Give it a year or so, and residents and visitors to New York State—and especially New York City—will be seeing a lot of green.

Today, cannabis brands and marketers are riding high after winning a major battle in their prospects for federal regulation: The Empire State became the 15th U.S. State to legalize recreational marijuana. On Tuesday night, after three years of New York lawmakers’ efforts, the Assembly and Senate passed the Marijuana Regulation and Taxation Act.

The new legislation means adults 21 and over can purchase weed in the state, companies can introduce licensing processes to deliver cannabis to citizens, and New Yorkers can grow up to six plants each for personal use. It will also be legal to possess up to three ounces of cannabis. The regulations will go a long way to decriminalizing possession of marijuana which has disproportionately affected Black and Hispanic populations (previous convictions will be expunged), and New York will also give out loans, grants and launch incubator programs to encourage startups from minority communities. The new legislation also offers an adult-use path for the state’s 10 existing medical cannabis companies.

The new regulations could benefit the state through taxes on sales—all recreational cannabis will be taxed at 13%, with 9% going to the state and 4% going to localities, plus an additional tax dependent on the level of THC (0.5 cents per milligram for flowers and 3 cents per milligram for edibles). The governor’s office is projecting that tax collection will top $350 million per year.

For most cannabis businesses, the large market share—New York has a total population of 19.5 million—will likely be worth the taxes. Marijuana Business Daily projects the market could generate $2.3 billion in annual sales in four years. MPG Consulting has an even higher evaluation, estimating the total cannabis market in New York to be $4.6 billion, or 747,000 pounds of flower, and projected to grow to $5.8 billion, or 1.2 billion pounds of flower, in 2027.

All that prospect means an abundance of opportunity for marketers and advertisers.

“New York’s best and brightest in the advertising and marketing fields will bring their considerable skills to bear on this emerging marketplace,” says Shaun Chapman, director of government relations at Weedmaps, a cannabis technology company where customers can choose weed delivery methods for goods from New York-based medical dispensaries like Columbia Care, MedMen and Vireo Health. “New Yorkers will certainly benefit from advertisers highlighting and educating around the vast array of products that will now be available to customers aged 21 and over.”

Big Weed

Cannabis marketers will flock to marketing channels already popular in other recreational marijuana states, such as out-of-home, experiential, display, local podcasts, affiliate marketing and unpaid efforts on social media platforms like Instagram. With the regulation making delivery a priority, brands will also proceed to turn to digital delivery platforms like Weedmaps and Leafly to jumpstart marketing efforts.

“Similar to what you’ve seen in other markets on a smaller scale is that there will be a rush to drive both brand and retail awareness,” says Chris Vaughn, CEO of Emjay, a cannabis delivery service based in California. “Out-of-home, display, local affiliates, local podcasts and so on will all now have an entirely new industry looking to buy up media. Operators in the state will be competing for audience share, and New York is a city like no other where creativity in media planning can capture the eyes and minds of one of the country’s largest audiences.”

Edible seller Kiva Confections, for instance, believes it can replicate some of its past experiential activations in the New York market, such as bringing its products to outdoor concerts like San Francisco’s Outside Lands and sponsoring drag shows. “Assuming options around out-of-home and PR stunts are allowed, you'll start to see New York City become an epicenter of cannabis marketing given the reach,” says Adam Grablick, chief operating officer at Kiva Confections.

Jason DeLand, partner at ad agency Anomaly and co-founder of Dosist, a cannabis brand selling health-focused formulas, pens and edibles, likens the upcoming wave of cannabis advertising in New York to that of online sports betting in New Jersey, which was legalized in 2018.

“Every billboard you walk by in the state of New Jersey says FanDuel or MGM. There’s a reason for it. Everyone is trying to gain terminal velocity and market share and I anticipate the same thing happening in the state of New York as it relates to cannabis. New York, New York City in particular, is the largest cannabis market in the world,” says DeLand, adding that there is “no doubt” his Dosist brand will be marketing in New York when the time comes.

