high times

November 2015 | marketing news 33 NovEMbEr 2015 | Marketing neWs 33

HigH TimesAs mArijuAnA legAlizATion spreAds THrougHouT THe counTry, recreATionAl And medicAl mArijuAnA mArkeTers Are bATTling legAl red TApe And sToner sTereoTypes To ATTrAcT A new generATion of cAnnAbis consumers

By ChristiNe BirkNer | sENior stAff WritEr

[email protected]

PHOTOGRAPHY BY JON ROSE

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Even in these markets, the laws and regulations governing marijuana’s production, distribution and use are expansive and burdensome for companies that operate in this space—and for marketers working to promote it. Like alcohol brands, recreational marijuana dispensaries are battling negative perceptions while attempting to do their due diligence to promote responsible use of their products. And like pharmaceutical brands, marijuana dispensaries must battle burdensome regulations and continue a lengthy and arduous quest for FDA approval.

Marketing agencies are sprouting up across the U.S. to help marijuana dispensaries promote more positive perceptions, and owners and employees at marijuana-based brands are working on sophisticated marketing strategies to nip stoner stereotypes in the bud.

jeb busH is in good compAny

In September 2015, Republican presidential candidates addressed questions regarding states’ legalization of marijuana during a debate hosted and televised on CNN. While much of the discussion focused on states’ rights, treatment plans and the penitentiary system, Jeb Bush—of the Bush family dynasty, and formerly the governor of Florida—was prompted to frankly cop to his pot-smoking past: “Forty years ago,

A cerTAin segmenT of THe boomer populATion spenT THeir formATive yeArs in A HAze of Hippie-filled poT smoke. Three decades later, skater dudes reveled in their stoner-stereotyped rebellion. Like the sweet, herbal, skunk-like stench that lingers on your T-shirt after a Grateful Dead show, marijuana carries with it connotations that are hard to shake as it enters the mainstream marketplace as a legal recreational product—not to mention a legally sanctioned pharmaceutical offering.

Marijuana has been legalized for medical use in 24 states across the U.S., and for both medical and recreational use in Alaska, Colorado, Oregon, Washington and Washington, D.C. Meanwhile, possession of a small amount of marijuana in 11 states (California, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island and Vermont) doesn’t carry a prison sentence, making those states likely candidates for complete legalization, according to Fortune.

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the laws and regulations governing marijuana's production and use are expensive and burdensome for companies that operate in the space.

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olivia Mannix and Jennifer DeFalco leveraged marijuana's legalization in Colorado to found their own niche marketing agency, Cannabrand.

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I smoked marijuana and I admit it. I’m sure that other people might have done it and might not want to say it in front of 25 million people. My mom’s not happy that I just did.”

Bush’s comments elicited chuckles from both the audience and his fellow candidates, and made a few headlines the following day, but they didn’t cause much more of a stir. When a U.S. presidential candidate from the right can poke fun at his own pot use in high school, it’s a sure sign that the game has changed.

“Surveys have shown that half of the people in this country have tried marijuana at one point in their lives, and as the laws change, more people will be comfortable with the idea of openly consuming and discussing their marijuana use,” says Mason Tvert, director of communications at Washington, D.C.-based Marijuana Policy Project, an organization that focuses on ending marijuana prohibition. Indeed, Tvert’s assertion is backed up by data from the 2012 National Survey on Drug Use and Health, conducted by the U.S. Department of Health and Human Services Substance Abuse and Mental Health Services Administration, which found that 49% of the American population reportedly has tried marijuana, making it the most commonly used illicit drug in the U.S.

Acceptance has risen since the haze of the hippie ’60s. In a 1969 Gallup poll, only 12% of Americans favored legalizing marijuana. In April 2015, 53% of Americans said that marijuana should be legal, according to a Pew Research Center study. But even though Americans might have tried it and might be in favor of legalizing it, they don’t necessarily think that their neighbors should be smoking it—at least not for fun. According to an April 2014 study by National Public Radio and Truven Health Analytics, 78% of people support the legalization of marijuana for medical use, but only 43% of people support legalization for recreational purposes.

While savvy marketing could help change public perception—and it likely will, just as other adult vices eventually gain acceptance—marijuana marketers face rolls and rolls of legal red tape, Tvert says. “The rules surrounding the marketing of marijuana are really strict, and they really limit the outlets that these businesses have to reach potential consumers.”

