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Five Things Every Cannabis Business Needs Before They Open

By Tim Allen
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When it comes to small business opportunities these days, few phrases give people the old dollar-sign-eyes more than “legal cannabis”.

From states like Michigan where it’s been approved for both medicinal and adult use, to places like South Carolina where legalization has been a popular topic for ballots and voters, cannabis is slowly turning into one of America’s biggest businesses.

You don’t need us to tell you that – Investopedia reports that (as of Nov. 2020) over 340,000 American jobs were devoted to the handling of plants at various stages along the retail cycle, and the industry was estimated at over $13 billion as of 2019.

Not bad for a plant that’s still technically illegal under federal law, huh?

If you’ve read this far, it probably means you’re hoping to be among the lucky ones who can strike it rich with their own cannabis business. A noble undertaking, but are you really prepared to make your mark? In a field as competitive – and occasionally complicated – as cannabis can be, you really need to lead with your best foot forward, and make sure you’re as well prepared for the various challenges of a fairly new industry as possible.

With that in mind, below is a list of the five things you’ll need to double-check and make sure you actually have access to before embarking on your new business venture.

The right shelving & equipment

You see this a lot with smaller businesses as well as, er, ‘independent growers’. A lot of people assume that they can just buy some greenhouse shelves, line the walls of their business with it, and call it a day, right?

Offering rare or unique cannabis strains is a great way to differentiate

This approach leads to problems more often than not. Even above and beyond the inherent concerns of helping your plants grow safely (and productively!), the sort of equipment you use should reflect the sort of business you’re trying to run. A cannabis retail outlet, for example, is going to need different sorts of shelves and tables than a dispensary or growing facility, as the work being done is completely different.

It will take a little research, but it helps that a lot of businesses these days are starting to offer shelving specifically designed for various cannabis operations. Check to see if any of the big warehouse suppliers near you have gotten into the cannabis game yet – Shelving Inc, Metro, and Rack & Shelf are a few of the bigger shelving names with cannabis offerings as of this writing.

Strong branding

Long gone are the days when all you needed to be successful in cannabis was a booth at the shady flea market, a pun name and a big sign that said “Head Shop” to throw off the authorities.

Far too many cannabis businesses launch themselves headlong into a business plan without stopping to think of a good name, or just settling for the first one they think of. With as crowded as the playing field is quickly becoming, it might honestly be worth it to pay someone to help you come up with a decent logo and branding – it’ll go a long way towards helping you stand out against everyone else using a green font. Places online like High Hopes specifically offer these services for cannabis businesses, so you know they’ll be able to figure out what you’re about more quickly.

An understanding of your consumer base

The exact sort of work your cannabis business performs is going to affect what your potential customer base can be – and vice versa.

Brands are embracing contemporary design more and more

Early on in the planning stages, make sure to figure out exactly who you’re going to sell your products to, as this will inform nearly every other decision your business makes. Do you want to sell directly to the customer, or to work as a distributor for CBD/cannabis retail outlets? Are you prepared to manage and run your own storefront, or are you just going to rent warehousing space to sell your plants to other retailers? If so, do you know who the businesses are in your area that you could work with? Or, if you are planning on entering the retail space, do you know how many other cannabis businesses could be operating in your desired geographical area? Finding an audience may be the hardest part of opening any business, but it’s important work.

Banking that understands your industry

Maybe the biggest drawback to being involved in an industry as comparatively new as cannabis, is that a lot of the old methods of doing business aren’t quite available to you. Many financial institutions of various sizes are limited in the ways they can help finance cannabis businesses, from not understanding the regulations and needs of your industry, all the way to being unable to assist cannabis businesses with banking in the first place.

Finding the right banking services can be challenging

It might be advantageous to look into banks, credit unions or financing companies in your area that specifically offer banking services (like business accounts and the like). A few examples include Aery Group from New Mexico, or Seed to Sale in Michigan. (It’s important to note that many of these companies, such as Aery Group, can only service the state they’re located in due to different state-by-state regulations – check ahead to make sure you find a place that can help you!)

Knowledge of the needed licensing and regulatory requirements

Getting a license to open any business is a tricky prospect on a good day, but for an industry as wide-ranging and varied as cannabis, getting licensed can require a lot of homework.

Even if you’re lucky enough to be setting up shop in a state that allows for the sale of cannabis, the licensing process can vary widely from state-to-state. In New Mexico, for example, it can take months to acquire a license simply due to the amount of paperwork, research and submissions required to cement your business. Before going too far down the rabbit hole of opening your business, make sure to take the time you need to completely research and understand the various local and state regulations you’ll need to adhere to for your business to get off the ground.

Obviously, there’s going to be a lot of other hurdles and requirements that come with starting a business – but by remembering these five things, you’ll be off to a much better start than many others.

Digital Marketing Tips to Help Grow Your Cannabis Business

By Steven Clayton
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The cannabis industry is quickly growing with the chance of sales tripling to $30 billion by 2023. With many rules and regulations that business owners must follow, marketing your cannabis business can be a challenge. While many may not know where to start with marketing, there are organic and simple tactics that owners can implement that can help drive more traffic to your website, resulting in more leads and sales.

Digital marketing is the most effective way to improve your brand’s online presence, reach your target audiences, rank higher on Google searches and ultimately drive more sales. Today, 81% of people turn to the internet before making a purchasing decision, but determining what digital marketing efforts are most valuable can be a daunting task for business owners. When looking to implement digital marketing strategies, businesses should leverage the 80/20 rule—focusing efforts on the 20% of the digital marketing tactics that yield 80% of the most impactful results. With this in mind, some of the key digital marketing tactics to implement today include:

Keep up with Reputation Management

This dispensary ad appeared on Variety.com

Having positive reviews for your company is key to having customers come back, and for new customers to try your business out. With 72% of customers not making a buying decision until they’ve read reviews, companies should prioritize soliciting for reviews from customers and stay up to date on the reviews that are coming in. Businesses should respond to all reviews, whether good or bad, as this shows to customers that the brand cares and values the customers opinion and feedback and wants to continue creating a positive experience for everyone. Reviews should be shown prominently on the business’s website for customers to clearly read and can also be used in emails or social media posts.

Make Search Engine Optimization (SEO) Top of Mind

Focusing on developing a solid SEO strategy ensures that customers can find your company on Google when they are searching. In оrdеr to rank well in search engine results, websites need search engine optimization (SEO), which is a powerful tool and a must if your company wants to be found online by customers. With Google processing 12.18 billion search queries in July 2020 alone and 93% of all online experiences beginning with a search engine, making sure your business can be clearly found and seen online is imperative for your cannabis business’ success. Keeping your website and basic information—such as hours, contact information and prices—up to date will keep your SEO high. 

