Tag Archives: business

The Dawn of Delivery: How This Oregon Company Launched During a Pandemic

By Aaron G. Biros
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Back in late 2016, the Oregon Liquor Control Commission (OLCC) legalized delivery for cannabis products. Since then, dispensaries could offer a delivery option for their customers to purchase cannabis products without leaving the comfort of their home. Up until quite recently, that market was dominated by a handful of dispensaries who also conduct business at their physical location, offering delivery as an option while conducting most sales in-person.

Enter Pot Mates. Founded in 2018 by Hammond Potter, the company embarked on the long regulatory road towards licensing and beginning operations. On April 20, 2020, Pot Mates opened for business, starting their engines to take on the fledgling cannabis delivery market in Portland.

Pot Mates is a tech startup through and through. The founders are former Apple employees. Hakon Khajavei, the chief marketing officer at Pot Mates, founded Blackline Collective, a business and marketing consultancy, which is where he joined the Pot Mates team. The other co-founder of Pot Mates and chief technology officer, Jason Hinson, joined after serving in the US Navy as an electronics technician maintaining satellite communications networks.

With the sheer amount of regulations for cannabis businesses, coupled with the new delivery-based business model, Pot Mates had to focus on technology and automation from the get-go.

Not Just an Online Dispensary

For the cannabis companies already offering delivery in the Portland metro area, their websites seem to mimic the in-person dispensary experience. They offer dozens of products for each category, like concentrates, edibles and flower, making a customer pour through options, all at different price points, which can get confusing for the average consumer.

The Pot Mates logo

Pot Mates does things a little differently. “Our start up process was thinking through how do we make this the best experience possible, how do we get rid of the unnecessary junk and how do we do things that only an online dispensary can do,” says Khajavei. They have flat pricing across the board. In each category, almost every product is priced the same, moving away from the common tiered-pricing model. This, Khajavei says, removes the decision barriers customers often face. Instead of choosing the right price point, they can choose the delivery mechanism and effect they desire uninhibited by a difference in cost.

It all comes back to focusing on the simplest way for someone to buy cannabis. “Shopping online is just very different,” says Khajavei. “Our process focuses on the customer journey and limits the number of products we offer. We have a mood system, where we tag our products from reviews to typify moods that you experience with different products.” All of that requires a lot of back-end technology built into their website.

The Long Regulatory Road

Technology has been a strong suit for Pot Mates since they opened their doors, and well before that too. Making the decision to be an online-only delivery cannabis company pushed them to pursue a very unique business model, but regulations dictate a lot of the same requirements that one might see in dispensaries.

Hakon Khajavei, Chief Marketing Officer

The same rules apply to them when Pot Mates submitted their license application. You need to have a signed lease, extreme security measures, detailed business plans, integrated seed-to-sale traceability software (Metrc in Oregon) and much more. “During the months leading up to getting our license, we were able to iron out a lot of the regulatory details ahead of time,” says Khajavei. A lot of that was about security and tracking their products, which is why technology plays such a huge role in their ongoing regulatory compliance efforts. “We built in a lot of automation in our system for regulatory compliance,” says Khajavei. “Because of our technology, we are a lot faster.”

In the end, their licensing process through the state of Oregon as well as the city of Portland took about nine months. Once they had the license, they could finally get down to business and begin the process of building their website, their POS system, their inventory and reaching out to partners, producers, distributors and growers.

For any cannabis company, there are a number of regulations unique to their business. “We need to report every product movement in house through Metrc,” says Khajavei. “Every time something is repackaged it needs to be reported. We focus so much on our technology and automation because these regulations force us to do so.” But delivery companies are required to report even more. Pot Mates needs to report every single movement a product makes until it reaches the customer. Before the delivery can leave the shop, it is reported to Metrc with an intended route, using turn-by-turn directions. It complicates things when you make two or more deliveries in one trip. Reporting a daisy chain of deliveries a vehicle makes with turn-by-turn directions to regulatory authorities can get very tedious.

As far as regulations go for delivery parameters, they can legally deliver anywhere inside Portland city limits. “It is our job to figure that out, not the customer’s job; so we don’t have any distance limits, as long as it is residential,” Khajavei says. “We programmed customized technology that allows us to handle really small orders.” Without a minimum order policy or a distance limit, Pot Mates can reach a much bigger group of consumers.

Launching in the Midst of a Global Pandemic

Chief Technology Officer, Jason Hinson

Luckily, the Pot Mates team received their license just in time. About two weeks after they submitted their application, Oregon put a moratorium on any new dispensaries.

They went forward with their launch on April 20 this year, despite the coronavirus pandemic impacting just about every business in the world, including their marketing efforts tremendously. With cannabis deemed essential by the state, they could operate business as usual, just with some extra precautions. What’s good for PotMates is that they don’t need to worry about keeping social distancing policies for customers or curbside pickup, given the lack of storefront.

