The first thing you learn about the cannabis industry is that the regulations are a nightmare. As new cannabis brands enter the market, navigating the restrictions while minimizing risk and without alienating customers is a real challenge.
As you move from one state to another, crafting a consistent and engaging cannabis brand looks different. It can oftentimes seem like no two states agree on the definition of ‘advertisement’, let alone keep up with the industry as it rapidly evolves.
However, the key to establishing your cannabis brand is to do your research and plan ahead. We spoke with our friends, Eric Becker, Director of Research & Analysis and Michael Cooper, Co-Founder & Managing Member at MadisonJay Solutions, the industry-leading compliance solutions provider, about how you can navigate cannabis marketing regulations and establish a cannabis brand that resonates with your customers:
How do cannabis regulations impact cannabis brands and their marketing efforts?
It’s a great question because, at its core, this is a highly regulated industry. Both how you craft your brand and message and how you convey that brand and message are driven by the statutes and regulations that govern the industry.
An initial matter is that there is no single national set of “cannabis rules.” Each state has a separate legal cannabis marketplace or potentially two, for those states that have both medicinal and adult-use programs and each marketplace has its own rules that control how cannabis brands can reach consumers.
Many regulations appear similar across markets (with slight, though potentially significant) variations, whereas others are found in a single market or two. As a result, it is critical for operators to stay on top of each market in which they will be operating.
Starting at the most basic, state laws and regulations may define what the words “advertising” or “marketing” even mean in this context and it may go far beyond what an operator might expect. Is that press release an advertisement? What about a brand CEO’s LinkedIn post? A sales rep’s social media post? Short answer: probably not in conversational English, but quite possibly in regulatory English. If a regulator views these communications as advertisements, they may run afoul of state rules for something as easy to avoid as a failure to include required information.
Another area that regulators focus on is who will see a given cannabis advertisement, including those outside of the intended audience. So each state has regulated where ads can appear–this might be a location restriction (think “no billboards”) or requiring that ads only show up on tv shows, radio programs, or in magazines or websites with audiences of at least a certain percentage being over 21. Some states looked to longstanding practices in the beverage alcohol industry (which we are very familiar with) and pegged that number at 71.6%. But Massachusetts-based operators in your hometown are looking at a much more stringent requirement.
The takeaway? You just can’t guess or assume on these matters. As operators and cannabis business owners, you have to do your diligence and incorporate a sophisticated regulatory strategy into your marketing strategy.
How can cannabis regulations affect your brand’s messaging?
Cannabis brands often feel like messaging is an uphill battle with regulations peppered with restrictions on health and/or physical effect claims, limitations on product imagery, and rules that place limits on merchandise giveaways that in other industries would help with consumer alignment.
Simply put, messaging is how brands reach consumers. But regulations control how you can message today in your existing markets, how you will be able to message in potential expansion markets, and how that might change in both going forward because these rules are far from static at this stage of the industry’s life cycle.
Consider the consumer who is looking for help with aches and pains or sleep issues and is interested in trying cannabis. It’s a consumer segment that is real and growing. As a result, it is not surprising that brands might want to focus on these ailments when trying to reach that demographic. But cannabis regulators have placed real limits on what marketers can say about their products in this area, often setting a high bar for compliance. For example, under California regulations governing manufacturers, any “health-related statement” (a phrase defined in the regulations) has to be “supported by the totality of publicly available scientific evidence” and also that requires that there is “significant scientific agreement among qualified experts.”
The language may leave your head spinning, but at the end of the day (and, unfortunately, due to the lack of robust cannabis research to this point) marketers must tread lightly when broaching these subjects. After all, negative repercussions such as enforcement actions might not be felt the instant a marketing campaign goes live.
On the contrary, it is far more likely to become an issue months or years down the road when a brand has grown into the spotlight or is seeking a new round of investment and is faced with difficult questions because of regulatory concerns.
In other words, not only do cannabis regulations place real limits on your brand’s messaging, which is key to reaching your consumers, but they can also create major financial and regulatory headaches (to say nothing of PR challenges) for you down the line if you do not proceed with caution.
What are the do’s and don’ts when writing your cannabis brand messaging?
Do plan ahead. There are two relevant points that are nearly always front of mind at MadisonJay when we help brands scope out their plans. First, it is critical to be aware of upcoming and anticipated regulatory changes that might impact your marketing plans.
Second, take a good look at when you may launch your brand in new markets. We work with brands to produce forward-looking content and marketing collateral so that assets can be leveraged in as many markets as possible.
The goal is to build a consistent brand message and identity across markets today, even in an era of closed-loop state markets. That requires planning, since California is not Massachusetts today, and California is likely to incorporate new rules from other markets in the future as well.
Don’t take unknown or unneeded risk. Think through the words that you are choosing and if they might be read by others in a different voice. Regulators (and those who might want to put a spotlight on your products), may have a drastically different reading of a seemingly innocent sentence.
We have spent countless hours working with brands and their marketing teams (internal and external) on language tweaks that might seem trivial to the uninitiated eye but are easy ways for operators to mitigate risk.
At the end of the day, there can be a crucial (but unsurprising) mismatch between the perspective of cannabis brands and regulators or investors. One important goal for us at MadisonJay is offering a bridge to our clients between those viewpoints.
Cannabis is far from the only industry in which language will land differently for the creative side of the house than those on the investment side. The key differences are (1) cannabis, unlike many industries, remains very highly regulated and, (2) many of the terms used in the industry are very new (and often not defined by the rules).
A great example that we’ve focused on with many brands this past year is ensuring that product descriptions accurately match what a consumer is purchasing. In a space where new products and form factors are being launched at an exceptional pace and much nomenclature is derived from slang, is new, and/or is undefined by regulators, it can be easy for wording to feel accurate to industry insiders but mean something very different to a regulator.
For instance, what does “broad spectrum” mean to you? Can all product types be broad-spectrum? Are you in one of a handful of jurisdictions that have offered a definition for broad-spectrum? Even if not, would a regulator (or plaintiff’s lawyer) rely on a sister jurisdiction’s definition when responding to a complaint lodged by a customer who feels misled? There can be dramatic costs to a message that lands with regulators (or consumers) differently than it lands internally.
Therefore, to effectively craft your cannabis brand messaging it’s important to think strategically and evaluate your messaging holistically with an eye towards the rules of the game.
How to stay compliant when creating your cannabis brand?
At MadisonJay we take a holistic approach and look at potential brand names, logos, narratives, descriptions, graphics, product and other imagery not only through the lens of “what is the product and who is the intended audience?” but also “where are you building your brand, today and for the foreseeable future?”
Yes, we can help brands throughout their lifecycle by identifying and mitigating risk. But we are also lucky enough to have been retained by some market leaders right from the idea stage so that a strategic approach to regulatory issues is baked in from day one. That allows you to build a compliant brand narrative that feels organic and resonates with consumers, in a way that an overnight “disappearing” of a previous brand element never does.
In a world where the presentation and marketing of your products is highly regulated, being on top of these issues can be a key competitive advantage for savvy operators. In other words, this is and will continue to be an industry in which key elements of a business strategy (markets, form factors, flavor profiles, branding, etc.) remain highly dependent on regulatory schemes (plural).
Our goal is to help our clients incorporate a robust regulatory strategy into their business strategy at the earliest possible stage and to work hand-in-hand with their creative teams to allow them to leverage their regulatory strategy as a competitive advantage.
If you want your cannabis brand to incorporate a proactive regulatory strategy into your business plan, MadisonJay Solutions can help navigate the complex web of ever-evolving regulations facing operators in the adult-use cannabis and hemp-derived cannabinoid products industries.