Incorporate Customer Relationship Management (CRM)

PlugPlay, a California cannabis brand, stays relevant with creative posts like these.

Gathering customer emails is KEY and your business should have a solid plan on how to capture them, whether that’s an incentive for providing an email when they enter the site or one at checkout in the retail shop. Businesses should have the customer’s name, phone and email as a baseline to use to email or text blast out the latest promotions. From there, companies can also create a loyalty program for customers in order to give them an incentive to keep purchasing from your business. By creating targeted and personal messaging to customers with the help of CRM tools, loyalty is created to the brand, which can increase purchasing power and the amount spent.

Embrace Social Media

Social media is a part of almost everyone’s life and it’s the perfect opportunity to give customers an inside view into your company, the products you sell and any promotions or specials going on. Utilizing Facebook, Instagram and Twitter is essential for directly reaching your customer base with visually appealing and timely content. Social media is an opportunity to get personal with your brand and build relationships with your customers for them to see what kind of brand you are. Social pages should remain up to date and should be keeping up with the comments that followers are saying.

As more dispensaries and cannabis businesses pop up across the country, marketing your business may seem like a challenge for business owners, but simple and useful digital marketing tools can be incorporated into the business plan to create more quality leads and sales. Ensuring you have a strong digital presence for customers to find you and learn about your business online is the key to success.

Jane & Leafly Join Forces: An Interview with Socrates Rosenfeld, CEO of Jane

By Aaron Green
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As retailers accept the end of in-store shopping as we know it and start adjusting to e-commerce, an improved and more involved customer experience will be imperative for an e-retailer to grow, let alone stay afloat.

Jane recently announced a strategic partnership that combines Jane’s best-in-class product catalog and business tools with Leafly’s consumer marketplace and reach. Together, the companies will build solutions that empower cannabis retailers with fast and simple online shopping experiences that increase consumer purchase behavior. The partnership will seek to help instill consumer trust in the online shopping experience, build stronger customer acquisition tools for retailers, and help dispensaries grow their ecommerce capabilities with consistency and automation.

This strategic partnership comes after a massive year of growth for both Jane and Leafly. In the past year, Jane powered over 17 million orders and $2 billion in cannabis sales, while Leafly has seen more than 4,500 cannabis retailers in North America leverage their platform to bring new customers through the door.

Socrates Rosenfeld, CEO of Jane

We spoke with Socrates Rosenfeld, CEO of Jane to learn more about e-commerce and online marketplaces and how Jane and Leafly came together as partners, rather than competitors. Prior to Jane, Socrates was an Apache helicopter pilot for the US Army later transitioning to consulting with McKinsey.

Aaron Green: Socrates, thanks for taking the time today. What trends are you seeing and following in the industry?

Socrates Rosenfeld: Always happy to chat about the industry. Thanks for having me.

If you were to ask me that question a year ago, I’d say having a digital footprint was something that would give a dispensary or a brand a nice advantage. Today, it’s a must-have for survival. Where it used to be one or the other; online or offline, now we are able to merge the two by replicating a physical store into a digitized form to extend its reach far beyond its walls.

As things become more digitized, information becomes more necessary to run operations. With that we are able to meet the expectations of the consumers who are accustomed to convenience and curation. The omnichannel experience provides the best of both worlds. Access and ease of search with the ability to pick up or have the product delivered the same day from a locally owned and run business.

Reviews are one of the most important aspects of this unification of online and offline. It is something that is lost in solely offline purchases, that we’re now able to collect and organize. This product information allows us to provide customers the purchasing power to make a well-informed decision.

At Jane, we believe it is possible to create wins for the dispensaries, brands and customers – and digitization creates the opportunity for that to happen. I think there’s no better incubator in the world than the cannabis industry to prove that online and offline retail can work in harmony.

Aaron: Jane is the largest e-commerce platform in North American cannabis and Leafly is the largest marketplace in North American cannabis. What’s the difference between an e-commerce platform and a marketplace?

Socrates: Great question. There is definitely some overlap between the two, which is why it makes so much sense for us to collaborate. Ultimately though, our focus and expertise are different. Jane’s ecommerce platform serves as the industry’s digital infrastructure that pushes digital products across various order origination points like a dispensary’s own website, a brand’s own website and now, Leafly’s marketplace. Paired with Leafly’s industry-leading content and market information, together we can complete the entire online cannabis shopping experience – from product discovery through order fulfillment.

Aaron: At first glance, one might think that Jane and Leafly are competitors. How did you see it differently? And how did this partnership come about?

Socrates: Not only is our tech complementary, but we are aligned on mission – to empower consumers, dispensaries and brands with the integrity of the plant in mind.

We want to make it simple for consumers to reach the products that will be most helpful for them. We want to make it possible for dispensaries and brands, regardless of their size, to be able to compete on an even playing field.

It all comes back to being good stewards of the industry. Education and access create a healthy demand for a diverse range of products. That means that the plant stays in the hands of many – safeguarding it from homogenization.

Aaron: How do consumers benefit from the partnership?

Socrates: It really is all about bringing this industry in line with any other retail vertical and meeting the customer where they are. It unlocks more avenues for customers to discover products and access a vast catalog of information and verified customer reviews. Bottom line, this partnership makes shopping for cannabis as simple as shopping online for everything else in the world, while also ensuring the success of the sellers.

Aaron: When you say the sellers, are you talking about the dispensary or the brands?

Socrates: Both, we want to provide value for the entire ecosystem. We can do that directly for dispensaries and brands by enabling an automated ecommerce platform that they can use to power their own website. At Jane, we know that technology can unlock value for everyone, where it is not a zero-sum game and success for one means success for the other. With Jane, both the dispensaries and the brands win.

Aaron: What kind of regulatory challenges do you face through the partnership?

Socrates: There are no real regulatory challenges for the partnership itself. The entire industry operates under regulatory challenges, but it is those regulations that have been the catalyst for innovation. I see the opportunity for legal online payments and national product distribution to play a large role in shaping the industry soon, and a partnership like this will ensure a seamless transition for the industry as things continue to evolve.

Aaron: Final question. What are you personally interested in learning more about?

Socrates: I’ve always been curious about disruptive models. The companies, not just in tech, but any company that has set out to do things differently and has been able to hold true to a vision. That’s what interests me, and I think I will always have something to learn and draw inspiration from. 

Aaron: Excellent, that’s the end of the interview, Socrates!

Socrates: Thanks, Aaron.

