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CANNABIS IS THRIVING BUT BRANDS LIKE MEDMEN STILL FIND BUYING ADS A SLOW BURN

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Source: AdAge

As marijuana enters the mainstream, plenty of ad sellers are still just saying no.

Even in states where pot is legal for recreational use, retailers are having a hard time placing ads. There's a complete lid on TV and radio ads, for instance, and the acceptance of outdoor ads is inconsistent. And Facebook and Instagram continue to prohibit ads that promote the direct sale of cannabis.

The resistance means that pot retailers must get scrappy as they deploy their ad dollars, even as legalized marijuana becomes big business, surpassing $6 billion in sales last year, according to one estimate.

Consider MedMen, one of the largest cannabis retailers in California, which legalized recreational pot as of Jan. 1. The marketer, nicknamed the "Starbucks of cannabis," is experiencing a wave of demand in the wake of the new law, with its West Hollywood store reporting a 480 percent revenue increase. But as it seeks to spread the word with a new campaign, MedMen has been forced to become resourceful, including placing ads on the sides of trucks that deliver fruit and office supplies.

"It is absolutely challenging," says B.J. Carretta, MedMen's chief marketing officer. "When you can't really run Instagram or Facebook ads, that takes a big chunk out of your standard media plays."

The new campaign, with the theme "Forget Stoner," targets California and Nevada, which legalized recreational pot last year. Ads seek to shatter stoner stereotypes by featuring a variety of people—including a police officer, an ex-NFL player, a grandmother and a teacher—who use cannabis for reasons including pain management.

MedMen made $2 million worth of media placements, covering more than 35 billboards as well as print buys in publications including OC Weekly, LA Magazine and San Diego Magazine. That's up from the $1.5 million spent on a campaign that in ran in January that used taglines like "Relax. It's legal."

It placed some outdoor ads via Outfront Media, but Carretta says MedMen has been rejected by Clear Channel Outdoor. The Los Angeles Times also declined its buy, he says.

An L.A. Times spokeswoman says the newspaper has "run a limited number of advertisements for marijuana, following legal and ethical guidelines." She adds that she is not familiar with the MedMen ads but "there is a variety of reasons an advertisement could be rejected or an advertiser could be asked to revise an ad." A Clear Channel spokesman did not respond to an email seeking comment by press time.

Podcasts and a custom magazine in place of TV and radio

California allows marijuana ads in broadcast, cable, radio, print, and digital communications "where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older," according to the state's regulations. That is similar to rules the alcohol industry has long used. But pot sellers face additional hurdles—first and foremost that marijuana remains illegal nationally, with only eight states approving recreational use.

That makes a lot of big media buys impractical. "Digital is hard because a lot of the publishers don't geofence all the time. So technically you could be promoting cannabis across state lines into a state where it is not legal," says Carretta, a former NBC Sports executive who joined MedMen in 2017 after a stint at guitar maker Fender.

Facebook's policies allow cannabis advocacy content, but prohibit the promotion of the sale of the drug itself. Brands are told to avoid using images of either recreational or medical marijuana, according to a description of Facebook's policy posted on the site.

While local TV or radio affiliates could theoretically accept pot ads, as long as they don't extend to states where it is illegal, they have been loathe to do so, Carretta says. So MedMen has relied on podcast ads, including with the "Adam Carolla Show" and "Doug Loves Movies."

MedMen also struck a deal with Paper Magazine to create a new quarterly print publication called Ember that documents the intersection of cannabis and culture. The first issue includes a feature on L.A. celebrity chef Neal Fraser who infuses cannabis into signature dishes. After being rejected so many times for media buys, "we decided let's just make our own glossy," Carretta says.

But experts say it's only a matter of time before pot ads gain widespread acceptance.

"What is clear is that laws legalizing the use of marijuana are escalating, and it is going to be a big business that will need big branding," Robert Passikoff, founder and president of brand research consultancy Brand Keys, said in a survey released Monday about consumer attitudes toward marijuana marketing. Citing Marijuana Business Daily, Brand Keys notes that U.S. retail sales of legal cannabis products totaled $6.1 billion in 2017 and are expected to rise to $14 billion by 2021.

But for now, brands and retailers are stuck in a "grey area" until the "regulatory regime catches up with the the commercial needs of legitimate licensed cannabis businesses," says Jason DeLand, founding partner of the Anomaly ad agency and chairman of cannabis products company Dosist, formerly called Hmblt.

"Until that happens, it's best to err on the side of conservative so that you don't make yourself a target," he says. "You have to look at it through the lens of the regulators. You do not want national media for cannabis brands because it's going to cross state lines. And you never ever want to create any type of communication that can be construed as appealing to minors."

Dosist—which markets cannabis dose pens and strains of cannabis oil promoted for outcomes like "relief" or "calm"—focuses much of its marketing on events where it invites experts to talk about topics including pain management, sleep and libido.

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