A legal cannabis market in the US has been welcomed by a broad range of interested parties. But although the relaxing of the law opens opportunities across the board, the current state of play is far from simple.
We come a long way from the stereotypical image of cannabis users, with public opinion showing cannabis is increasingly regarded as a form or medicine or relaxation. In 2022, Pew Research found that 59% of US adults believe marijuana should be legal for medical and recreational purposes, with a further 30% agreeing it should be authorized for medical reasons.
Legislation has also evolved over the past decade with Minnesota became the 23rd US state to legalize adults’ recreational use of cannabis on the 1st of August 2023—a movement that started in Colorado and Washington back in 2012.
However, digging a bit deeper than the binary legal-illegal topline reveals a complex regulatory patchwork.
Head west from Minnesota to North or South Dakota, for example, and cannabis is only authorized for medical purposes. Go south to Iowa or east to Wisconsin and it’s illegal altogether. And even in the territories in which it is allowed, amounts and specific regulations vary significantly.
The inconsistencies in its legal status are reflected in whether and how cannabis can be marketed across different US states. Despite the widespread availability of brands and products, the fragmentation of the market makes for an intimidating advertising environment, exacerbated by most of the major platforms avoiding the segment. Many providers have avoided it completely, choosing instead to rely on ‘safer’ organic campaigns.
Big tech platforms start to shift
But with the US cannabis market predicted to reach $40 billion by 2030, it’s perhaps unsurprising that things are starting to shift further.
The likes of Facebook, Instagram and TikTok have continued to stay away, but at the beginning of January 2023, Google launched a pilot project in California and Colorado (as well as Puerto Rico); the move sees it lift its ban on advertising for pharmaceutical products approved by the Food and Drug Administration (FDA) containing cannabidiol (CBD) along with topical, hemp-derived CBD products with 0.3% or less tetrahydrocannabinol (THC, the major psychoactive component and one of the 113 cannabinoids recognized in cannabis).
Twitter—or X as it has since become—followed suit, updating its policy to allow cannabis ads on the platform in states where cannabis is legal.
Wider audiences—but tighter restrictions
These advancements can potentially help cannabis brands reach new audiences, as well as strengthen ties within the cannabis-buying market. But while access to consumers is easier, the complications haven’t gone away and the combination of nationwide limitations and individual state restrictions on geographical targeting and content remain a minefield that requires precise navigation.
Across the US it is prohibited to make specific health claims about cannabis or CBD products, or target states where cannabis is illegal for example. But each state then has its own rules; cannabis may be legal for recreational use in Colorado, but outdoor advertising is generally prohibited. Creatives might also need to vary depending on the area in which they are to appear, such as including specific text for an ad in one state but not another.
Working with BidSwitch
To help companies make the most of the nascent but fast-growing cannabis advertising market, BidSwitch supports ad trading between partners that have both opted in to run campaigns of this nature, in the states where it is legal to do so. As part of the process, DSPs must meet additional vetting standards to ensure the right controls are in place.
There’s no denying that the sector is highly complicated, and likely to continue changing as legislation is upgraded. Keeping pace with these shifts is an ongoing challenge for brands, platforms and trading partners alike.