They still need to keep their team safe though. The Pot Mates team began 3D printing washable and reusable face masks, getting more gloves for delivery drivers, cleaning their warehouse thoroughly, cleaning vehicles and making sure employees maintained distancing. Pot Mates is even 3D printing enough masks and donating them to local organizations that need access to masks. “As a cannabis company, we always have to handle things with gloves here and take necessary safety precautions anyway, so our response is more about how we can help than what we need to change.”

Advertising Cannabis in a Pandemic is No Easy Task

“The marketing aspect is where covid-19 really hurt us,” says Khajavei. “There are so many regulations for cannabis companies advertising already. Unlike other products, we can’t just put up advertisements anywhere. We have to follow very specific rules.” So, in addition to the normal marketing woes in the cannabis industry, the team then had to deal with a pandemic.

Pot Mates had to scrap their entire marketing strategy for 2020 and redo it. “We wanted to begin with a lot of face-to-face marketing at events, but that didn’t quite work out so well.” Without any concerts, industry events or large gatherings of any kind, Pot Mates had to pivot to digital marketing entirely. They started building their SEO, growing their following on social media, producing content in the form of blogs and education around cannabis and the local laws.

On an Upward Trajectory

Obviously, the short-term problem for a new cannabis company is reaching people, especially during the COVID-19 crisis. “We have a good trajectory though, we know we are growing our business, but we still have a ways to go,” says Khajavei. It doesn’t help that social media companies have nonsensical policies regarding cannabis. Their Facebook page was recently removed too.

Founder & CEO of Pot Mates, Hammond Potter

But the bigger issue here is kind of surprising when you first hear it: “It’s not even a matter of customer preference, a lot of people just have no idea that delivery is even legal.”

It’s pretty evident that cannabis delivery has not really gone mainstream yet. “We’ve told people about our business in the past and a common answer we get is, ‘Oh my gosh, I didn’t even know we could get cannabis delivered.’” It’s never crossed their mind that they can get cannabis delivered to their home. It’s an awareness problem. It’s a marketing problem. But it’s a good problem to have and the solution lies in outreach. Through educational content they post on social media and in their blog, Khajavei wants to spread the word: “Hey, this is a real thing, you can get cannabis delivered.”

As the market develops and as consumers begin to key in on cannabis delivery, there’s nowhere to go but up. Especially in the age of Amazon and COVID-19 where consumers can get literally anything they can dream of delivered to their front door.

Moving forward, Pot Mates has plans to expand as soon as they can. Right now, they’re limited to Portland city limits, but there’s a massive population just outside of Portland in towns like Beaverton, Tigard and Tualatin. “We are so close to these population centers but can’t deliver to them now because of the rules. We want to work with OLCC about this and hopefully change the rules to allow us to deliver outside of the city limits,” says Khajavei. In the long term, they plan to expand out of state, with Washington on their north border being first on the docket.

To the average person, one would think launching a delivery cannabis business in the midst of a global pandemic would be a walk in the park, but Pot Mates proved it’s no easy task. As the market develops and the health crisis continues, it seems the Oregon market will react positively to the nascent delivery market, but first they need to know it is even an option.

Soapbox

Cannabis Shifts to a Luxury Brand

By John Shearman
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This year, many issues have gotten put on a shelf as the world has dealt with the COVID-19 pandemic. The legalization of cannabis in many states has been one of those issues. But this time on pause has given the industry a chance to identify how it would like to move forward as an emerging market that has many benefits across medicine, from mental health to the economy.

For many of these reasons, cannabis use is coming out of the shadows and there has clearly been a shift in recent years from cannabis being an illicit item to becoming a boutique product in many circles. The transition of cannabis’ image from that of the stoner in his parent’s basement to the “it” consumable for the jet set has as much to do about science as it does sophisticated branding.

americana dummiesApproximately 24 million Americans in 2019 have used cannabis, about 10% say they consume it for medical purposes based upon a growing body of evidence supporting the use of medical cannabis for a number of conditions. There are also economic reasons why legalizing cannabis makes sense including increased revenue for the government, job creation and more.

As cannabis becomes legal across America—11 states have adopted laws allowing for recreational use, while 22 others permit only medical cannabis—it’s finally becoming the sprawling business its proponents have long envisioned.

And this has moved the mainstreaming of cannabis in today’s society from a taboo illicit drug to now being openly discussed at dinner tables.

PlantTag
A plant tagged with a barcode and date for tracking

First of all, our hats need to be taken off to the cannabis advocates who over the last 20 years have shaped an emerging industry, educating society and the government on the benefits cannabis can offer based on science.

The global cannabis community has collaborated with regulatory bodies to establish compliance and regulations as a starting point to help the general public understand sourcing products from legal entities is a safer way to get quality product to consume that is not compromised from unregulated producers.

In addition, technology advancements within the cannabis space have led to sophisticated track and trace solutions of raw materials and products through the supply chain. The data captured within these systems allows cannabis brands to tell a compelling authentication story to end consumers based on scientific facts.