Integrating a Culture of Quality Into the Cannabis Industry

By David Vaillencourt
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The culture of the cannabis industry is filled with passion that many envy, and for valid reasons. The roots of the cannabis plant go back thousands of years. As of this writing, there are no documented human deaths that were caused by a phytocannabinoid overdose. However, it is not all rainbows and unicorns.

Before breaking ground, fundraising, proper facility design, competitive application and permitting requirements are just the start. Once operating, businesses struggle to stay current with regulations that continue to evolve. Cannabis cultivators struggle to scale while mitigating pest infestations, which is a part of life in the conventional agricultural industry. A lack of consistent products frustrates consumers, while regulators and policy makers continue to struggle on the best way to regulate a commodity that has seemingly endless demand. The reality is dizzying!

However, amidst all of the challenges and opportunities, a continually overlooked tool stands out: a Quality Management System (QMS). Merriam-Webster defines a system as “an organized set of doctrines, ideas, or principles usually intended to explain the arrangement or working of a systematic whole.”

A QMS documents processes, procedures and responsibilities that ultimately direct an organization’s activities to meet customer and regulatory requirements as well as continually improve its effectiveness and efficiency. In other words – it steers innovation through the collection of data while ensuring products are safe for the consumer. For further reading, the American Society for Quality (ASQ), now over 70 years old, is an excellent resource and provider of resources and formal training programs that are recognized and revered around the world.

Step 1: Define your stakeholder requirements

This all starts with knowing your stakeholder (e.g., customer, regulatory body) requirements. For simplicity’s sake, let’s start with your customer; at a fundamental level, they expect safe, consistent and reliable products that impart a certain experience.

How does that translate into specifications? Let’s look at them one at a time.

What does “safe” mean? For an edible, safe means the product is free of physical, chemical and microbial hazards. Knowing what potential impurities could be in your product requires understanding your raw materials (inputs) and the manufacturing process. To take a deeper dive, some of the aspects of safety and quality, product specifications and testing considerations are discussed in this recent Cannabis Industry Journal article by Dr. Roggen and Mr. Skrinskas here.

An example of a compliant label in Oregon

What does “consistent” mean? This builds off and complements the safety profile. It could mean a consistent fill level, an acceptable range of cannabinoid concentration, and so on. For example, in the US Pharmacopeia’s peer-reviewed article about quality attributes of cannabis inflorescence (commonly known as flower or bud), they recommend 20% as the acceptable variance in cannabinoid content. For a product labeled as having 25% THC, the product will actually test to between 20% and 30%. This may be surprising, and discomforting for some, but the reality is that products on the market consistently fail to meet label claims.

What does “reliable” mean? That could mean that you always have inventory of certain products on the shelves at your dispensary. Defining “always” as a SMART goal – perhaps it means that you will have your top 3 products in stock at least 90% of the time. Customers need to feel like they can rely on your business to provide them with the products they want. Take the time to capture the data on what your customers want and work to satisfy their needs and you’ll watch your business really accelerate.

Step 2: Build your processes to meet these expectations

This is where your written standard operating procedures (SOPs), forms and records come into play. Your SOPs serve to memorialize your operations for consistency. Most SOPs in the cannabis industry are not written by the actual operators of a process. Rather, they are written by the legal and compliance team without review by the operators to confirm that what they are stating reflects operational reality. The audience needs to be the operators. Without effective SOPs that are utilized by your employees, your business will struggle to meet the established specifications. Cannabis businesses in Colorado, the oldest regulated adult-use cannabis market in the United States, continue to see 1 in 8 of their products fail final product testing! Cannabis businesses that understand their processes, document them in SOPs and have records to prove they follow their SOPs (see Step 3) are able to reduce errors that ultimately lead to costly rework and product failures.

Consistency in quality standards requires meticulous SOPs

Step 3: Monitor and improve

You have your requirements, you have your process, but how do you know that they are being adhered to? By the time you have results from a third-party lab, it’s too late. Look internally. Records and logs that show preventive maintenance was performed, room and canopy temperature and humidity checks, inventory reports, production records, extraction equipment report and employee training records shouldn’t be filled out only to be filed away. These records are data, which is your most valuable tool. Unfortunately, records are one of the most overlooked assets in today’s cannabis business. A team independent from operations (typically a Quality Unit) should be regularly reviewing these for inconsistencies and trends that can alert you to catastrophic failures before they occur.

Initially, the additional expenditure and learning curve may make this seem like an added burden, but keep in mind that succeeding in today’s cannabis industry requires long-term customer retention. By biting off one piece at a time, you can slowly implement a QMS that will improve your business, increase customer satisfaction, and ensure your brand is a staple for years to come. Remember, quality and compliance is a journey, not a “set it and forget it” situation.

The definition of a Quality Management System includes ‘continuous improvement’. Look forward to a future article which will discuss the importance of tools like a CAPA Program – Corrective Action Preventive Action (which all cannabis license holders in Colorado are required to have in place as of January 1, 2021) and how they complete your QMS, keeping you compliant and mitigating your business risks!

How Small Dispensaries Can Stay Competitive in Today’s Market

By Claudia Post
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Small cannabis dispensaries face different challenges than those seen with large, multi-state operators. To this end, massive companies like MedMen and Grassroots Cannabis need to accommodate multi-state operations’ compliance challenges. Conversely, small dispensaries must learn to compete with the big box retailers of the cannabis industry.

Small cannabis dispensaries must figure out how to make their size an advantage against larger business entities to stay competitive. To this end, they must critically assess the corporate structure of large cannabis companies like Green Thumb Industries to look for operations and m​arketing opportunities​ still “left on the table” for smaller operators.

Luckily, owning and operating a small cannabis dispensary affords creativity and innovation in the workplace. Namely, because small businesses can quickly implement change and pivot to the demands of the ever-changing cannabis landscape. Conversely, due to corporate structures’ difficult navigation, their larger counterparts must go through far more effort to implement operational changes. To better understand how small dispensaries can stay competitive in today’s market, we put together some criteria to examine.

Cross-Training Employee Teams

The fact that small cannabis dispensaries do not have many employees significantly reduces operating costs. However, to capitalize on the savings of a small employee team, you must cross-train your staff. Because if a small team can handle all the required tasks of a shift, you will never waste money on over-staffing your dispensary operation.

budtenderpic
A bud tender helping customers at a dispensary

Looking at the specific jobs of a small cannabis dispensary, business owners should ensure that budtenders are trained to handle nearly every business task. To illustrate, you should train budtenders to open and close the store, conduct inventory work, recommend products and operate seed-to-sale software. Not only does this cross-training keep you from overstaffing your dispensary when it is slow, but it also insulates your business during busy market fluctuations.

Please note, once you train budtenders to handle a variety of tasks, you should also pay them more than the industry average. In doing so, you insulate yourself from the high turnover rate that plagues the cannabis space.