Three Denver-based companies are taking on both the regulatory and consumer

perception hurdles of marketing medical and recreational marijuana. Cannabrand, a marketing agency dedicated solely to cannabis industry clients, opened its doors two years ago as legalization picked up steam. GroundSwell Cannabis Boutique, a medical and recreational marijuana dispensary, works to change negative pot perceptions by offering professional-level customer service via sleekly designed, welcoming storefronts that could just as readily offer handbags and cosmetics in their modern shelving and display cases in place of pot-infused products. Inhale Mercantile, an online “headshop,” the term for a store that sells marijuana accessories, promotes its luxury cannabis accessories primarily to women—no stoner stereotypes in sight. All three are using savvy marcom strategies, and heavy doses of creativity, in an attempt to spark the U.S.-based marijuana industry’s growth.

A budding businessCollege students the world over often scheme of launching businesses with their peers, and when you attend college in Colorado these days, you’d likely be concocting ingenious ways to enter the nascent industry for which Colorado has become an unofficial home base.

Olivia Mannix and Jennifer DeFalco decided to leverage marijuana’s legalization there to found their own niche marketing agency, which they called Cannabrand. Both 2011 graduates of the University of Colorado-Boulder, with degrees in advertising, PR and communications, Mannix and DeFalco first launched MARCA Strategic in June 2013, a general marketing agency that’s still in operation, and then created Cannabrand as a specialized offshoot on the eve of marijuana’s legalization in Colorado in January 2014. Cannabrand now has 20 clients, including dispensaries, marijuana growing operations, and companies that sell vape pens (pre-filled pens that contain pot and are similar to electronic cigarettes), extracts, edibles and other marijuana accessories. Most of Cannabrand’s clients are based in Colorado and California, but the founders are in talks with brands in Washington, and in Florida and New York, where recreational legalization could be imminent.

78% of people support the legalization of marijuana for medical use, but only 43% support legalization for recreational purposes, according to national Public radio and truven Health analytics.

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To build their client base, Mannix and DeFalco first networked with industry leaders in Colorado, including those who already were selling marijuana for medical purposes. “We said, ‘Cannabis is about to go legal for recreational use, so what are your plans for transitioning from medical to recreational?’ We talked to different dispensaries about how rebranding would help them appeal to this new market,” DeFalco says.

In the consumer packaged goods space, brands, logos and general panache are important, so the two businesswomen wanted to work with dispensaries to help them create compelling visual brands and brand stories. They also saw the need for full-fledged marketing and advertising campaigns.

In July 2015, Mannix and DeFalco prepared what was to be the first TV ad for a marijuana product for its client Neos, a Denver-based vape pen maker, which sells its products in Colorado and to medical dispensaries in California. The ad, which was scheduled to air prior to Jimmy Kimmel Live on local station ABC-7 in Denver, was pulled at the last minute because of FCC concerns (pot is still illegal nationally). The ad showed images of the Colorado skyline and focused on nature and outdoor experiences,

featuring twentysomethings at a concert and camping. A voiceover said: “You lead an adventurous life, always finding new ways to relax. Now enjoy the best effects and control with Neos portable vape pen, and recreate [as in, use recreational marijuana] discreetly this summer. Neos: Recreate Responsibly.” The tagline read, “A bold new way to unwind,” and the ad ended with a 21-and-over/Colorado-only disclaimer—similar to those “drink responsibly” messages for alcohol—and did not show the product.

Even though the drug is legal in Colorado, marijuana marketers must abide by stringent advertising rules set by the state of Colorado and other marijuana enforcement agencies. Cannabis brands must prove that at least 70% of the audience for each outlet in which they’d like to advertise is 21 years old or older. Facebook won’t accept marijuana-related ads, and outdoor advertising is not allowed.

Those requirements were met for the Neos spot, yet the commercial still was pulled, DeFalco says. “The commercial was approved by Channel 7 and our client, and was compliant with regulations because 97% of the audience was proven to be over the age of 21. It only needs to be 70%, so we were well within those guidelines,” she

49% of the u.s. population has tried marijuana, making it the most commonly used illicit drug in the u.s., according to the u.s. Department of Health and Human services substance abuse and Mental Health services administration.

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says. “They were concerned over the FCC situation, and at the last minute, they backed out.”

Adds Mannix: “They told us we weren’t allowed to show the pen, itself, but it was a great commercial and it was more of a lifestyle piece. There wasn’t anyone consuming, or any pictures of cannabis or the product. It was celebrating Colorado, with celestial skies and great imagery.”

The lifestyle branding approach helps Cannabrand’s clients break down stigmas about marijuana, DeFalco says. “A lot of our advertising shows people hiking or being outdoors and going about their lives, and they just happen to consume. That’s one way we’re trying to break down those stereotypes, to show that anyone can consume cannabis—professionals, outdoorsy people, whoever—to veer away from those images of lazy, unproductive potheads.”