This all leads to an emerging market that has open transparency, full traceability and establishing trust with consumers. The early master growers now work hand in hand with designer laboratories, perfecting and protecting their IP. A sophisticated supply chain has been put in place so consumers know where their cannabis was grown and by whom. Consumers understand which strains have been harvested and what hybrid models have been created. This is certainly no longer a bag of weed you purchased from a neighborhood friend, but a complex, innovative industry with established brands that have celebrities, ex-politicians and well know business executives involved now and the advocates that has been leading the charge for over 30 years are still the backbone to educate the masses on the benefits cannabis and hemp will bring to mankind over time.

The Brand Marketing Byte

Basking in Sunshine: GrowHealthy

By Cannabis Industry Journal Staff
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The Brand Marketing Byte showcases highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies.

Here is a data-led, shallow dive on GrowHealthy:

GrowHealthy – Basking in Sunshine

Although Florida may only have a medical market and a relatively restrictive regulatory framework, a handful of companies are leading the pack in dominating the new market. Even though the medical cannabis market is fairly young and the state has not adopted adult use yet, the market’s growth trajectory is very encouraging.

GrowHealthy (GH) is one of those companies capitalizing on market growth with a number of expansion plans. They already have 16 dispensaries open for business throughout Florida and have plans to add to that considerably.

In the past few months, GH has taken a number of steps to enhance their web presence. Perhaps as a reaction to the COVID-19 crisis, GH, along with many other companies in the cannabis space, have started aggressively improving their websites.

With the pandemic wreaking havoc on the national economy, cannabis companies are not immune. However, in the early days of the health crisis, Florida deemed the medical cannabis market ‘essential.’ That proved to be a boon for cannabis companies in the state like GH, who pivoted to curbside pickup and delivery quickly.

In order to capitalize on curbside pickup and delivery, a strong web presence is very important. GH saw a solid rise in web traffic in the past few months, thanks in part to their continuing expansion of brick-and-mortar dispensaries. Adding to their boost in web traffic, GH saw increased strength in their backlinks profile, indicating further increases in future web traffic.

In May, GH shot up to the 20th hottest brand in the United States, up from the 38th slot in April, according to the Pioneer Index. We can attribute this jump to the brand’s performance in web-related activities. The trend continued into the first week of June, as GH’s web activities were the 2nd best nationwide, with the company becoming the 4th hottest brand in the Pioneer Index.

How to Name and Brand Your Cannabis Business

By Grant Polachek
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Once you have your product and your business model conceived in the legal cannabis industry, it’s time to brand your endeavor. Branding is what will differentiate your company from others in the same cannabis space. It’s a reflection of what you value and why customers should care about your company.

Build brand identity

When branding your cannabis business, the first place to start is defining your brand identity. Working off your original business plan, you need to determine what your company stands for and how this reflects the services or products you provide. Formalizing your brand will create a foundation for all of your marketing materials, collateral, imagery, packaging and design. This will allow you to better reach your target market and build customer loyalty in the competitive cannabis marketplace. Brand identity includes your company’s voice, tone, visuals, values, and mission. These core components work together to demonstrate how customers perceive your brand. It can help to personify your brand and illustrate its personality.

From healthcare to leisure, there are many emerging markets within the cannabis industry. It’s important to know the subtle differences between each type of cannabis business. Knowing your market will help define your identity.

Formulate the first impression

Your business name is your first impression on customers. Landing on a memorable name that speaks to your customers is a crucial decision that affects your bottom line. Reports have demonstrated that a strong name performs up to 33 percent better on the stock market than weaker names. These marginal advantages cannot be ignored in an industry that continues to ramp up. It’s important to select a name that will be both powerful and overcome any social stigma associated with the cannabis industry.The cannabis industry is fresh and innovative and so should your brand and name.

One of the first steps in this process is to review naming constructs. Most brands fit into one of five styles: classic, clever, pragmatic, emotional or modern. The style needs to reflect your brand’s tone and values. It should also appeal to your dedicated audience. Using what you produced about your cannabis company’s identity, you should begin the brainstorming process. You can utilize online tools such as a brand name generator to spark the brainstorm. Squadhelp’s generator is powerful in that it analyzes the accessibility, depth and functionality of each name idea.

Think creatively

The cannabis industry is fresh and innovative and so should your brand and name. Creative names are what customers respond to. It’s what will set you apart from the bland and sterile. Remember your name doesn’t solely have to describe your product or service. Your brand’s name should, however, evoke genuine emotion.

According to Motley Fool, here is a list of the 10 largest cannabis stocks in 2020:

  1. Canopy Growth
  2. GW Pharmaceuticals
  3. Curaleaf Holdings
  4. Cronos Group
  5. Aurora Cannabis
  6. Green Thumb Industries
  7. Tilray
  8. Aphria
  9. Trulieve Cannabis
  10. Harvest Health & Recreation

The majority of these names involve nomenclature and cannabis buzzwords. But they also include names completely unrelated to the industry, proving an original name can drive success.

