Today marks the first time that April 20th — known amongst pot smokers as “420″ and frequently celebrated with smoking parties — is a legally observable event in the United States (in some places, at least, since the states of Washington and Colorado have legalized recreational use of the drug for adults). So, what does this mean for local businesses and marketers?
In 2010, I conducted a limited audit to see if 420 party locations, as well as marijuana dispensaries, appeared in Google Maps. I found little more than a user-generated map back then — but fast-forward to 2014, and we begin to see legal marijuana retail establishments appearing in local search results and local directories.
The virtually overnight switch from prohibited substance sales to legal businesses has left local search engines and online directories with a dilemma as to how to adapt to the changing marketplace.
New Business Growth Is Smoking Fast
Marijuana sales are lighting up faster than a blunt at a 420 party. By January, over 300 businesses in Colorado had received licenses to sell marijuana.
We can imagine that number continuing to rise as previously-unheard-of innovations emerge, such as marijuana vending machines, cannabis-infused not-so-soft drinks, the “Costco of weed,” hemp nurseries, cannabis growing schools, and more.
Tax revenues alone are expected to exceed $100 million in Colorado this year, and over $30 million in Washington State going into 2015. If you do the math, you can see that this translates to a lucrative new (well, newly legal) industry emerging.
The Marketing Dilemma
However, a huge dilemma has been brewing. With so many businesses emerging, and so much apparent consumer demand, businesses desire to market themselves. One could even make the argument that it’s in the consumer’s interest to be able to easily find outlets, select amongst differentiating features of shops, research pricing and find consumer reviews of cannabis businesses.
Unfortunately, Colorado’s rules for recreational marijuana businesses prohibit them from advertising in any sort of mass media unless there is evidence that less than 30% of the audience is under 21 years old — this includes television, radio, billboard and print ads.
Restrictions on Internet advertising are even more stringent. There is a lawsuit pending on this matter, brought by High Times magazine and Westword alternative newspaper against the Colorado State government.
Online sites and services, in many cases, have policies that may limit access to recreational marijuana advertisers, as well. These ads are apparently banned on Google, Facebook, Twitter, Bing and Yahoo!, as well as on many yellow pages and other local business directories. (Amusingly, Google does allow ads for cigar bars and hookah lounges, as well as “products made from hemp,” while disallowing ads/sites that promote sales of tobacco, drugs and drug paraphernalia.)
I know of one Internet yellow pages that recently received an advertising request for a recreational marijuana company in Colorado, but they declined, citing federal illegality as the reason. Tough luck.
Is Organic Promotion An Option?
But what about via organic/nonpaid promotion?
If your content promotes regulated goods and services, including alcohol, gambling, pharmaceuticals, tobacco, fireworks, weapons, or health/medical devices, you are responsible for applying the appropriate age and geographical restrictions for that content. If we receive a complaint that such content is targeting audiences in violation of applicable laws and regulations, we may remove or restrict the offending content or account.
With the appropriate age and geographical restrictions in place, we allow discussion and promotion of these goods, but we do not allow the facilitation of the sale of the products listed above.
It seems inherently confusing that they “allow discussion and promotion of these goods,” in the same sentence stating they “do not allow the facilitation of the sale of the products.”
Perhaps they merely mean you can’t be offering to sell such through e-commerce? Or, do you need to avoid overtly promoting the products on a website — perhaps implying without outright stating, or making use of double entendres?
Geographic And Demographic Targeting
Some have argued that it’s not particularly fair for Google to disallow the paid ads for recreational marijuana, since they could be okay in a legal sense through demographic targeting.
I can currently see one marijuana retail listing appearing for a search for [marijuana, denver, co] on Google:
The business in question is actually a medical marijuana dispensary (“Best Marijuana in Denver Medical Weed Dispensary,” according to their website title, although the homepage promises “The best party in town”). So, it’s possible that ads for medical marijuana may not be limited by the state’s prohibition on advertising. Or maybe this one just slipped through.
But, wait — the company’s homepage states that they offer both medical and recreational marijuana. It seems the advertising limits are not applied to medical dispensaries, although they are not supposed to promote marijuana in “recreational terms.”
Obviously, this leaves something open in interpretation — it’s understandable that quite a few dispensaries would have branched out into also offering recreational sales this year. It is now easy to find local listings on Google and Google Maps for [medical marijuana] in Denver:
On Bing, one can find local shops for just a [marijuana] search in Denver:
If you search for [recreational marijuana], though, the local listings disappear, while paid ads for “Recreational Dispensary” do appear:
In Washington State, the rules for retail marijuana advertising appear to be less restrictive; they seem to focus upon advertising that appears in conjunction with the physical location:
Q: Are there any restrictions on advertising?