Even though the TV spot didn’t air as planned, Neos generated a lot of PR as a result of the ad being pulled, and the company put the advertising investment to good use, posting the spot on YouTube and social channels, and sending it out in a customer e-mail blast, generating 300 million total impressions in a week, according to Mannix. “It actually was a success because we had a PR angle,” she says. “We alerted some journalists that we were going to have one of the first recreational cannabis commercials, and they were excited about it. Once it was pulled, the backlash was more: ‘Look at how simple this artwork is. Why did this not air?’ ”

Because of cannabis advertising restrictions, Cannabrand steers most of its clients toward industry-related publications that will accept marijuana-related ads, such as The Cannabist, Culture magazine, THC magazine, Marijuana Business and Dope magazine. Some publications, such as the Denver Business Journal and Westword, a Denver lifestyle magazine, publish ads for local dispensaries and marijuana products, as well.

PR, rather than advertising, is proving to be marijuana businesses’ best bet right now, Mannix says. “PR is the way to go. You can speak with journalists about your brand and get your message across that way, and target specific publications that fit your audience.”

To market their own agency, Mannix and DeFalco also rely on ways to prompt word of mouth, using their networking skills and industry knowledge, doing speaking engagements at conferences such as the International Cannabis Association’s Cannabis

World Congress and Business Exposition, and attending legislative events in Colorado. They were present at the passing of the Limited Social Marijuana Consumption Initiative, which allows for adult cannabis consumption in a public or private space in Denver, including designated smoking areas in bars, and they work with activists and lobbyists on a local and state level, such as the Cannabis Patients Alliance, a group that helps provide patients with information about marijuana and connect them with doctors.

“There are a lot of restrictions on compliance, and regulations are always changing,” DeFalco says. “We’re constantly reading up on new laws, and we also work with compliance companies that help us with packaging and labels. Having those relationships from the get-go are great. We really understand the industry, and we’re seen as the leading cannabis branding agency because of where we’ve been and what we’ve been doing.”

Adds Mannix: “We’re not just an agency that’s providing marketing services. We’re also on the ground floor level, and we really care about this industry and helping to drive change.”

When marijuana dispensary groundswell first opened its medical space four years ago, the front of the building was an art gallery, which created a comfort level for neighborhood consumers.

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A poT prescripTion Change—a lot of it—will be necessary before medical marijuana is marketed like other prescription drugs. Medical marijuana brands face one major hitch: the lack of approval from the U.S. Food and Drug Administration.

Two FDA-approved medications that contain cannabinoid, a chemical in marijuana, are used as an appetite stimulant and for treating nausea in cancer patients, and there’s interest in the drug industry to use marijuana to treat several symptoms from medical conditions, such as glaucoma, AIDS wasting syndrome, neuropathic pain, cancer, muscular dystrophy and seizures, but the FDA hasn’t yet recognized or approved the marijuana plant, itself, as medicine for any condition, says Michael Roth, healthcare practice leader at New York-based marketing agency Bliss Integrated Communication, whose clients include Eli Lilly and Pfizer.

“Getting medical marijuana FDA-approved is going to take many years and a lot of money,” he says. “Even if they get approval, they’ll be limited to what they can say about what’s approved for

Groundswell store-front TKTKTKTKT

"we’re Trying To breAk down THose sTereoTypes, To sHow THAT Anyone cAn consume cAnnAbis—professionAls, ouTdoorsy people, wHoever—To veer AwAy from THose imAges of lAzy, unproducTive poTHeAds.”

-jennifer defAlco, cAnnAbrAnd

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what [condition].” Although drug companies cannot yet get involved in the marketing due to the lack of FDA approval, some smaller drug companies are researching marijuana as a treatment for several conditions, he adds.

If FDA approval happens, medical marijuana would be marketed to consumers like most any other drug, Roth says—which likely means a lot of vague marketing messaging and ample disclaimers. “Their clinical trials will determine what they can or cannot say about the efficacy and safety of the drug. The FDA … would determine how much they could say [in advertising]. They also would need to talk about the side effects, if there are any.”

Approval will come, but not in the near future, Roth adds, so in the meantime, medical marijuana use—and related marketing—will continue to be conducted on a smaller scale. “Scientists will continue to pursue it no matter what, and I wouldn’t be surprised if the government didn’t start getting involved in some studies. The marijuana plant will need to be studied from a delivery standpoint and a safety and efficacy standpoint, and it will need years of trial, which haven’t been done yet. Right now, people are going to dispensaries and, as long as it’s legal, they’re using it.”