Feedback is key

Love at first name is real. It’s easy to fall for a name relying heavily on personal preference. But that’s why audience testing is so important. Through proper audience testing, you can gauge whether your favorite name resonates with your key demographic or if there’s another name that better hits the mark. You may also discover that your name is actually offensive or politically incorrect, a fail you truly want to avoid in today’s cancel culture.

The company Bodega changed their name to Stockwell in 2018, after worldwide backlash to the tone-deaf name

One example of this was a startup called Bodega, a San Francisco company that specialized in tech-enabled vending machines. The founders believed the name was a nod to corner stores heavily established throughout New York’s boroughs. Instead, the company received extreme backlash for exploitation and cultural appropriation of these beloved mom and pop stores. In 2017, The Verge said that “Bodega is either the worst-named startup of the year, or the most devious.” Tapping into diverse audience surveys and polls provides valuable feedback to avoid catastrophic launches such as this.

Check for functionality

When you finally settle on a name you want to be sure that you’ve run through a final functionality checklist.

There are three main parts of functionality to review when naming your cannabis business:

  • Read to Speak – Can customers easily say the name aloud after reading it? Do they pronounce the name correctly?
  • Hear to Spell – Can someone easily spell your name after hearing it? Would they be able to Google search it after hearing it once or look your business up on social media?
  • Speak to Hear – Does your name pass the “crowded bar test”? Meaning, would somebody be able to clearly understand your brand name even if it was spoken in a crowded bar? Would whoever heard it be able to repeat the name back in the same situation?

A highly functional name are ones that are easily remembered and often referred to in conversations.

The time is now

The industry as a whole can be a complicated space to understand. Creative branding is an opportunity to educate potential customers about this novel industry as well as debunk myths. After all, two in three Americans support the legalization of recreational cannabis, according to a 2018 Gallup poll. This illustrates that there’s still a population that needs additional cultivation.

By following these steps, your impactful brand name will promote interest and stand out in an industry that shows no sign of slowing down.

New Cannabis Science Course Offered at University of Colorado at Boulder

By Cannabis Industry Journal Staff
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According to a press release, the University of Colorado at Boulder is offering a new course focused on cannabis science through the Continuing Education program at the university during the upcoming Summer and Fall semesters.

The class is called Modern Cannabis Science and will involve a lot of genetic research. The course is sponsored by the Agricultural Genomics Foundation, a non-profit dedicated to scientific research and education in cannabis. In the press release, they describe the course as meant for students who are well informed, but “seek a deeper appreciation of scientific advancements in cannabis genetics.”

Here’s a snapshot of what students can expect to learn from it:

In Modern Cannabis Science, we will explore the range of Cannabis research currently available covering topics such as evolutionary history and global distribution, sex chromosomes, genetic contribution to chemotype, and analyses to aid law enforcement and forensic investigations. We will examine how genetic data allow us to understand relationships between strains and common categories in the Cannabis genus, and why this is important for breeding, policy-making, and medical purposes.

The press release suggests students who enroll can expect to use this knowledge in the cannabis industry. “For example, a budtender will be able to more accurately recommend strains to users,” reads the press release. “Similarly, medical personnel will more fully understand the relationship between strains, the compounds they produce, and how to properly advise Cannabis patients.”

For more information, take a look at the course here.

european union states

International Cooperation: The Next Generation of Cannabis Development?

By Marguerite Arnold
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european union states

The Canadian-German market connection has been a “thing” ever since the middle of the last decade. But this is not the only international cannabis connection. Indeed, firms in multiple countries have been developing international partnerships for quite some time – and not just deals involving the plant or its extracts, but on the cannabis technology front.

This year and going forward expect these to bear fruit, and in interesting ways.

What are the trends? And who is doing what?

Europe
The entire European cannabis market has slowly been developing momentum since 2017 when Germany kicked off its first attempt at a domestic cultivation bid. The first German-grown cannabis is expected to hit pharmacies this fall, and further at a price that will keep everyone else hopping (€3.20 a gram from BfArM to distributors). However, because domestic cultivation was never expected to keep up with patient demand, Germany has become one of the hottest destination markets on the planet.

While there is clearly product still coming in from Canada, the big importer into Germany is actually from Holland (Bedrocan), right across a common border.

european union statesBut Holland is not the only game in town anymore. Europe has long had promise as one of the most international cannabis markets in the world, simply because of relatively open, cross-border trade. Cannabis from Denmark, Portugal and Spain as well as Australia and South Africa have already made it into the German market. Greece, Italy and Poland are all moving into position as major sources of at minimum, floss if not extracts, along with growing interest in Eastern European entries (and not only the Czech Republic).

The intra-European market for cannabis is well underway, in other words, and this is likely to be an increasing trend, particularly as cannabis continues to make waves on the medical front as well as continually mounting evidence that the drug treats difficult to treat conditions including neurological disorders, cancer and the ever-present chronic pain.