Lean Operating Principles

Lean operating is a practice that has exploded in popularity across the business world. To help teach lean operating principles, specialty training companies offer Six Sigma certifications. These certifications help business owners and executives save money on operational efficiencies. Methods taken from Six Sigma can be incredibly impactful for small cannabis dispensary businesses.

According to the ASQ professional training w​ebsite​, “Lean Six Sigma … drives customer satisfaction and bottom-line results by reducing variation, waste, and cycle time, while promoting the use of standardization and flow, thereby creating a competitive advantage.”

Lean Six Sigma principles can be beneficial with inventory control in small cannabis dispensaries. To this end, these businesses should apply analytics to track consumer behavior within their stores. After that, they can use data to create precise sales forecasts and conduct highly accurate product procurement. The end goal being to increase liquidity by reducing money tied up in a bloated inventory of unsold cannabis products.

Personalized Experience

Due to their small size, single dispensaries have the luxury of customizing the retail shopping experience. As such, without the added pressures of corporate oversight, small operators have the creative freedom to make for highly memorable shopping experiences within their stores. In going the extra mile on things like interior design, small dispensaries can help ensure customer retention and benefit from word-of-mouth marketing.

The dab bar at Barbary Coast

For example, ​Barbary Coast Dispensary​ in San Francisco, CA, has the look and feel of a high-end speakeasy, making it the perfect match for the Bay Area’s aesthetic sensibilities. The dispensary interior is decorated with a 19th-century touch and features a dab bar, where clients can enjoy the surreal atmosphere while consuming some of California’s best cannabis. A visit to a small dispensary like this will likely leave a lasting impression.

Memorable retail shopping experiences often translate directly to customer loyalty. In turn, this dynamic directly impacts your bottom-line concerning marketing expenses. Notably, a steady base of loyal customers will sustain your business, significantly reducing your marketing costs. In the end, marketing can be directed at retaining clients through loyalty programs and customer engagement – both can be mainly handled “in house” and relatively inexpensively.

Product Differentiation

Small dispensaries can utilize ​product differentiation​ to stay competitive in today’s market. To this end, small operators are blessed with the ability to pivot quickly with new product offerings. Conversely, large dispensary chains with corporate structures must go through rigorous steps before launching new products at their stores.

Offering rare or unique cannabis strains is a great way to differentiate

Small cannabis dispensaries can immediately “get out ahead” on new product trends as they arise. For example, you can offer rare cannabis strains or boutique extracts that none of the larger dispensaries carry.

By the time the larger dispensaries in your area catch up on the current trends, you can move on to the next one. We recommend making alliances with some of the top craft growers in your area to make this possible.

Every year, the cannabis industry grows more competitive. As this business evolves from an underground affair to a multi-billion-dollar enterprise, the scope and sophistication of cannabis dispensary operations grows exponentially. Within this ever-changing dynamic, many small dispensaries fear the wayside will leave them.

Yet, if you approach the market with creativity and zeal, you can make the additional market pressure work to your benefit. By focusing on critical facets like cross-training employees, lean operating principles and product differentiation, you can build a profitable and sustainable cannabis dispensary by making small size a competitive advantage.

It’s High Time for the Cannabis Industry to Pay Attention to Contact Compliance

By Daniel Blynn
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Communicating with consumers through the telephone—either by text messages or by calls—is a great way to engage with them. Indeed, a recent analysis of text messaging trends reveals that most consumers check their cell phones more than 20 times a day, with almost 20% saying they check it more than 50 times.1 Text messages have a nearly five-times higher open rate than email, and the average consumer has 96 unread emails in his inbox compared to about one unread text message at any given time.2 In short, used properly, text messaging is an effective medium to reach consumers. And cannabis companies have embraced texting with open arms, especially given that other forms of advertising currently are off limits to the industry.

But with the utility of text messaging consumers comes substantial risk. Cannabis companies are frequent targets of private litigation arising out of their texting practices. Over the past two years, dozens of class action lawsuits alleging unlawful text messages have been filed against cannabis companies, including well-known multistate operators and less recognizable ones. Most of these cases are ongoing and may rightfully be considered “bet the company” litigations. For example, a pending case against cannabis delivery company Eaze Solutions, Inc. alleges that unsolicited text messages were sent to 52,104 individuals.3 Assuming each putative class member received just one text from Eaze, the statutory damages exposure ranges between $26 million and $78 million. The court twice has rejected proposed class settlements of $1.75 million and, later, $3.5 million as being too low. Given the potential exposure, before cannabis companies click the send button on a text message, they need to ensure that they’re abiding by the law.

At the federal level, the Telephone Consumer Protection Act (TCPA) regulates all types of text messages, telemarketing and transactional/informational alike. Generally speaking, the TCPA governs how text messages are sent (i.e., manually versus automatically dialed), and how calls are conducted and voicemail messages delivered (live representative versus “artificial or prerecorded voice”).4 The TCPA also contains do not call rules applicable to marketing messages. The TCPA is enforced by the Federal Communications Commission (FCC) and, notably, through private lawsuits, including class actions. Under the TCPA, a private plaintiff can seek statutory damages of $500 for each unsolicited autodialed text message (or unsolicited call that utilizes an artificial or prerecorded voice or delivers a prerecorded message). If a solicitation text is sent to a telephone number registered on the National Do Not Call Registry or the cannabis seller’s own internal do not call list, the statutory damages are “up to” $500 per call or text. In all cases, statutory damages may be trebled to $1,500 if the TCPA violation was committed either knowingly or willfully.

These rules fit atop myriad state telemarketing and do-not-call laws, which may be more restrictive than the TCPA.

While I could fill up this entire website with the various calling and texting issues with which sellers generally struggle under the TCPA—such as the use of artificial or prerecorded voices and prerecorded messages, how to handle reassigned numbers, revocation of consent issues, etc.—this article focuses on the basic rules governing how cannabis companies can text consumers, and what types of consent they need to do so under the Act.

Overview of TCPA’s Consent Rules

Under the TCPA, a seller is required to have a consumer’s “prior express consent” in order to send an autodialed non-marketing text message to a cell phone; The consent rule for autodialed marketing text messages to cell phones are different in that they require “prior express written consent” (EWC). No consent is needed in order to manually send a text message (and note that “manually” does not necessarily mean that an individual must dial all ten digits and click send from a standard smartphone).

“Prior express consent” is a lower level form of consent and generally exists where a consumer voluntarily has provided her telephone number to the seller.