Much of the marketing and advertising that already exists in New York around using marijuana for medicinal and therapeutic purposes will become more mainstream. Catharine Dockery, founder of VC fund Vice Ventures, which invests in “vice” industries that other firms often discard—and whose roster of companies includes New York-based cannabis brands like Recess, Hath and Plant People—has tracked the marketing shifts in states with recreational legislation. She says brands typically start positioning cannabis consumers as regular members of society and both brands and the government will start to introduce more education around the use of cannabis, which will increase comfort levels. 

“The opening up of the New York recreational market and allowing delivery early in the process will give marketers an unparalleled opportunity to reach consumer segments that many states have yet to crack, including consumers who are sensitive to personal stigma or have reputational concerns,” says Dockery. “We expect consumers to become more knowledgeable about CBD-focused products and more willing to try them.”

A smoking gun

Given the reach of New York, expect established multi-state brands to start selling in New York and entirely novel brands to enter the competition, supplying plenty of work to the ad agencies that will take it. New players to the field could potentially dethrone California brands, some which have long benefited from the sunshine state’s recreational legal status, says Dockery. Eventually, New York will likely look similar to the dense parts of LA, she believes.

As more consumers become acclimated to the new products and branding, experts predict that larger agencies and holding companies, which up to now have been reluctant to partake in cannabis work largely due to its illegal federal standing, might finally want a slice of the pie (or, rather, a bite of the brownie).

“We’ll likely see some of the bigger New York firms opening themselves up to cannabis brands, creating cannabis practices and even acquiring established agencies that have been doing this work for years,” says Jesse Burns, chief marketing officer of Denver-based public relations firm Grasslands, which works with several New York-based agencies around cannabis campaigns.  

“Soon we’ll be seeing announcements that Omnicom is doing Greencom and it will be a group of cannabis experts to help wade through certain topics,” says DeLand. “That is an inevitability at some point.”

Restrictions on regulations

Of course, seeing cannabis lounges and new cannabis brands pop up in ads on the streets of New York won’t happen anytime soon—marketing experts say it will take at least a year for all the rules and regulations around sales and marketing to be laid out. New York also plans to set up its own cannabis board. Assembly Majority Leader Crystal Peoples-Stokes believes it will take 18 months to two years for sales to start, according to the Associated Press.

Where brands will be able to place marketing, and what can be said, still needs to be ironed out. It’s possible cannabis marketers will have to follow best practices as they do in California, such as ensuring that audiences viewing ads are comprised at least 76% of consumers aged 21 and older, and that ads do not depict images or branding that is attractive to children, says Burns.   

Platforms like Facebook and Twitter, and paid search, will continue to be restrictive or simply off-limits to cannabis advertisers, and will likely remain that way until cannabis becomes legal at the federal level.

“Hopefully, the industry can put enough weight and influence behind a concerted effort to get these platforms to come around,” says Lisa Jordan, VP of marketing at Canna Advisors, a cannabis consultancy which helped entrepreneurs break through when weed became legal in Colorado. “With digital and social, of all mediums, they should open up to cannabis advertisers given the ability to target only where cannabis is legal.”

“With one of the country’s largest populations legalized, Facebook and Twitter need to seriously rethink their policies as an increasing percentage of their U.S. user base is now in legal markets,” says Vaughn. “At what point are they just clearly censoring genuine populous interests, versus allowing for a thriving and legal community?”

Even with legalization in New York, cannabis brands still have to navigate a patchwork of disjointed laws across state lines, making product delivery and the scaling of marketing and targeting difficult to achieve. “The burden of operating across multiple states is currently so high as to be nearly infeasible,” says Dockery, who calls the states that have legalized weed “an uncoordinated and disconnected group of states.”

“Overall, everything federal really hasn't changed, and that, in our opinion, has been a force preventing the standard forces of commerce from really fully engaging in cannabis,” says Dockery. “The void of federal leadership on this issue is going to create massive long-term problems and be a drag on cannabis businesses for years to come. We could well have 30 to 50 states with varying recreational and medical policies, Washington DC rec legal, and still be fighting for de-scheduling or re-scheduling.” DeLand says: “It’s very frustrating to run a business like this where the regulatory regime really doesn’t know what’s going on.”

But New York’s legalization of the green flower raises hope that federal regulation might not be too far off. As Socrates Rosenfeld, CEO of cannabis online dispensary marketplace Jane Technologies, says: “The financial epicenter of the world could be the last big domino to fall before we reach federal legalization.”