Then of course, there is Israel, which is expected to be a big contender now that the country is finally in the export game.

Beyond the direct imports, however, there are also multiple country hops in play (such as Uruguay to Portugal to Germany). Malta is also increasingly shaping up to be an intriguing pass through port, if nothing else.

But of course, Europe is not the only international game in town.

The UK
Despite all of the problems that British patients face in obtaining high quality medical cannabis at a price that is affordable, the UK has actually led the world in cannabis exports (benefitting so far only GW Pharmaceuticals). However many firms have also been cooperating to bring cannabis into the country (from Canada and Holland in particular so far). The biotech partnerships set up by firms like Canopy Growth are also expected to bear fruit as cannabinoid research begins to truly come into its own in the coming decade.

The Americas
Despite the fact that exporting from the U.S. is still difficult (although some firms have managed to export hemp to Europe), there is a lot of cross border cooperation going on throughout the hemisphere (including investment and all kinds of creative partnerships). Canada of course, got its export game going early. Yet one of the more intriguing cross border stories of the last 18-24 months is the amount of South American cultivated cannabis ending up “north of the border.” Changing laws in the region make Latin America a major export location as well as a source for product bound elsewhere including Europe (see Columbia, Uruguay and Jamaica in particular). Mexico is expected to be a power player globally going forward too.

There are also many American firms who have developed strategic partnerships globally beyond the actual plant (including in Israel).

Israel
israel flagThe country is absolutely in the export market, but that is not the whole story. Earlier in the year, the country received its first import from Uganda. There are also multiple U.S. companies in partnership with Israeli firms, and this will increasingly play out in terms of both product and cannabis technology as the market continues to open internationally. American firms, in other words, are still largely prohibited from shipping from the U.S., but they can now do so from Israel, and further, anywhere in the world.

South Africa
Another newcomer, South African firms are partnering internationally (including with American firms) to develop not only product but extraction technology. Cannabis firms here have also already shipped product to Canada and Europe.

Australia
Agricultural exports generally are a major part of the Aussie economy, and cannabis is shaping up to be no exception. Domestic firms are increasingly exporting to Europe (in particular), but partnerships here will be intriguing to watch, particularly as the Chinese market comes into its own. And there are already plenty of firms with partnerships now established or in the last phases of inking out deals with Israeli firms. Canada has been the largest source of imports into the country since 2017.

The Top 4 Things Cultivation Directors Should Discuss With Their Operations Manager Right Now

By Lucas Targos
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Communication is key for efficient interaction between cultivation and business functions at any cannabis operator. So, what are the top four things cultivation directors should be discussing with their operations manager right now, as we face an uncertain Summer 2020 and unique COVID-related challenges (product demand uncertainty, reduced workforce, and immediate response to problems and issues):

  • Labor requirements
    • Operators should be discussing “Who, and what, do I need to operate this facility and how do I make operations more streamlined without diminishing quality, consistency, and yield?”
    • Efficient operations should focus on labor workflow and circulation and document a clear understanding of how employees will move through the spaces while doing their jobs.
    • Having a “less labor” philosophy and understanding—a ‘first in and first out’ mentality—drives down cost of production.
    • By limiting employees’ need to cross paths and segregating processes (e.g. harvest, distro, packaging) in a facility, you can maintain biosecurity and limit the risks of cross-contamination
    • When working with fewer staff members, everyone should be trained to:
      A greenhouse facility that urban-gro helped bring to operation.
      • Operate all necessary equipment
      • Perform keys tasks like nutrient deliver or preventative maintenance
  • Supply chain
    • What sort of products do I use to cultivate, process, distribute and how will potential shortages affect my use/cost related to these?
      • Consider products and supplies that you can order in bulk
      • Examine and update your chemical regime to focus on products that are cheaper to freight ship, and located within the US or even your state
      • Mitigate the risk of availability by using products that are have no shelf-life or expiration issues, and those where the supply chain has not yet had disruptions
  • Automation and technology
    • What’s the availability to allow for remote monitoring and controls?
      • Cultivators can take some of the load off the reduced staff by automating critical tasks
      • Remote monitoring solutions will also allow for faster notification of crop issues
      • Integrating preventative maintenance tasks like equipment schedules and maintenance can increase efficiency
  • Yield expectations
    • Ensure that conversations on yield expectations are as transparent as possible and set realistic and achievable goals
    • Build business models based on the correct numbers that take into account productions numbers on ‘high yield’ genetics versus lower-yielding plants (yield versus price)
    • Ensure you have a detailed plan that combines both plant density and production goals

Here’s How to Run Compliant Digital Cannabis Ads

By Brett Konen
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Advertising your cannabis brand isn’t as easy as it should be—but then again, neither are most things about working in the modern cannabis industry. Here’s the good news: Today there are more avenues available for compliantly advertising your cannabis brand than ever before, particularly online.