“Prior express written consent,” on the other hand, is a heightened consent standard requiring a written agreement bearing (1) the signature of the person called (either traditional “wet” signature or an electronic/digital one) that clearly authorizes the seller to deliver or cause to be delivered to the consumer telemarketing messages; and (2) the telephone number to which the signatory authorizes such telemarketing messages to be delivered. If the seller utilizes an autodialer to send a marketing text message to a cell phone, then the written agreement with the consumer must also clearly and conspicuously disclose both that (a) the text may be sent using an autodialer, and (b) the consumer is not required to provide his consent as a condition of purchasing any goods or services. This EWC to be contacted must have been provided by the consumer before the text is sent. Unlike the lower standard for prior express consent, the mere provision of a cell phone number to the seller does not constitute the required EWC to be contacted at that number via an autodialer marketing purposes.

Confusing enough? Don’t worry, a table summarizing the current TCPA consent rules is below:

What Type of Text Are You Sending?

Generally, the type of consumer consent that is needed to send a text message is a function of the type of text and how it is being sent. “Telephone solicitations” are subject to more restrictions than purely informational or transactional text messages. The TCPA defines “telephone solicitation” to be “the initiation of a [text] message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.”

On the other end of the spectrum lie pure informational or transactional text messages. These are communications designed to provide information, rather than promote products and services (in the case of informational calls), and to “facilitate, complete, or confirm a commercial transaction that the recipient has previously agreed to enter into” (in the case of transactional calls). For example, customer satisfaction survey texts and texts to confirm orders and deliveries are informational and transactional, respectively.

Finally, the TCPA also covers a third category of text messages—“dual purpose” texts. These are texts with either a customer service or informational component as well as a marketing one. Because courts and the FCC take an expansive view of what constitutes telemarketing, dual purpose texts are treated as pure marketing messages and subject to the more rigorous standards to obtain the requisite level of consumer consent.

Common examples of texts that cannabis companies send and the corresponding level of consent needed are as follows: 

  • Autodialed Text Messages: Under the TCPA, an autodialer is defined to be equipment, which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and to dial such numbers without a requisite level of human involvement. However, there currently is a “significant fog of uncertainty” as to what is and is not an autodialer, with different courts reaching conflicting decisions as to, for example, whether simply dialing from a curated list of targeted telephone numbers constitutes autodialing, or whether the numbers on that list must have been randomly or sequentially generated in order for a platform to constitute an autodialer.
  • While proceedings are ongoing at the FCC to clarify the autodialer definition, the Supreme Court recently agreed to decide the autodialer issue during its next term in a TCPA case filed against Facebook; a decision is expected by May or June 2021. Notably, in mid-September 2020, the Department of Justice filed a “friend of the court” brief taking the industry-favorable position that a platform itself must randomly or sequentially generate the telephone numbers that it texts to be considered an autodialer under the statute.
  • Texts sent by autodialer (whether the autodialing functionality is actually used to send the text or not) require consent from the recipient. Note that this rule generally applies to both individual and business cell phone numbers. As long as the text is not a solicitation message, then consent may be obtained orally. Alternatively, if a consumer provides his cellular telephone number to you via an online lead form or during the checkout process, then this should be sufficient to constitute “prior express consent” to receive autodialed non-solicitation texts, such as order confirmations or delivery updates. The key to obtaining prior express consent, however, is that the consumer provide you with his telephone number voluntarily.
  • However, EWC is required to send a text for marketing purposes using an autodialer. The EWC requirements are described above and examples of EWC are below.
  • Note that, under the TCPA, the seller has the burden of demonstrating that it had the requisite level of consent to send the text in question. Thus, cannabis companies should maintain records evidencing such consent. A good rule of thumb is to maintain such records for a period of five years from the date of text, which covers the TCPA’s statute of limitations and the limitations periods under most state telemarketing laws.
  • Manually-Dialed Text Messages: If a cannabis company manually sends text messages—e., using a device that does not have the capacity to autodial—then no special consent is needed. However, even for manually-dialed texts, applicable do not call lists must be checked.
  • Texts to Numbers on Do Not Call Lists: The TCPA also prohibits companies from sending marketing texts to consumers whose telephone numbers are registered on either the National Do Not Call Registry or the seller’s own internal do not call list, unless an exemption applies, such as calls with the consumer’s EWC or to consumers with whom the seller has an “established business relationship.”5 The TCPA’s do not call rules are agnostic to how a telephone number is dialed, whether it be manually or by automated means. Be sure to scrub against relevant do not call lists.

Best Practices for Obtaining Proper Consent

As noted above, for autodialed non-marketing text messages to cell phones, the lower level of simple “prior express consent” is required. Prior express consent is deemed to exist by virtue of a consumer having provided his telephone number to a cannabis company, either orally or in writing.

EWC for autodialed solicitation text messages, however, requires more. First, specific disclosures must be made “clearly and conspicuously” to the consumer. Specifically, a consumer should be advised and agree that, by providing his telephone number to the cannabis company, he is agreeing (1) to receive potentially autodialed (2) marketing text messages, and (3) that he is not required to provide his consent as a condition of making a purchase. This disclosure should not be placed beneath a submission button on a lead form or checkout page (unless an unchecked check box is utilized to demonstrate that the consumer has reviewed and accepted the disclosure); it needs to be unavoidable. The disclosure should be presented in readable, crisp font, both in size and in color, that contrasts against its background. For example, the following disclosures likely would pass muster to demonstrate EWC:

As you may now appreciate, the TCPA is a minefield (and this article just scratches the surface). However, with planning and a good compliance program, the law can be navigated to minimize risk while, at the same time, allowing for communications with cannabis consumers. Remember, an ounce of compliance now can lead to a pound of litigation prevention later.


Disclaimer: Using, distributing, possessing, and/or selling marijuana is illegal under existing federal law. Compliance with state law does not guarantee or constitute compliance with federal law. This informational overview is not intended to provide any legal advice or any guidance or assistance in violating federal law.


