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Navigating the Uncharted Territory of Cannabis Marketing

Jeremy Kees, M. Paula Fitzgerald, Joshua Dorsey and Ron Hill

As cannabis becomes more accessible to consumers throughout the U.S., marketers and public policy makers must adapt to this changing landscape. Taking cues from the tobacco, alcohol and pharmaceutical industries, our new research in the Journal of Public Policy & Marketing discusses how marketing this controlled substance will affect consumers in general, while placing a distinct emphasis on vulnerable populations.

The laws of supply and demand from basic economics provide a simple frame to capture this situation. As costs for its acquisition – as well as dangers associated with previous search strategies – are reduced, it should come as no surprise that people of all ages find it more enticing. Marketers will need to ensure that people with legal access to these products have the information needed to make informed decisions, and that those more vulnerable to cannabis harms either have restricted access (e.g., minors) or a clear understanding of the potential benefits and harms of the product (e.g., pregnant women).

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In terms of packaging and labeling, policymakers may benefit from following the alcohol industry’s lead. For example, some state laws require potency (i.e., alcohol by volume) to be clearly labeled on beer products to help consumers make informed decisions on how much of the product to safely consume. For cannabis, labeling should clearly identify products with high amounts of THC, while also disclosing quantities of CBD, to account for the increased popularity of high-CBD (low-THC) goods. Yet, little information exists about how consumers will respond to cannabis labeling; we encourage evidence-based regulations that are shown to be effective in providing consumers with the relevant information they need to make informed decisions that best meet their goals.

According to Section 843 of the Controlled Substances Act, advertising of any Schedule I drug is prohibited and any violation of this act is a felony. Thus, promotion opportunities are limited presently; major digital marketing platforms such as Google and Facebook have prohibited cannabis marketing for the foreseeable future. Digital marketing could be well-suited as a primary marketing communication medium for the cannabis industry; for example, marketers could use advanced geotargeting technology to target consumers only in states where cannabis is legal.

Distribution presents a challenge, with state-level restriction differing considerably. Take California, for example: Under current state law, individual cities can ban retail cannabis sales. And, while distribution of cannabis via the U.S. Postal Service is illegal (because it is a federal entity), local governments in California are prohibited from preventing cannabis deliveries on public roads. Thus, delivery services potentially negate the same laws designed to keep cannabis away from schools and may facilitate illegal distribution. New laws and regulations will undoubtedly address this new world, as distribution opportunities unfurl alongside e-commerce.

Price considerations will also be key; as demand increases, public policy makers may initiate excise taxes. Studies of the alcohol and tobacco industries show that high excise taxes reduce smoking initiation and long-term usage. But we caution that artificially high prices due to taxation of legal cannabis may have the unintended consequence of continuing black-market exchanges, given that such a system has existed for decades.

Educating consumers will be key in marketing cannabis responsibly. Marketers can learn from the tobacco industry’s missteps and lead the way in clearly informing the public of risks. Because few researchers have investigated marketing cannabis to date, this field of study will certainly multiply. Marketers should remain abreast of these trends to avoid being unprepared. For cannabis marketing, the future may already be inextricable from the present Рgreater marketing knowledge is needed to navigate this uncharted territory to allow consumers to chart their best path.

Read other Scholarly Insights from the Journal of Public Policy & Marketing