So why don’t more cannabis brands run compliant digital ads? Generally speaking, it’s an issue of awareness. Since cannabis brands are currently disallowed from running their advertising campaigns through the modern digital advertising mainstays of Facebook, Instagram, and Google, most business owners believe that digital advertising as a whole is not allowed, and thus most cannabis companies are either underutilizing or completely overlooking their digital ad options.

In fact, the rules barring cannabis brands from advertising with Google and Facebook are specific to those platforms. While Facebook and Google—together known as “the Duopoly”—currently account for approximately half of digital advertising dollars spent in the U.S., the other half of the digital advertising pool—including sites like ESPN, HuffPost, Newsweek, Politico, Barstool Sports, and USA Today—is increasingly open to accepting ad buys from compliant digital cannabis and CBD advertisers. More publishers are opening their doors to cannabis ads every day, and many advertising professionals speculate that the COVID-19 pandemic may speed up the process, as publishers begin to look for new streams of ad revenue in order to weather the economic storm.

Where Can Cannabis Be Advertised?

Today, cannabis industry advertisers can easily run ads across hundreds of mainstream websites using programmatic advertising technology. This is true for both cannabis brands and CBD brands, though they use different programmatic platforms to do so: CBD brands (which we’ll address in more detail later) can use mainstream “demand-side platforms” (such as The Trade Desk) to run their ad campaigns, while cannabis brands can use new cannabis-specific platforms (such as Safe-Reach) created to address the unique compliance needs of the legal cannabis industry.

For those unfamiliar with the term, programmatic advertising refers to the automated buying and selling of online ad space using programmatic technology. In a nutshell, advertisers and their ad agencies use demand-side platforms (DSPs) to set the parameters of “bids” for certain ad impressions based on relevant attributes of the ad space and the viewer who will see it. Publishers put their ad space up for auction via supply-side platforms (SSPs), and ad exchanges play matchmaker to sell the ad impression to highest bidder in the time it takes the web page in question to load.

This CBD product ad can be found on Thesaurus.com

Cannabis-specific DSPs work with other cannabis industry leaders to develop sets of data relevant to cannabis advertisers; they then open these data sets within their platforms to help cannabis advertisers reach known cannabis consumers. These known consumers may be, for example, people who’ve downloaded apps like Leafly on their phones.

A key thing to note is that the cannabis ads themselves no longer need to be shown exclusively on these endemic cannabis sites and apps. In the past, digital cannabis advertisers were generally restricted to buying space on industry-specific sites like Leafly, High Times, and Weedmaps, which pushed prices up due to inventory limits and ran through ad budgets quickly. Ad networks like Mantis attempted to compile this inventory to make the buying process more scalable, but because cannabis has been (and remains) the fastest-growing industry in the United States since 2015, it’s no surprise that endemic cannabis ad inventory has been insufficient to meet demand.

Now, the data sets available through programmatic advertising technology allow ads to be shown to the same cannabis enthusiasts across any website, endemic or not. This makes digital advertising far more affordable for cannabis marketers, and allows for more advanced advertising techniques like building look-alike audiences, cross-device advertising, first-party data onboarding, and ad retargeting. These techniques can be used across all modern digital ad formats, including display, mobile, native, video and digital audio.

Still, even those marketers who are already aware that they can advertise digitally outside of Facebook, Google and endemic cannabis sites may struggle with knowing what they can say and show in their digital ads, particularly if they intend to run those ads in multiple locations or across multiple channels. The broadly applicable rules for running compliant digital cannabis ads are what we’ll discuss now.

Rules for Cannabis Ad Compliance

Thanks to cannabis’s continued federal classification as a Schedule I drug, current digital advertising regulations are governed by state cannabis laws, so they vary depending on where your business operates. This can become particularly confusing if you want to run digital advertisements visible to customers across multiple states (which some states allow—for those who don’t, cannabis ad tech will let you keep your ads within state or local borders too).

Both Ivyside and Weedmaps are featured on this page

Luckily, most cannabis bills are crafted to resemble those that have been passed successfully before them, which means that state laws can be boiled down to a handful of broadly applicable guidelines no matter where you intend to show your ads. The current best practices for advertising cannabis are as follow:

  • No claims of health or medical benefits
  • No elements that could appeal to children (cartoon characters, etc.)
  • No false or misleading statements, including those made about competitors’ products
  • No testimonials or endorsements (e.g. recommendations from doctors)
  • No depiction of product consumption
  • No pricing information, potency statements, or promotional offers
  • Ads for infused products must state “For Adult Use Only”

Using these guidelines, cannabis marketers can more easily create ads to be approved for use in a variety of settings. A few states have their own additional rules: In Florida, a state approval process for ad creative also applies. In Alaska, Arkansas, California, Maryland, Massachusetts, Nevada, Ohio, Oregon and Washington, additional state-specific copy is required in the ad creative.