References

  1. Zipwhip, 2020 State of Texting, at 4 (2020).
  2. Id. at 11.
  3. See Lloyd v. Eaze Solutions, Inc., No. 3:18-cv-05176 (N.D. Cal.).
  4. Although the TCPA utilizes the term “calls,” courts have found the statute applies with the same force to text messages. This article focuses on text messaging but most of the principles extend to calls as well.
  5. There are two types of “established business relationships” (EBRs) under the TCPA: (1) inquiry EBRs and (2) transactional EBRs. Pursuant to a transactional EBR, a seller may text a consumer whose telephone number is listed on the National Do Not Call Registry for up to 18 months after the consumer’s last purchase, delivery, or payment—i.e., from the date of the seller’s last transaction with the former customer—unless the consumer asks the seller to stop calling him. In that case, the seller must honor the do not call request by placing the consumer’s telephone number on its own internal do not call list. Under an inquiry EBR, the seller may text a consumer who has inquired about its products or services, but only for up to three months. Again, if the consumer asks the seller to stop calling within that three-month timeframe, it must honor the request and add the consumer’s telephone number to its internal do not call list. Telephone numbers on the seller’s internal do not call list should remain on that list indefinitely or until the consumer subsequently provides her prior express written consent (or explicitly asks to be removed from the internal do not call list); a new EBR will not override an internal do not call request. Indeed, as to the latter, the Federal Trade Commission and several state attorneys general made this point clear in their briefing in a recent TCPA and Telemarketing Sales Rule litigation then-pending in Illinois federal court; the practical reason for the rule is that a consumer may wish to do business with a seller yet not receive telemarketing calls.

Why Organic Should be the Future of CBD

By Josh Epstein
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The hemp industry is rapidly growing, but it’s no secret that it suffers from a major legitimacy problem. When manufacturers choose to certify their products and processes under a third-party agency, such as the USDA, it is a way for those companies to gain credibility with new customers.

USDA LogoThe USDA’s organic certification program is a great way to increase transparency and trust with both ingredients and processes used within the hemp industry. Organic certification is a rigorous audit program to review both manufacturing facility design and production process plans with the ultimate goal of increasing supply chain sustainability.

Investing in organic certification is a smart business decision – especially in today’s competitive CBD market. A recent Bloomberg report has shown that COVID-19 has actually accelerated organic food sales in the US due to increased demand for health-conscious foods and drinks. “Sales of organic food and drinks surged 25% during the 17-week period ended June 27,” according to Nielsen Data.

Organic certification is one way to differentiate between the thousands of seemingly identical CBD products being sold in the marketplace today. From a consumer perspective, organic certification provides both supply chain transparency and increases confidence with brands and products they already love. It also provides a form of quality assurance to skeptical consumers, especially those who avidly read product labels prior to making a purchasing decision. Members of this “label reader” demographic will consistently choose organic products for the quality and transparency it provides with pure and natural ingredients.

Not only does certification support ethical practices, it’s also good for business. According to the USDA, “Food labeling can be confusing and misleading, which is why certified organic is an important choice for consumers. Consumers are willing to pay a premium for food that carries the USDA organic seal, or that contains organic ingredients.”

Organic farming and production processes significantly contribute to increasing sustainability within the CBD industry. In general, organic farming is a growing practice for farmers across the US. According to the Pew Research Center, “There were more than 14,000 certified organic farms in the United States in 2016, according to the latest available data from the U.S. Department of Agriculture’s National Agricultural Statistics Service. This represents a 56% increase from 2011, the earliest comparable year.” The USDA has found that organic production practices can improve water quality, conserve energy, increase biodiversity and contribute to soil health. In terms of organic farming, soil ecology and water quality are both protected by farmers committing to working within regulated guidelines.

Organic certification ensures transparency and trust with a consumer-friendly approach to ingredient products. This comes on the heels of research showing that the CBD market lacks credibility. Organic CBD should be the next step all brands should take to ensure they’re adapting to changing consumer preferences.

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Need to Improve Your Cannabis Initiatives? Consider Marker-based Augmented Reality

By Amanda Byrd
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Augmented Reality (AR) used to be something us mere humans only dreamt about. Now, AR is the norm and is seen in thousands of apps that people use every day. In fact, the forecast for the AR market is projected to reach up to $75 billion in revenue by 2023.

This is largely in part due to the fact that many smartphone apps now use AR as their default engagement method. And, with more people than ever using their smartphones to shop, the opportunity to engage through AR is easier than ever.

To give you a better idea of just how regularly we engage with AR, think about the popular apps Snapchat and Waze. Both apps utilize AR in some way – Snapchat uses AR to create the app’s infamous filters, and Waze uses AR to offer pop-up coupons and other promos based on the user’s location.

Another popular type of AR is marker-based AR. This form of AR is when a mobile app lets users scan the “marker” or image for a rendered interaction. Marker-based AR can be especially useful to cannabis businesses and offers a relatively low price point and easy execution.

Here are just a few ways marker-based AR can revamp your cannabis business and take you to the next level.

Education

The canna-curious are becoming one of the largest audiences in relation to the sustained growth of the cannabis industry, and it’s more important than ever to provide valuable information to this demographic to encourage their purchasing decision. Considering the fact that 65% of the world is comprised of visual learners, showing a video will have a far greater impact compared to talking them through a product.

By utilizing marker-based AR, a budtender can quickly activate video content from packaging or marketing material to demonstrate how a product works and its most important features. This provides an easy and effective way to quickly educate customers and entice them to make a purchase. 

Engagement

Connecting with customers is more important than ever thanks to the fragmented distribution system in the cannabis industry. Capturing customer information and building relationships is crucial to a brand’s longevity.

AR can support two aspects of the customer journey: in-store and post purchase. Fifty-five percent of shoppers use online videos while they’re in the store making a purchase, and eight out of ten people are more likely to purchase after viewing a brand video.

An AR app that provides customers with support during and after their purchases not only encourages sales but also provides brands with the opportunity to engage with push-notifications and direct marketing, which ultimately encourages additional product purchases. With more people than ever using their smartphones to shop, the opportunity to engage through AR is easier than ever.

Experience

The experience a consumer has with your brand can make or break their brand loyalty. As the Chief Marketing Officer for Philter Labs, Inc., I’m constantly looking for authentic ways to connect with our customers.

We recently partnered with Daily High Club, a monthly subscription box that offers custom glass pieces and must-have smoking accessories inspired by cannabis influencers. For June, Daily High Club featured two fan-favorite influencers: MacDizzle420 and Koala Puffs.

Using marker-based AR, we activated a video montage featuring the influencers that could be viewed directly from their custom piece of glassware. Subscribers were able to engage with the influencers while enjoying the glassware which added a new element to the experience that was both engaging and immersive in a way that was never possible before.

At PHILTER, we’re committed to continue using AR to supplement our marketing strategies. As a proponent of the technology, I truly believe that as brands work to differentiate themselves in the space, leaving a lasting impression will be the catalyst for brands to thrive and grow in an increasingly competitive market while also directly impacting a customer’s lifetime value.

Accelerate Your Business Growth with Great Product Packaging

By Ashlee Brayfield
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The cannabis industry is booming. Just the medical segment of the industry is expected to generate $22 billion in the next four years.

Today, 36 of the 50 states allow patients to use medical cannabis with a prescription. But there’s a lot of competition in the cannabis industry. To succeed, you must stand out from the rest with custom branded packaging for your cannabis and CBD offerings.

