

Town’s agency also focuses on search engine optimization to drive cannabis consumers to brand websites, he said. Non-cannabis businesses can supplement Google search results with paid advertising, so that a viewer would see Google ads in additional to websites that match their search criteria. Cannabis companies can’t as easily use Google ads, so websites need to be mobile-friendly and fast with good content to stand out, Town said.

“Telling that story of who you are, and why you’re the best is super important,” Town said. “But it’s frustrating. We’ve even tried to do some digital marketing (on) Facebook for CBD and thought we had it figured out and it was working. And then Facebook shut us down. And they don’t mess around and they won’t talk to you.”