With the dust of the 2020 election settled, Democrats now control both the executive and legislative branches of the U.S. government.
This is good news for the cannabis industry, as congressional lawmakers have been vocal proponents of passing significant cannabis reform that may be a boon to consumers and business owners alike.
Cannabis industry leaders are optimistic about regulatory changes that may come about under the new administration, but the question remains: How will they realistically impact the day-to-day operations of legal cannabis businesses, especially for brands and retailers that are unable to reach their target consumers through traditional marketing avenues?
All Eyes on the Senate
A Democratic president brings hope of federal legalization — but legalization is not guaranteed in the immediate future. Given the ongoing pandemic and associated financial crisis, ending cannabis prohibition is not a top priority for the White House.
The Senate, on the other hand, will likely take the lead in pushing reforms forward. In early February, Senate Majority Leader Chuck Schumer (D-NY) and Senators Cory Booker (D-NJ) and Ron Wyden (D-Ore.) committed to drafting cannabis reform legislation focused on “restorative justice, protecting public health and implementing responsible taxes and regulations” in the coming months.
Despite these actions, it is unclear how the Senate will approach cannabis reform. Some speculate it would involve passing the MORE Act (Marijuana Opportunity, Reinvestment and Expungement Act), which would deschedule and decriminalize cannabis and create a much-needed social justice framework to the industry.
Decriminalization would make possession of cannabis legal — a benefit to consumers — but manufacturing and distributing the plant would remain illegal at the federal level, meaning there may be little change for businesses.
The best bet for major cannabis business reform lies with the SAFE Banking Act (Secure and Fair Enforcement Banking Act) which would provide critical banking and financial underwriting services to legal cannabis businesses. Although there has been no indication of when the SAFE Banking Act might pass, it has the potential to dramatically increase access to capital markets for cannabis businesses, ushering in a new era of growth and opportunity.
Will Policy Reform Reshape Cannabis Digital Marketing?
The short answer is — not really. Considering how both the MORE and SAFE acts are written, they would have limited impact on digital marketing regulations.
In theory, The MORE Act would allow medical cannabis businesses to advertise on popular digital platforms — but companies would only be allowed to make statements approved by the FDA, and the approval process for such a new area of study could take years.
Unfortunately, this provision extends to medical cannabis only; adult-use brands will still be barred from popular technology platforms. To further complicate matters, it is possible that adult-use cannabis would still be excluded from these outlets even if they become federally legal one day. Considering how tobacco companies still are not allowed to advertise on the two largest digital platforms, this creates an unpromising precedent for adult-use cannabis companies.
Whatever occurs, it is unlikely that the major technology companies will go through an immediate culture shift — especially platforms that are working to be more advertiser-friendly.
That includes Google, a company with tight controls on pharmaceutical advertising and explicit policies against recreational drug advertising, including recreational cannabis in legal states.
Text Message Marketing Remains an Effective and Compliant Solution
Given these factors, it is safe to say the legal cannabis industry should not expect seismic changes to their advertising practices in the next year.
Because brands and retailers must abide by stringent marketing regulations at both the state and federal levels, SMS marketing remains the best way to stay compliant while effectively engaging consumers.
Current state-level digital marketing laws require cannabis companies to have reasonable certainty that at least 70% to 85% of a marketing campaign’s audience is over the age of 21 for adult-use campaigns and over 18 for medical advertisements.
With traditional digital marketing, such as display advertising, it is nearly impossible to guarantee that an appropriate proportion of the target audience meets this criteria. The only way to ensure a campaign is fully compliant is by sending text message advertisements to people who have provided proof of age at a dispensary and explicitly consented to receiving messages.
This is why text message marketing has become a vital business tool in the cannabis retail space — especially during the ongoing pandemic, which has limited in-person engagement opportunities. Despite these challenges, many retailers were able to maintain, if not grow, their clientele during this period by leaning on SMS marketing.
Last year, springbig reported 20% quarter-over-quarter growth in SMS messaging among clients —totaling more than 548 million text messages by retailers around the country — and saw its customer base grow by 17%.
For companies with limited marketing budgets, text messaging is also a more cost-efficient and effective way to reach consumers. Traditional platforms such as print, out-of-home and television ads can be exorbitantly priced, and it is nearly impossible to track conversion rates through these methods. SMS digital marketing platforms, on the other hand, can provide trackable ROI, detailed campaign performance reports and tell brands and retailers exactly how far their dollars are going.
SMS Marketing is Here to Stay
Marketers in the cannabis space should not expect regulations to change in their favor anytime soon. Although federal lawmakers are prioritizing cannabis reform, it is unlikely that these regulations will significantly impact the internal policies set by large technology platforms who are the ultimate gatekeepers of digital ads.
In the future, there may be more marketing opportunities through the SAFE Banking Act, which will provide cannabis brands with more capital and the ability to expand their marketing budgets. However, the bill has been stalled in Congress since 2019, and there is limited guidance on when the Senate will vote on this key piece of legislation.
In the meantime, cannabis companies must focus on tried and true methods that are available to them right now.
Jeffrey Harris is the co-founder and CEO of springbig, a leading marketing platform for cannabis businesses.