In fact, some of the most successful companies in the industry have built multi-billion dollar businesses based on a strong brand identity, including compelling packaging design for their cannabis and CBD products.

Here’s what you should keep in mind when designing packaging for your cannabis or CBD products:

Cannabis packaging should attract your target customers

Compelling and high-quality product packaging plays a big role in a customer choosing one cannabis or CBD product over another.

But, before you can create packaging solutions for your cannabis and CBD products, you must understand your target market, your prospective customers and the experience you want to promote.

Here are a few customer profiles for you to consider:

Luxury cannabis and CBD customers

A product is considered a luxury when the brand status is elevated in the eyes of the customer.

Luxury clients expect top quality products and packaging. And, as far as most customers are concerned, if a product is perceived as better than others – it is.

To aid in this perception, packaging options for premium products should be high quality, clean and minimal or luxe, and over-the-top.

Just some of the many CBD products on the market today.

And, the packaging should always deliver on the implied promises defined by the manufacturer or dispensary. In fact, if you want to start a cannabis dispensary, you should be thinking about the overall experience for your customers and how the products and packaging offered in your dispensary will stand out from others.

When designing packaging options for customers looking for luxury cannabis and CBD products, be sure to consider:

  1. Quality: Luxury consumers expect high-value, designer packaging that functions impeccably.
  2. Sense: Luxury product packaging should provide a heightened, tactile user-experience.
  3. Taste: Luxury product packaging should forgo the typical stereotypes associated with cannabis.

Millennial cannabis and CBD customers

Millennials are drawn to authenticity. They’re burnt out on traditional advertising, coercive marketing and carefully cultivated facades.

But they’re open to trendy design, and unique product uses and experiences. And, they’re generally receptive to following celebrity and influencer endorsements from people they perceive to have values that align with their own.

When designing packaging for Millennials, be sure to consider:

  1. Simplicity: Minimal, unadorned custom branded packaging appears authentic and trustworthy. This type of packaging represents the product within, without frills or facades.
  2. Sustainability: Millennials tend to value environmental consciousness. They value sustainable packaging that offers alternatives to plastics. You’ll get extra points if the packaging is made from renewable or plant-based materials.
  3. Limited Edition: Millennials want something not everyone can have. This is why scarcity marketing via special edition products is wildly popular.

Customers looking for relief

All medical cannabis customers have a medical need for cannabis and CBD products. A recent study found that approximately two-thirds of medical cannabis patients define chronic pain as their chief reason for treatment.

Patients looking for pain relief for medical issues will be drawn to custom branded packaging that promises what they desire, without making unsubstantiated health claims. So, an emphasis on the efficacy of your product and the relief they will enjoy will be very persuasive for that audience.

When designing packaging for customers looking for relief, be sure to consider:

  1. Medical symbols: Packaging design should make it clear that your product delivers health benefits. Some brands choose to do this through logos pairing cannabis leaves with medical symbols. But, with so many medical cannabis brands hitting the market, that concept will be quickly played out and overdone; making it hard for your brand to stand out. So, think of other ways you can convey your product’s medical value to set your brand apart.
  2. Text: Use clear, concise copy describing your product and its benefits. Pain relief should be a focal point of the package messaging.
  3. Simple design: Clean package graphics and labels with ample white space will ensure that consumers can read the product packaging and find the necessary information with ease.

Cannabis packaging should inform

The best custom branded packaging design successfully balances design and information. Custom packaging for any product must include basic product information on a custom printed label – preferably in a design that makes your product look appealing.

Effective packaging design can be simple

The overall design is an important element in the success of your products. As we emphasized in our guide on how to start a business, a strong brand identity is more important today than it has ever been.

But, medical cannabis packaging carries a heavier informational burden. Guidelines, which vary state by state, require that your packaging must include dosing information and instructions for safe use, as well as batch numbers and expiration details.

For reference, here is our handy content checklist for cannabis packaging. It is also important to be sure your packaging solutions meet state laws. If you already have packaging for your cannabis and CBD products but are struggling to increase sales, perhaps it’s time to consider rebranding your company and your packaging.

Cannabis packaging should protect the product

When choosing cannabis packaging materials, consider both appearance and function.

The best marketing and package graphics in the world won’t hold much value if the product inside isn’t properly protected.

Child-resistant packaging can look aesthetically pleasing with the right design

Keep the following protection guidelines in mind when developing your custom packaging:

  1. Proper seal: Packaging for products that are not single-use must be resealable and generally should be smell proof. Containers with lids, adhesive closures, ziplock packaging and boxes with interlocking closures are all options – which is right for your product?
  2. Child safety: Packaging must be difficult for children to open – it must be child-resistant (such as pop-top bottles that require some dexterity to open). Packages must adhere to the Poison Prevention Packaging Act.
  3. Tamper evident: Much like over-the-counter drugs, medical cannabis packaging must be designed in such a way that it is evident if the package has been tampered with.
  4. Sturdy materials: Select packaging that is sturdy enough to protect the product inside. Different products will present differing packaging requirements based on the level of protection they require.
  5. Edibles and beverages: States laws involving medical cannabis and consumable products are not created equal. In the states that do allow edibles and infused beverages, the packaging must be opaque.

With all products, it’s important to remember that the package is the first thing people will see. Great packaging design elevates your product and tells a story about who you are as a company.

But medical cannabis packaging must also work to build trust and confidence in the efficacy of your product. Use these strategies to create the best packaging for your product and cannabis customers will buy over and over again.

Advertising a Cannabis Business Through the Pandemic

By Brett Konen
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For a long time, cannabis marketing didn’t exist. Then suddenly, it did. Fast forward a few years, and this nascent vertical within the modern marketing sphere remains a unique tangle of federal restrictions, state regulations, platform-specific policies and gray-area confusion, complicated by the sudden classification of businesses within it as “essential.”

So, how do today’s cannabis business owners create a marketing strategy that works in 2020? Below, we take a look at how cannabis marketing has evolved over the last few months before diving into one example of a Seattle-area cannabis retailer that’s risen to the challenge, evolving their marketing strategy quickly and successfully to capture an influx of new customers during COVID-19.

Welcome to the Cannabis Industry’s New Normal

The fact that COVID-19 has fully dominated marketing news, along with every other form of coverage, since its inception goes to show just how much it’s changed things. Multinational corporations have paused their entire ad spends; contracts have been backed out of; multi-year marketing plans have been torn up and rewritten, sometimes more than once. Those who were hoping to get back to their previous initiatives within a month or two have seen the error of their ways—and we’re still (though it doesn’t feel like it) less than half a year in.

