Advertising in regulated markets requires more than creativity and compliance. As the industry’s footprint grows across the country, brands face the challenge of standing out in an increasingly crowded market while adapting to shifting sets of disparate regulations. To succeed in the quagmire, cannabis advertisers need strategic insight, innovative technology, and a clear understanding of what makes their brand unique. With intelligent tools that support compliance, loyalty programs that foster customer connections, and developing technologies like Web3, brands are finding better ways to resonate with their audience.
Mastering local regulations
One of the biggest challenges for cannabis operators is staying at least one step ahead of the ever-changing regulatory arena. Since advertising laws vary between states and municipalities, staying up to date in all relevant markets can feel like it requires a full-fledged compliance department. For those open to new technologies, artificial intelligence (AI) can help.
“We have a new partner called CannabisRegulations.AI, which is a great use of AI technology to help you stay up to date with the changes,” said Amy Deneson, co-founder at Pheno, an omni-channel advertising agency dedicated to cannabinoids. “Beyond that, you should always read from the source of your regulatory body on what’s allowed—and it does change quite often. But also, as advertisers, we need to be in partnership with our media publishers to make sure they’re very well-versed—not only in age-gating and being able to prove it—but also in being responsible for where the placements show up. For example: within X amount of space from a place of worship or a school.”
While knowing the rules and regulations of your locality is essential for success, it’s just as important to remain inspired and creative within those guardrails.
“Advertising is a challenge, but before you even get into the channels that you can successfully do this on, it’s important to understand what your message is,” said Courtney Zalewski, chief marketing officer at California dispensary chain Embarc. “What is the creative, and how are you communicating that to your audience?”
While price is often presumed to be the differentiator, it’s not ultimately the reason someone gravitates toward a brand. That’s why Zalewski believes it’s so important to understand how the audience will respond to the creative messaging before investing significantly in ad placements. Distributing the message is the easy part, ensuring it resonates requires time, experience, and ultimately, a deep understanding of a target audience.
Leveraging loyalty programs for data and differentiation
With restrictions on mainstream advertising platforms, cannabis brands are constantly on the hunt for alternative ways to reach their customers. One of the most effective methods is through loyalty programs to collect valuable first-party data brands can leverage for differentiation.
“We had a campaign around Devil’s Lettuce [strain], which was in some ways poking fun at the hysteria of ‘Reefer Madness,’ but the intended audience for that was our loyalty members and our budtenders,” Zalewski said. “Instead of trying to attract a brand new customer, we thought to ourselves, ‘What if we leaned into our team who’s out there on the front lines?’”
The satirical campaign resonated with Embarc’s most loyal customers, sparking a dialogue between staff and clientele. But it also worked to drive more shoppers into the loyalty ecosystem for future marketing efforts.
While redeemable points are a popular mainstay of most dispensary loyalty programs, motivating an audience through fear of missing out (FOMO) can keep the program’s membership growing.
“Going back to the Devil’s Lettuce—that product was offered at a special price for loyalty members, and it’s marked up for non-loyalty. So you have a decision to make: Do you want to buy this product for under $20, or do you want to pay significantly more by just not opting in?”
While this campaign drove sales well among its top-level target of loyal consumers and connoisseurs, its real success was the sense of FOMO it created for everyone else who joined the program.
“Within the loyalty audience, you have access to their opted-in, enthusiastically-given first-party data,” Deneson said. “You can use that information as a foundation for your advertising partners to then anonymize that segment, and also find lookalikes who demonstrate similar purchasing behavior. Let’s say your loyalty segment prefers vapes. Now you can think about how you go after that when a new vape is available—and that’s just one idea for how you can use that customer data in an ethical and compliant way.”
Using Web3 to increase transparency and expand reach
With heavy digital restrictions on popular consumer platforms like Google, Facebook, Instagram, Twitter, and TikTok, cannabis brands are increasingly exploring emerging technologies to expand their reach. The decentralized nature of Web3 offers unique marketing opportunities, potentially allowing brands to communicate more freely and creatively.
“I believe in Web3, but I think it’s still too early for where we’re at,” Zalewski said. “Still, there are plenty of cannabis brands and companies who’ve either created NFTs or communities within the metaverse—I just haven’t seen it take off yet.”
Deneson agrees that Web3 hasn’t yet reached the visibility the industry needs, but she sees blockchain’s untapped potential for enhancing transparency and connecting with consumers directly.
Blockchain could be a game-changer for cannabis brands navigating strict regulatory landscapes by offering full transparency into product sourcing, lab results, and supply chain processes. For example, brands could use blockchain to provide consumers with a verified history of each product—from cultivation to sale—boosting credibility in a market where authenticity is key.
Web3 also supports building exclusive communities that strengthen brand loyalty. Brands could issue NFTs that grant holders perks like early access to new products, special discounts, or invitations to exclusive events. By fostering these decentralized communities, cannabis brands can create a more personal, rewarding connection with their audience.
In addition, by accepting cryptocurrency payments, cannabis brands can provide consumers with flexible payment options that bypass traditional banks. This flexibility also appeals to tech-savvy consumers, broadening the brand’s reach and creating new channels for engagement.
