Marketing Cannabis and Psychedelics: Unique Challenges and Legal Considerations
Marketing cannabis related businesses and companies dealing with psychedelics comes with some unique challenges. Organizations operating in the semi-legal space (which for the purposes of this blog post simply means that legality varies by location), a current understanding of local, state and federal laws is crucial. Any failure to comply with these laws can create massive ripple effects when coupled with a marketing campaign that effectively draws attention to a company with profits or audience growth on its mind.
Anyone going into business likely does so with a desire to generate revenues by solving a problem in the marketplace– a statement that certainly applies to those in the emerging cannabis and psychedelic economies. When we’re discussing companies producing the final products and bringing them to market, raising brand awareness and amplifying the message of the products’ value proposition requires a different approach than one might use when marketing a new pharmaceutical product.
Companies often have contingency plans in place for unexpected failure, but they rarely have contingencies ready for unexpected success. If a cannabis-related business, for example, launches a campaign to promote their offering in a state where their product is wholly legal, and they go viral to a degree that they’re suddenly drawing attention from the national media, how can that affect them– and everyone they rely on to do business? If the company hasn’t been diligent in administering their affairs in strict accordance with the law, the effects can be devastating- potentially resulting in criminal charges for themselves and others.
In the ecosystem of businesses that touch cannabis and psychedelics – sometimes without realizing it – investment institutions are especially vulnerable to the negative effects of compliance failures.
James Francis, Chief Research Officer for CRB Monitor, says: “I don’t think any financial institution wants to be caught not having done their due diligence and done their KYC work–which is ‘know your client.’ Much more than the risk of paying fines, I think there really is a much greater concern over their reputation.”
CRB Monitor is the leading provider of market intelligence for the cannabis industry. They offer
broad and deep data regarding cannabis businesses, with their main objective being to cover the entire cannabis ecosystem– primarily (but not exclusively) for financial institutions that are concerned about risk in the cannabis space.
James explains: “Our business is important to financial institutions because they’re looking for that subject matter expert who can say, ‘This set of companies are cannabis companies, and this list of 170,000 individuals are the individuals related to that space. And this list of licenses–200,000 or so–active licenses are the licenses you need to pay attention to.’ All of that information that’s scraped off of those licenses is the basis for this giant database that all of these financial institutions need (for their) anti-money laundering work.”
We believe that before marketing cannabis and psychedelics, these companies (and those who work with them) should invest in sound legal guidance, and it would be wise to have marketing support from a team that fully understands the legal landscape. Their marketing teams should be adept at attracting attention… and equally as adept at crisis communications and reputation management.
Although it’s true for any business, in semi-legal industries, it’s critical to know the law– and for companies that touch these emerging industries, it’s critical to know their clients! Failure to do so will be compounded exponentially by a viral moment, which can cause a growing company to be shut down overnight, with ripple effects negatively sweeping through a variety of related businesses. Our advice: do your diligence beforehand and have the right teams supporting you as you grow– and at the ready in case of unexpected stumbles or successes!