The biggest change brought on by COVID has been a shift en masse to all things digital. Whereas before most companies met in person, they now meet over Zoom. Thousand-person conferences have become webinars and virtual networking events, while brand activations are now free trial promo codes. Along the way, traditional marketing methods have increasingly been replaced by their digital counterparts. Today, marketers need to meet consumers where they are, and where they are is at home and online.

In most industries, this shift to digital has been happening for many years already. Digital marketing and advertising methods are highly measurable, instantly adjustable and capable of reaching target audiences more directly and efficiently than traditional media. Even before the pandemic hit, cannabis was already playing marketing catchup: For example, while most industries have been using billboards since closer to their inception in the 1830s, the first cannabis billboards post-legalization only cropped up in 2014.

The shift to digital advertising in the cannabis industry has long been stalled by Facebook and Google, both of which reject all cannabis ads and even most CBD ads regardless of the location and legality of the products. Therefore, cannabis brands have evolved their own unique non-digital marketing playbooks. In addition to the prevalence of print ads, physical billboards, sponsored events and in-person pop-ups, many cannabis brands have come to rely heavily on a tactic unique to the industry: budtender education. In the meantime, most cannabis marketers haven’t been leveraging their digital options in full (or, frequently, at all).

Due in large part to COVID-19, the need for this to change has come into sharp relief. In addition to decreased reach for print publications and out-of-home ad space with fewer people spending time in public, events are no longer feasible, and customers are no longer having leisurely chats with their budtenders as they weigh the benefits and drawbacks of different products for sale. Most cannabis stores are minimizing their in-store visitors as well as offering online ordering, curbside pickup services or cannabis delivery. In April Margaret Jackson, a journalist at Marijuana Business Daily, reported on this trend:

“Many marijuana brands have relied on in-store pop-ups and educating budtenders about their products to reach consumers. But as cannabis customers increasingly order products online for delivery or pickup—and with the expectation that these habits will persist after the coronavirus pandemic is under control—marijuana brands should consider more direct ways to reach their audience to ensure sales stay strong, according to industry officials.”

Marketing Isn’t the Budtender’s Job

We don’t know how long COVID-19 may continue unchecked, but as Jackson notes, these shifts in behavior are likely to outlive the circumstances that first necessitated them. Since online shopping, pickup and delivery have quickly become standard in 2020 cannabis sales, a huge marketing gap has been left between consumers—including an influx of new ones—and the brands they’d probably be buying if those brands had been marketing to them before the pandemic.

“I’ve been saying for a long time that the brands we work with need to start marketing themselves directly to consumers,” says Anna Shreeve, managing partner at The Bakeréé. “It’s not the budtender’s job to do that legwork.”

The Bakeréé operates two retail locations in Seattle, one on the north end of the city and the other on the south. Since opening their first store, the team has focused on sourcing products of the highest possible quality at every price point, as well as emphasizing a wide variety of high-CBD options. Shreeve says the store has worked hard over the years to build a knowledgeable clientele that comes in specifically to find new and interesting products. Still, she notes that many customers go directly to the budtenders for suggestions.

Steve Schechterle, director of marketing at Washington’s Fairwinds, which sells both cannabis and CBD products, recently noted the company’s focus on budtender outreach and training in a webinar hosted by the Cannabis Marketing Association. “It’s where we’ve seen the biggest payoff by far,” said Schechterle. “Since we first noticed this, we’ve created an entire program around training Fairwinds-certified budtenders.”

Fairwinds isn’t alone: Many companies come in to meet dispensary employees, offer swag, answer questionsand show off their newest products. That way, when a customer comes in looking for a recommendation, those products are top of mind. For now, that option is largely gone, and Fairwinds (along with a few other early adopters of digital advertising in the industry) has begun advertising online to drive increased consumer demand and avoid having to rely primarily on budtenders in the long term.

Pivoting a Dispensary to Digital Ads

In the past, The Bakeréé—like many retailers in adult-use states—leaned heavily on event-based marketing, including New Years parties, in-store artist showcases, festival sponsorships and more. While they have used digital advertising for their own business, ad campaigns have primarily supported in-person events, such as through ticket sales for the New Years parties. This year, Shreeve had planned to go big on marketing for 4/20, putting together her own concert lineup that included up-and-coming hip-hop names from across the US. She was about to start promoting that concert with digital ads when the pandemic hit.

This ad for The Bakeréé appeared in The New York Times.

By early April, it had become clear that the 4/20 concert was not happening. Shreeve had already lost $20,000 in deposits on artists and the venue, which reduced the budget available for alternate marketing ideas. She decided to run a digital advertising campaign with a single display ad: The goal was to promote online ordering for curbside pickup.

While display ads are not generally known for their conversion rates, they’re a common place to start advertising cannabis due to their price point (impressions generally cost fractions of a cent) and ease of creation. Display ads can be run using programmatic ad tech, the current standard in digital advertising, which accounts for 70% of ads bought and sold in 2020. In most other industries, search and social ads through Google and Facebook are the go-to methods for digital advertising, but since both are closed to cannabis brands, programmatic is the best way for cannabis businesses to advertise digitally.

Starting with one display ad concept, and then adding a second, The Bakeréé ran their ads on a wide variety of mainstream websites, using demographic and geographic targeting to reach potential customers within a specific radius of each store. They also advertised to customers living near the closest competing dispensaries. The ads themselves focused primarily on promoting the ease of curbside pickup as well as offering a 10% discount on all online orders. Sales began to rise almost immediately.

Though April’s increase may have been due in part to 4/20’s impact on sales and a widespread stock-up mindset in the first month of the pandemic, The Bakeréé saw back-to-back-to-back months of YOY revenue growth at both their locations in April, May and June. From display ads on desktop they added mobile to the campaign, and in June added two 30-second video ads to build on the momentum generated by display.

Overall, The Bakeréé has seen a 13-fold return on ad spend, driving $153,000 in revenue from digital ads in the campaign’s first 90 days. The display ads have generated widespread use of the online ordering system, increased basket size to an average of $95.47, and grown online ordering revenue by 389%.

In the second half of the year, Shreeve says she hopes to expand the campaign to include connected TV and digital audio ads, particularly to support the launch of a new website with updated online ordering capabilities in Q3. And she still hopes to see more of the cannabis brands sold by The Bakeréé start advertising on their own, too: To that end, Shreeve is considering working with vendors to run co-branded advertisements that may help them adopt their own digital marketing initiatives sooner and drive more sales for everyone involved.


Suggested Readings

Case Study: The Bakeréé (PrograMetrix)

Programmatic Advertising: A Close Look at Cannabis (IAB)

White Paper: Digital Ads for Cannabis & CBD (PrograMetrix