Note that it’s always important to double-check your state’s most recent requirements, as local rules may change over time. If you’re working with an advertising agency that specializes in the cannabis industry, they can help you with this process; cannabis-specific programmatic platforms like Safe-Reach will also check your ad creative against local requirements as part of their approval process.

Why Advertise Cannabis Digitally?

Prior to the advent of modern, cannabis-specific digital advertising technology, cannabis marketers were light years behind their mainstream industry counterparts in terms of the advertising channels they leveraged to get their message out. Traditional advertising tactics like billboards and print ad buys were popular among cannabis businesses early on due to the lack of digital ad publishers willing to work with them.

The problem with these traditional tactics is one of targeting, measurement, and reporting: It’s impossible to know who has seen your ads, how many of those viewers went to your website or dispensary after seeing them, and what your return on ad spend (ROAS) was. The fact that you can neither know nor control who will see your ad in a print newspaper or on a billboard is why most states have treaded cautiously with their advertising restrictions to avoid ads being seen by minors. In Washington state, for instance, no advertisement is allowed “within one thousand feet of the perimeter of a school grounds, playground, recreation center or facility, child care center, public park, library, or a game arcade admission to which it is not restricted to persons aged twenty-one years or older; on or in a public transit vehicle or public transit shelter; or on or in a publicly owned or operated property.”

This dispensary ad appeared on Variety.com

With programmatic advertising, digital identity data allows advertisers to show their ads exclusively to an appropriate audience—for instance, adults ages 21 and over who live within state borders. Digital advertising also addresses the issues of measurement and reporting, which is why mainstream brands have already shifted en masse to choosing digital over physical ads: You can learn, down to the cent, the return on your digital ad investment, which makes the choice of continuing to advertise an easy one as long as ROAS remains positive. As of 2019, digital ad spending surpassed traditional (TV, radio, print, etc.) for the first time in history, and in 2020, eMarketer estimates that $151 billion will be spent on digital marketing versus $107 billion on traditional. By 2021, 70 percent of all digital ads—and 88 percent of display ads—will be bought and sold using programmatic technology.

As the fastest-growing industry in the United States, cannabis should also be one of the fastest-growing segments in digital advertising, but so far cannabis advertising efforts have been far off pace with the industry’s progress as a whole. However, that is beginning to change as savvy cannabis brands begin to understand and leverage their digital marketing options.

What About CBD Advertising?

The 2018 Farm Bill legalized hemp-derived CBD products in the United States, but did not offer guidance on selling, marketing or advertising them. Most CBD products are thus sold and marketed in a legal gray area, which is only made more confusing by Facebook’s and Google’s policies of rejecting these as “illegal drug” ads (a policy both platforms enforce irregularly). Although CBD brands should still try for approval, and some ads (especially those for hemp-derived CBD topicals) may be approved, CBD advertisers cannot rely on Facebook and Google for ongoing traffic, and ads may be taken down after initial approval regardless of legality.

That said, CBD business owners already have an even more extensive range of digital advertising options available outside of search and social than cannabis brands do. Some websites that do not yet accept cannabis ads will accept CBD ads, and mainstream ad tech platforms like The Trade Desk allow CBD ad buys as long as ad creative meets their internal guidelines for approval. Thus, the de-facto rules and regulations governing CBD advertising today are made by the platforms and publishers running their advertisements. To ensure ad approval on programmatic platforms like The Trade Desk, CBD brands should follow the same guidelines listed for cannabis brands above.

To sum up the current state of digital advertising compliance in the cannabis industry, cannabis and CBD brands should know that there are far more digital advertising options out there than most people realize, and that creating compliant ads is relatively straightforward as detailed above. That said, brands considering an investment in digital advertising should also keep in mind that the current window of opportunity for getting a head start on the competition is already closing day by day as brands begin to realize all the ways they can run compliant cannabis digital ads.

 Suggested Readings 

Programmatic Advertising: A Close Look at Cannabis (IAB)

White Paper: Digital Ads for Cannabis & CBD (PrograMetrix) 

Cannabis Quality Conference & Expo Goes Virtual

By Cannabis Industry Journal Staff
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The prospect of large events with 50 or more people in Illinois taking place in 2020 seems highly unlikely. Illinois released a plan called Restore Illinois that consists of five phases for reopening the economy. Illinois entered into Phase 2 in early May;  it is not until Phase 5 that gatherings of 50 or more people are allowed, and only if there is a vaccine, or a highly effective treatment that is widely is available, or the elimination of new cases over a sustained period of time.

Regardless of federal and state guidance, we feel it would be irresponsible and premature to host a large gathering of people in a confined meeting space this year. That is why, instead of a three-day, in-person event, we will host a series of webcasts over the course of eight weeks in the Fall.

Every Tuesday, starting on September 8 and through Election Day, we will host two presentations and two Tech Talks, followed by a panel discussion. The Cannabis Quality Virtual Conference Series will culminate with a post-election analysis to take place November 10.