Medical marijuana currently is being touted in the U.S. for specific conditions through word of mouth, but because it’s not yet federally regulated, ads or marketing claims promising treatment for certain conditions can’t be created. According to Allen St. Pierre, executive director of the Washington, D.C.-based National Organization for the Reform of Marijuana Laws (NORML): “Wellness providers are already starting to nip around the edges. They’re using code words and trying to stay just beyond the scope of the FTC. It’s pretty Wild-West-like when it comes to the advertising.”

Noah Sodano, co-director of operations at GroundSwell, a Denver-based dispensary that has sold medical marijuana for the past four years and started offering recreational marijuana in April 2015, says that the marketing of medical marijuana currently resembles the marketing of homeopathic cures that you might find in a Whole Foods aisle. “There are a lot of claims out there where people say, ‘This is a cure for this,’ or, ‘If you want to get sleep, this will help,’ or there’s talk about pain relief, but the more likely that the federal government gets involved in that, any medical claims are going to get curbed way back,” he says. “We’re seeing a lot of products on

COnSUme CannabIS ReSpOnSIbly

In June 2014, New York Times columnist Maureen Dowd wrote a column about overdosing on edible marijuana in a Denver hotel room, chronicling her experience of hallucinating and becoming

paranoid after consuming too much of a pot-infused candy bar. The Washington, D.C.-based Marijuana Policy Project (MPP) used Dowd’s column to create ad campaign to warn so-called “pot tourists” about the negative effects of over-indulging. In September 2014, MPP unveiled a billboard in Denver with an illustration of a woman who looks like Dowd slumped over on a bed, and the tagline, “Don’t let a candy bar ruin your vacation.” The ad directed viewers to MPP’s website, ConsumeResponsibly.org, which has tips for responsible cannabis consumption.

“Maureen Dowd’s column did more to educate people about edible marijuana than anything out there so far,” says Mason Tvert, director of communications at MPP. “We wanted to take advantage of that and make people think about the fact that [edibles] have different effects on people than inhaling marijuana, and they need to be careful when they consume them. We’re never really taught that you don’t drink 10 shots of liquor in a row; it’s just cultural knowledge. With edibles, it’s: ‘I saw people eat pot brownies in a movie one time. They eat it and laugh.’ People don’t know that when you eat it, it takes 45 minutes to feel the effects, and if you eat too much, it can be uncomfortable. We’re trying to foster that public dialogue.”

The billboard was covered in 43 national media outlets, including CNN, CBS, Fox News, the Associated Press, Bloomberg, Time, The Washington Post, Huffington Post and BuzzFeed. When Dowd was asked about the billboard in an interview with The Daily Beast, she said that she loved it and that she was going to make the photo her Christmas card. MPP obliged, sending Dowd a card with the message: “Don’t let a candy bar ruin your holiday. With edibles, start low and go slow.” MPP also sent the card to its own mailing list and posted it on its social media channels.

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the medical side that are marketed like you would see a vitamin section in a grocery store, talking about what conditions these things address. In terms of how they’re likened to pharmaceuticals, it really depends on where the market goes.”

Rather than creating ads that promise cures for certain conditions, GroundSwell’s medical side emphasizes professional-level customer service and patient relations, offering one-on-one patient consultations to help its customers create their own treatment regimen based on doctors’ recommendations. GroundSwell’s staff cannot write prescriptions and instead just offer advice, says Caitlyn Ewing, the company’s other co-director of operations. “Our patient relations specialists take time to elicit information and help ensure that every person who walks into the door walks out with the best solution they’re looking for.”

A new TArgeT wHo TokesWhen you talk about customer service with regard to cannabis, that likely conjures images of seedy street corners or Ziploc bags put to unintended purposes. The stereotypes surrounding marijuana are deeply rooted, so consumer perception could be marijuana marketers’ biggest challenge. Although the twentysomething male stoner culture still exists, of course, cannabis marketers are working to shift perception of their customers from those slacker types to a mix of white-collar executives, suburban moms and grandparents. “Yes, there’s always going to be that culture there that’s a fundamental part of why we’re here now, but the reality is, for everybody else who’s over 21 and potential customers, we have to find different ways of talking about it, particularly the experiences,” Sodano says.

Adds Ewing: “We see moms coming into the dispensary for the first time, or little old ladies who live around the corner. We get the full spectrum.”

