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As Regulations And Platform Restrictions Loosen, Cannabis Ad Budgets Are Hitting New Highs.

Time was when rolling paper ads on FM album rock stations were controversial, even while they were not allowed to mention what went in those papers. Fast-forward to 2023, when, in the wake of loosening marijuana regulations from state to state, and greater openness from most advertising media, cannabis brands are increasing their budgets and trying out new ad strategies on multiple weed-friendly platforms.

“From the conversations that we are having, it is evident that there are a lot of companies that are being more open,” says Gbemi Maiyegun, co-founder of online community Weed for Black Women, noting more mainstream brands with cannabis-friendly ads during 4/20 week this year, and a recent increase in partnership inquiries for Weed for Black Women. “I’m definitely seeing a lot more openness to collaboration from these brands.”

As more of the U.S. is seeing relaxed restrictions on cannabis, hemp and CBD – with 38 states, three territories and the District of Columbia allowing the medical use of cannabis products, and 22 states, along with Washington, D.C. and Guam, acting to legalize recreational marijuana – ad platforms such as Twitter, Google and Pinterest have loosened bans on advertising the products, and advertisers are opening pocketbook for paid ads on such platforms.

“It’s been an incredible shift in opportunity,” Lana Van Brunt, co-founder and co-CEO of Sackville & Co. cannabis company tells Digiday. “It has democratized business. And being able to hit your consumer directly, this is CPG-wise, has been monumental. Now we’re able to drive direct to e-comm. Which has changed the game because you can actually start getting an understanding of what’s moving, where and to who.”

On the radio side, at the end of 2022, there were already more than 40 cannabis dispensaries running spots on AM/FM radio, as some stations ignore warnings from broadcast attorneys that doing so could jeopardize their FCC license. That was in addition to ads from the fast-growing Marijuana Products & Services sub-vertical, where there is far less risk in accepting advertising.

This year's aforementioned 4/20 campaigns included cannibis-related messages resulting from partnerships with national brands such as Jack in the Box, Ben & Jerry's, and Red Lobster.

Move To Increase Ad Spend

Compared to 2022's average marketing spend last year – which increased from 6.4% to 9.5% of company revenue across almost all industries, according to a report from Gartner – cannabis brands spent just 5-8% of their annual operating budget on marketing, according to Amy Deneson, co-founder of the Cannabis Media Council and co-founder of Pheno, a cannabinoid-friendly ad agency. “We really need to increase [media spend] if we’re going to grow up to be the industries that we aspire to be, which is following the good lead of retail and CPG,” she says.

As it stands, several brands such as cannabis-infused drinks Brēz and Cann have already upped their ad spend, with the latter pushing their budget from 10% of marketing dollars in 2022 to between 30-40% this year. “The digital ecosystem – that is our pathway to let people know that these products exist,” CannCEO and co-founder Jake Bullock says. “For us, it’s really important that we have the ability to do this type of advertising to get the category and the brand and the products out to consumers.”

While the budgets rise, however, there remain regulatory issues to get around, with marijuana still classified at the federal level as a Schedule 1 drug under the Controlled Substances Act, and state-to-state differences in laws, meaning advertisers need all the help they can get to successfully leverage digital platforms. “We’re constantly toeing the line,” cannabis-friendly agency N° 9 CEO Kiana Anvaripour says. “You get as close to the fire as possible without getting burnt.”

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