The standards come as Cresco and other big cannabis firms push to normalize the industry in hopes of opening up more media inventory to run their ads. Recreational cannabis is now legal in 11 states, with 33 states approving medical use. But because marijuana is still illegal federally, publicly traded companies such as Facebook and Twitter generally do not accept paid pot ads. Ad agencies controlled by large publicly traded holding companies have also shied away from doing work for cannabis brands.
Cresco has been able to place ad buys with privately held media brands controlled by Condé Nast, Penske Media and Vice Media, says Cory Rothschild, senior VP of marketing for Cresco Labs. By putting new ad standards in place, Cresco hopes to grow that list, targeting media brands like Sports Illustrated and Pandora, he says.
“It’s understandable why [publishers] would be cautious to move into this space,” Rothschild says. “What we hope to demonstrate is that there are standards and values that we share, that the entire industry shares, that we can all commit to.”
The opportunity for media companies is potentially immense. BDSA, which tracks cannabis sales, forecasts that global sales will reach $19.7 billion in 2020, including $16 billion in the U.S. It projects that U.S. cannabis sales will approach $34 billion by 2025.
Greg Butler, chief commercial officer of Cresco Labs, says that could translate to nearly $4 billion in sales and marketing spending. Cannabis companies had been focused on growing supply. But as their balance sheets improve—Cresco in June reported its first cash-flow-positive month in June—”you are going to start to see the big players investing in brands, cause you now have the money to do so,” Butler says. “But in order for us to make sure we are doing it the right way, there’s got to be standards.”
Because cannabis is still illegal federally, companies must comply with a patchwork of state regulations, including for marketing and communications.
It’s not hard to find cannabis marketing that violates the standards Cresco is pushing, some of it exhibited in unpaid social media messages. A brand called Dogwalkers earlier this summer pushed pre-rolled joints with an Instagram post showing someone holding one on a beach with text that states “let the good times (pre) roll.” In the background are surfers that appear to be underage.
Another brand called Kushy Punch, which markets cannabis edibles, last Christmas Eve ran an Instagram post featuring a picture of Santa Claus with the text “#KushKringle getting ready to make his #Litmas deliveries like.” Santa Clause could be considered a symbol targeting underage users, according to Cresco’s code.