A: Retailers are limited to one 1,600 square inch sign bearing their business/trade name. They cannot put products on display to the general public such as through window fronts. No licensee can advertise marijuana/infused product in any form or through any medium whatsoever within 1,000 ft. of school grounds, playgrounds, child care, public parks, libraries, or game arcades that allows minors to enter. Also, you can’t advertise on public transit vehicles/shelters or on any publicly owned or operated property.
Obviously, the phrase “any medium whatsoever” within proximity of schools and libraries might seem to potentially apply to the internet, which reaches into those places, but I’m supposing that their mentioning this in context of physical locations would mean that the internet medium, as well as television, radio and more, might not be specifically prohibited.
When I search Google for [marijuana] in Los Angeles, I find one local listing (interestingly, the business apparently offers delivery service):
For Los Angeles, again, there are a number of listings that appear for [medical marijuana] searches.
Now, Yelp actually has a number of listings showing up when I search for [recreational marijuana], although they all seem to be under an official category heading of “Cannabis Clinics.” However, it’s clear that many of these businesses are selling for both medical and recreational uses:
I also tried searching for [marijuana, denver, co] on Superpages.com, but only got addiction treatment centers and attorneys. Searching for [medical marijuana], on the other hand, does provide dispensary listings, as well as some incorrectly categorized stuff (like a listing for an STD testing center):
Interestingly, at least one of the businesses at Superpages offers a discount coupon there, albeit only for AIDS/HIV patients:
By contrast, I can’t find any listings at all on YP.com for any marijuana searches — I’d conjecture that they have specifically prohibited it in their directory as a matter of policy:
You can’t blame the directories and local search engines for being a bit flummoxed about their policies toward advertising or listing such businesses. The situation has changed so rapidly, and it’s challenging to create exception cases for just a few states while still limiting “restricted categories” in all the others.
Opening the gates for legal businesses is also resulting in innovative business concepts related to the recreational product, and the laws and advertising platforms haven’t really anticipated the variations that could occur. They’re limiting recreational retailers while simultaneously allowing more freedoms for medical retailers. Yet, many of these businesses are hybrids — so what do you do in those cases?
It’s unclear to me how the lawsuit involving advertising in Colorado may turn out — it could pry open the gates further, or it could close them even tighter.
If advertising laws do stay restrictive, I think many businesses will come up with imaginative workarounds that will allow them to target the online market of people who will be searching for recreational providers.
For instance, events that advocate marijuana use are perhaps not limited if they don’t involve on-site sales. If one can advertise that without restriction, perhaps a retailer could throw a big fair, promote it independently of their retail shop, and then promote the shop at the fair. They could act as a main sponsor, handing out discounts and maps and such.
Or, perhaps a business owner could open a bakery next to their marijuana store called something like “Recreational Marijuana Baked Shop,” but not sell marijuana there — only cookies, sweets and non-intoxicant brownies. However, you could still direct people to go next door for the ganja goodies. Is there any law that a non-restricted business cannot name itself “recreational-marijuana-something”? I doubt it.
Legal Gray Areas Remain
As things currently stand, there are many ambiguous gray areas here. Does getting your recreational marijuana business listed in a phone book or online directory constitute “advertising”? Does merely having a website constitute advertising? Does performing search engine optimization to get your business positioned more prominently in [marijuana] search results constitute “advertising”?
What is very clear is that searches for recreational marijuana shops have spiked — very sharply beginning in January — and the increased consumer demand coupled with increasing competition from more licensed local outlets is creating a drive for businesses to appear somehow in local search.
Technically, I don’t think it’s illegal to even advertise the selling of illegal drugs, since the law focuses primarily upon the acts of possessing, possessing with intent of selling, and selling such things. (There are exceptions — the FDA has been known to go after companies that market apparently innocent products as street drugs. )
Of course, advertising could be used against anyone involved in the illegal activities and could be helpful to law enforcement in locating those involved in the criminal activities. I could be wrong — there might be localities that specifically make advertising and promotion illegal.
I think that most publishers have policies that prohibit advertising of illegal products as a matter of tastefulness — such ads could make a company appear tawdry. There might be a case against a publisher if it could be established that they profited as part of a criminal endeavor, perhaps.
But, the limits placed around restricted business types are also a matter of taste — a desire to avoid offending community standards and to protect children.
What About Next Year? And The Year After That?
I think it’s likely that many organizations will find the potential advertising revenues to be too attractive to stay out of the game for very long, and as time goes by, they will be more and more inclined to relax their policies around this — especially if even more states legalize pot from here on out.
One way or another, I think that consumers will be increasingly able to locate such shops without jumping through the hoops of going through age-verification websites, too.