When GroundSwell first opened its medical space four years ago, the front of the building, which now houses GroundSwell’s recreational space, was an art gallery. “It got people in the building. Every month they had a new show,” Sodano says. “The front of the building didn’t look scary. It was a nice gallery space, so it was a way of saying: ‘Come into this building. Welcome.’ People would say, ‘Wow, this is a dispensary?’ ”

GroundSwell’s recreational and medical spaces are designed to maintain that comfort level, and feature blond wood countertops and soft lighting. “We want to make sure that the experience we offer is the most non-threatening, welcoming atmosphere possible,” Ewing says. “It’s a premium boutique experience, versus Jamaican flags and [giant] joints.”

Even the word “dispensary” might be doing the business a disservice because companies like GroundSwell aim to create sophisticated retail experiences, Sodano says. “In the last four years, the change in the type of marketing you see from dispensaries has really moved away from that ‘headshop’ approach. The majority of players in the industry realize that they have to take their marketing to the next level.”

Cannabrand’s DeFalco agrees: “It the past, you’d go to a dispensary and it would feel seedy or underground. It’s starting to feel more comfortable and mainstream. They’re looking more like MAC stores. There are clean lines and custom fixtures. It’s inviting for newcomers because it doesn’t feel like you’re going to an illegal place or that you’re doing anything wrong.”

The shifting demographics of cannabis consumers are reflected in the growth of businesses such as Denver-based Inhale Mercantile, a luxury online headshop geared toward women, which

groundswell’s recreational and medical spaces are designed to be welcoming, and feature blond wood countertops and soft lighting.

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sells vaporizers, pipes and bongs, cannabis-based skincare lines and accessories. “I am the stereotypical stoner now,” says Inhale Mercantile’s owner, Kim Gordon, a 48-year-old business professional who’s the mother of two teenage children. “There’s a new stereotype developing. Eighty-five percent of purchases are made by women and 93% of over-the-counter pharmaceutical sales are to women. That’s why everyone’s saying women are the key to the future of this because we’re the ones with the purchasing power, doing the buying of the pharmaceuticals that marijuana can replace. It becomes a health and lifestyle choice. I’m selling $500 [marijuana leaf] necklaces that aren’t flashy and in your face, and people are loving it.”

Gordon markets Inhale Mercantile’s products through word of mouth, and uses Instagram and Pinterest to drive traffic to her website. “Everyone talks about negative stereotypes, but ours is different because we’re a niche: We offer luxury women’s items,” she says. “Our brand is clean and simple, and that’s how we target everyone.”

Inhale Mercantile is not alone, according to Mannix and DeFalco. Cannabrand’s clients generally are broadening their target demographics, reaching out to more women and baby boomers. “In the past, cannabis brands were targeted toward men between the ages of 25 and 35,” Mannix says. “It was a male-

dominated industry and all of the marketing was geared toward men. To target women, there are more health-oriented messages now, or there will be ads that say that cannabis is not as caloric as drinking and you won’t have a hangover. And with topicals, they say the cream is good for wrinkles, stuff like that.”

The tide could be turning on the perception issue as the next generation comes of age, research shows: Support for marijuana’s legalization rose 11% between 2010 and 2013, with 68% of millennials supporting it, versus 52% of Gen Xers and 50% of baby boomers, according to a Pew study from February 2014. Sixty-nine percent of Americans believe that alcohol is more harmful to a person’s health than marijuana, and 57% say that they wouldn’t be bothered if a store selling legal marijuana opened up in their neighborhood, according to Pew.

DeFalco, for one, is optimistic: “We’re anticipating federal legalization in five years. A lot of people are saying 10 years, but we think it’s going to be a lot quicker. We’re already seeing public perception of cannabis shift really quickly, just from social media alone. People are sharing their opinions and people are voting, and that’s going to effect change.”

The pace of change in the marketing of marijuana has been rapid, Sodano says. “The growing up that’s happened in this industry—in terms of marketing—over the last two or three years is more like what you’d see happen in other industries in five or 10 years, in terms of how quickly it’s become professional. There’s so much red tape wrapped up in what we do that it ends up dictating a lot of our decisions … but I’m happy to see that there are no longer as many tie-dyed peace signs or half-naked women [depicted in marijuana-related messaging]. I’m glad the whole industry has risen. We’re in an industry that has a benefit of working together rather than being competitors because if the whole thing goes down, we’re going down together.” m

“we wAnT To mAke sure THAT [our] experience . . . is THe mosT non-THreATening, welcoming ATmospHere possible . iT ’s A premium bouTique experience, versus jAmAicAn flAgs And [g iAnT] joinTs.

-cAiTlyn ewing, groundswell

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