3 Cannabis Marketing Myths Powerhouse Brands Ignore

3 cannabis marketing myths powerhouse cannabis brands avoid Maxutov Depositphotos mg Magazine
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Cannabis-related businesses raised $6 billion in capital during the first half of 2021, three times the amount they earned in the first half of 2020, according to New Frontier Data’s “Cannabis in the U.S.: 2021 Mid-Year Market Update.” Investor confidence is on the rise, and passage of the SAFE Banking Act would bring more momentum.

Retail brands and dispensaries now need to win over consumers. Legal cannabis is expected to grow to $43 billion by 2025, but an estimated $65 billion was spent on illicit cannabis in the United States during 2020. The powerhouse cannabis brands and dispensary operators of tomorrow will tap into that enthusiasm to educate consumers and build loyalty, but first they will need to overcome a few debilitating cannabis marketing myths.


Myth 1: Cannabis products can’t be advertised.

Ads can be served through top media outlets and publishers across mobile networks, the web, and a wide range of streaming services to verified audiences made up entirely of cannabis consumers. These audiences may be sliced and diced to connect advertisers with the specific types of cannabis consumers most likely to want their products or visit their dispensaries.

Technology makes compliance simple, allowing advertisers to focus on engagement. Location data, for example, can limit ad serving to those in legal markets and with the right proximity to the advertiser. Consumer profiling and behavioral targeting make it easy for many brands to connect with their highest-value consumers. Specialized advertising agencies and some of the ad industry’s powerhouse data-management platforms now offer turnkey solutions to target cannabis consumers and overlay a wide array of other filters, helping marketers reach the most desirable targets.

Myth 2: Point-of-sale data provides adequate targeting.

Brands and dispensaries absolutely should target legal-market cannabis consumers, but stopping there puts operators at a huge disadvantage compared to more forward-looking, growth-oriented competitors. Tomorrow’s powerhouse dispensaries and brands understand driving rapid growth means tapping into tomorrow’s consumers, regardless whether or where they purchase cannabis today. Future powerhouses precision-target consumers whose interests make them most likely to become their customers and brand advocates.

By 2025, roughly 53 million Americans are expected to consume cannabis at least once a year, and 37 million will be frequent users, consuming at least once a month. Consumers spent a total of $20 billion on legal cannabis products from regulated channels in 2020, a year in which 68 percent of the U.S. adult population still resided in medical-only markets or in states where cannabis remained completely illicit. What about the millions of consumers who are not yet purchasing cannabis products from legal retailers? By 2025, 42 percent of total annual U.S. cannabis demand is projected to be met by legal purchases in regulated marketplaces, up from just 24 percent in 2020, fueled by both a continued rise in legal market spending and continued migration to legal sources. This leaves far too many consumers (both existing and potential) ignored as a segment.

Tomorrow’s powerhouse cannabis brands will tap into both consumer groups’ enthusiasm, educating and motivating them to try legal cannabis offerings. These brands will engage the right consumers, emphasize product benefits, leverage promotions, and nurture loyal customer relationships.

Myth 3: Cannabis retail is fundamentally different from traditional retail.

As consolidation continues and the industry welcomes more large players, we all should expect more of what already has begun: dispensaries striving to replicate the retail experiences offered by Starbucks, Apple, and other mainstream favorites. Businesses see the opportunity ballooning, and more have begun, rightly, to focus on building a loyal customer base as a foundation on which to erect the powerhouse cannabis brands of tomorrow.

Retain and acquire to build loyalty

Many U.S. dispensaries send special offers and regular communications to their customers via text or email. While it’s a nice way to reward and retain existing customers, this alone won’t adequately fuel the growth businesses need to support a powerhouse brand. Not even close. Loyalty and customer acquisition together drive growth in market share. Failing to do both practically ensures a business will lose its share of this fast-growing market. Keeping existing customers just won’t be enough.

Businesses can acquire new customers by using data to better understand and drive engagement with their ideal cannabis consumers. Driven by both market research and sales data, dispensary operators and retail brands alike should understand what types of cannabis consumers are most likely to become loyal customers.

Dispensary operators should cater to the types of cannabis consumers who live close enough and are most likely to become repeat customers. Dispensaries located in wellness communities will need to cater to nearby holistic healers, for example. Just 8 percent of the overall U.S. market, holistic healers tend to use cannabis infrequently and prefer topicals, tinctures, and edibles.

Brands, on the other hand, need to understand what types of cannabis consumers are most likely to buy from them, then focus on the markets providing greatest access to these consumers and engage them.

Educate and engage

Replicating the Starbucks or Apple experience sets the stage for dispensaries to educate consumers directly with immersive experiences and targeted media, in addition to educating and incentivizing budtenders. Too many brands work hard to develop wholesale relationships with dispensaries, get the product on the shelves, and then prematurely consider the job done. Instead, make sure budtenders understand a brand’s value specific to their dispensary’s customer base and get them singing its praises.

The best marketers will go further still, educating themselves for ongoing improvements. Maybe the consumers a brand envisioned being its best prospects show no interest, but other types of consumers become huge brand advocates. Brands can use these types of insights to refine their top-of-funnel targeting strategies accordingly and drive ongoing improvements.

Gary Allen New Frontier Data

Marketing technology expert Gary Allen serves as chief executive officer at New Frontier Data. Over the course of his career, he has led the development of technologies that were acquired by Google, DoubleClick, Kantar Media, and other market leaders. Prior to joining New Frontier, Allen founded ModernMinds, a strategy consulting firm focused on startups in the technology space. Contact his team at [email protected].