This will still be an interactive virtual conference, where attendees can ask questions and get in touch with speakers. We look forward to seeing everyone virtually there.

We are now accepting abstract submissions for the Cannabis Quality Virtual Conference Series. Below you’ll find a list of topic areas we are looking for abstract submissions on:

  • Government Policy, Reform & Legalization Efforts

    This will still be an interactive virtual conference, where attendees can ask questions and get in touch with speakers.
  • State Regulations, Licensing & Requirements
  • USDA Hemp Programs
  • Laboratory Testing
  • Quality & Safety in Manufacturing
  • Cultivation Best Practices
  • Marketing, Branding & Communications
  • Legal, Insurance & Data Analysis
  • Extraction & Infused Products Best Practices
  • Standards, Certifications & Accreditations
  • International Market Analysis

If you’d like to submit an abstract, click here. If you’re interested in sponsorship opportunities, please contact RJ Palermo at Rj@innovativepublishing.net. If you’re planning on attending, stay tuned for announcements to come when registration opens.

We will continue to monitor the situation, but in 2021 we are planning on bringing this event back to Illinois for a face-to-face conference. Until then, we look forward to joining everyone virtually.

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Israel Begins Granting Export Permits

By Marguerite Arnold
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On May 13, months after the Israeli government originally signed off on cannabis exports, a free export order was finally approved by outgoing Minister of the Economy Eli Cohen. This is also sixteen months after the government approved exports of locally grown cannabis (at least in theory) and after the country began importing earlier this year as domestic patients were given priority for existing medical supplies.

However, all the internal barriers have now been officially removed. Exporters who wish to sell medical cannabis abroad are now able to obtain a license, as the order enters into full force by mid-June. The new regulation specifically requires that such products have obtained GMP certification (the pharmaceutical-grade cert required for all medical cannabis in Europe’s medical markets).

Licensing Already Underway

At least two Israeli companies have already obtained such licensing approvals. Cannabics, a company located in both Israel and Bethesda, Maryland, has obtained final approval of its drugs for export to both Canada and Europe, as well as Australia. The company is licensed by the Israeli Ministry of Health to conduct research and development on cannabinoid-based medications and cancer and operates a facility in Rehovot.

Cannabics describes itself as an American pharmaceutical company with R&D operations in Israel.

However, there is another interesting twist to all of this. Cantourage, a German company founded by entrepreneurs behind Pedianos, one of the two earliest importers of medical cannabis into the country (created in 2015 and subsequently purchased by Aurora), announced its import of the synthetic dronabinol to Germany from BOL Pharma, based in Israel, in late April. In doing so, they also became the first company to challenge Canopy Growth in its domination of the synthetic cannabinoid market which remains about one third of reimbursed prescriptions by volume (at least ffor publically insured patients) of cannabinoid medications.

Why Is This Development So Significant?
The European and Canadian markets are clearly leading the world in at least the consumption of cannabinoid-based medications – which by definition are based on extractions of the plant, beyond floß (or flower). Israeli producers have been banned from entering these markets for the last several years due to internal political struggles domestically, and an apparent deal between Israel and American presidents Benjamin Netanyahu and Donald Trump to delay market entry.

This delay also impacted Israeli firms hoping to enter the first German cultivation bid, which was finally decided last spring. It is expected that the first domestically cultivated product will be distributed to local apothekes as of this fall, although this may be slightly delayed as a result of fallout from the COVID-19 pandemic.

This delay is not expected to impact the import market in the country, which is the source of all flower-based medicine here, and will continue to be a strong market segment. The bid itself only called for a limited production of cannabis in Germany, and was already too little to meet the needs of domestic patients.

However, what the potential lag in German product also does is open a door for Israeli products to now enter the market before German-produced cannabis becomes available.

A Steep Uphill Climb
What the COVID-19 pandemic has clearly affected, more than drug entry, however, is something almost as important – namely doctor education. For a producer or distributor to get sales via German pharmacies, they also have to ensure that doctors are prescribing the drug. This is a lot easier if the product is a generic, like dronabinol, because doctors can write prescriptions for a drug which can now be sourced from several sources. It becomes a little harder to do that with any formulated substance, and further one with a “brand” name. Especially because German doctors are right now are on the forefront of an uneasy “flattening the curve” scenario as the economy continues to cautiously resume somewhat normal operations.

The challenge that remains, indeed not just for Israeli entrants, but everyone with new product formulations, is educating doctors about prescribing such medications, and further, obtaining insurance approvals for those who have been prescribed such drugs.

Cost, which is beginning to be addressed by the regulated pricing established here for domestically produced cannabis, is still in the room too.

The Market Continues To Open
Regardless of the struggle, and the costs involved, it is clear that the German market is obviously now finally opening to Israeli firms and on the processed medical front (as opposed to “just” flower).

Further it is also a sign that the market here is maturing, and even specializing.

No matter the obstacles, in other words, and despite the pandemic, the global market for cannabinoid drugs continues to expand.