All Cannabis Advertising Is Local
While I both relish and rue the day when we can all turn on late-night TV and suddenly see a local commercial with someone in a cowboy hat shouting at us, "Come on down to Wacky Wayne's Weed World," like a B/C County auto dealership owner standing in their lot, the days of that happening may not be far off.
As cannabis is becoming legal for adult use in more and more states (17 as of this writing) in what seems to be a game of dominos, so too is the need to advertise and brand for manufacturers and dispensaries.
However, cannabis advertising is not easy to pull off. The main reason being that on a national level it is a federally illegal product, so its advertising is legislated by each state. Secondly, the two major players for digital ad dollars (Facebook and Google) are not taking cannabis dollars on their platforms. Since any products that contain THC cannot be shipped across state lines, they all must be grown, processed, manufactured and sold in that state. This leaves brands themselves to be replicated in one of two ways, either through licensing in each state or by a company setting up a manufacturing facility in each—these companies are called MSOs (multi-state operators).
My bet is that a large part of the true power of the advertising dollars is in the retailer's hands, and if not now, it should be soon. While the MSOs can and do have multiple locations they control in a given number of states, and within each of those states they are all creating their own brands, there are also many independent brands that need to get onto the shelves and online menus at all of these retailers. So, it's easy to think of these brands as similar to regular CPG products that have shopper marketing dollars and slotting fees associated with them. A similar case is for a manufacturer/dispensary alliance that is tantamount to the Tier 3 structure in autos, where the manufacturer co-pays for ads that point to dealerships and pull the product through.
Frankly, it's a formula for digital programmatic advertising at its very best. Combining location (how close are they for pickup or delivery?), targeting segments from various data suppliers (21+, known dispensary visitors and perhaps "canna-curious" for a few starting points) and then serving it out onto mainstream and long-tail content sites. The bull's-eye for customers, and with the right amount of cooperation within the individual dispensaries' "tech stack," a proveable ROAS.
These campaigns are best done through the DSPs (demand side platforms, for those not "in the know") that have already vetted the sites for age gating and also frankly permission to run. Some of these same DSPs are now getting into the addressable TV and OTT TV game as well for cannabis, and it is possible to run a video ad as "platform agnostic" mixing all the mediums together, wherever the right place is to find that target. There are still a few factors that make video a bit more prohibitive, including production costs of the ads themselves, high minimums and CPMs with more limited acceptance rates across channels.
However, with the amount of revenue and sales being generated in cannabis and the easing of public opinion, I would expect the proliferation of dealer-level commercials to increase over time.
Bottom line is, saddle up cowboys and cowgirls because we are in the Wild West when it comes to cannabis advertising, but my bet is that local ads are where it's at—and that means that a man in a white cowboy hat hawking "the best bud west of the Pecos" may be coming to your screen(s) soon.
