Here's Why Cannabis Companies Struggle with CX More Than Any Other Industry
Uneven legislation and social stigma represent significant barriersAdd bookmark
As the world’s most commonly cultivated, trafficked and used illicit drug, marijuana represents a $12 billion industry.
This is in spite of the fact that B2C and B2B marijuana businesses grapple with ever-changing compliance regulations that would stop most entrepreneurs in their tracks.
For instance, cannabis brands can’t state the benefits of their product on their packaging because their claims aren’t scientifically proven. However, the fact that marijuana is still illegal by federal law prohibits companies from conducting privately funded research to prove the benefits of the drug.
“Basically, we have to walk around what we know to be true,” said Sarah El Sayed, CEO and founder of Grass Is Greener PR, a full-service marketing agency representing cannabis companies. “We can’t say ‘cannabis will help you get a better night’s sleep.’ We can say there are certain studies in rats that have helped target cannabis for sleep.”
Cannabis companies face significant legal barriers to providing a consistent customer experience
So far, the District of Columbia and 11 US states have legalized marijuana for recreational use, while the remaining states have elected to either decriminalize possession, restrict marijuana use for medical purposes, or keep it fully illegal.
Fragmented legislation precludes marijuana companies from offering a consistent brand identity and product experience – not to mention predictable sales and distribution channels for their customers to find and buy their products.
“Providing a consistent consumer experience from state to state is very difficult because you can’t transport products between states,” said Evan Nison, founder of cannabis PR firm NisonCo. “Every state has different regulations in terms of what ingredients you can use, or what lab tests you have to go through.”
For businesses operating in the black market, where sellers profit almost exclusively from word of mouth, branding and differentiation are less relevant concerns. In the newly legalized markets, cannabis companies rely heavily on public relations, reviews and social media influencers to “advertise” to their customers. In states where the drug is legal, companies do periodic pop-ups at dispensaries to meet with customers, or host their own educational seminars.
Social media sites like Facebook, Twitter, Instagram, LinkedIn and Snapchat don’t permit advertising from marijuana outfits, while the rules for billboard advertising vary from state to state. In California, for instance, marijuana ads can’t be posted within 1000 feet of daycare centers, K-12 schools, playgrounds or youth centers.
“The primary way [to advertise] is through PR and associating your brand with a name that people already know and trust – either another brand or a celebrity or something of that nature,” said Nison, who sits on the board of directors for Students for Sensible Drug Policy.
Influential figures such as Seth Rogen, Snoop Dogg, Olivia Wilde, Jay-Z, Danny DeVito and Wiz Khalifa are just some of the outspoken celebrities helping to put cannabis on the map, with many famous names either investing in or starting their own cannabis brands.
Country singer Willie Nelson runs his own cannabis company called “Willie’s Reserve.” On his site, he sells a variety of products such as pre-rolled joints, dried flower, edibles, and oil concentrates. In 2018, actress Gwyneth Paltrow’s lifestyle brand Goop announced that it would offer CBD products on its online store, including CBD-based tinctures, lotions and edibles.
“There’s not a lot of thoughtful, strategic branding in the industry, but there’s a lot of imagery, and it doesn’t really seem to make sense,” said Deb Gabor, founder of Sol Marketing and author of Irrational Loyalty: Building a Brand that Thrives in Turbulent Times.
The road to customer acquisition is paved with obstacles
One of the biggest concerns for marijuana brands is improving online visibility. Aside from PR, advocacy and content marketing, their best bet is to sign up to popular business directories like Yelp, YellowPages and Local, as well as cannabis-specific directories like Leafly and Weedmaps.
With the cannabis industry still in its infancy, there is a lot of exploration happening in terms of brands, retailers and distribution channels, to the backdrop of tensions between the legalized and black markets. In California, for instance, where cannabis products are taxed at up to 40 percent, legal cannabis sales fell after recreational stores opened.
There is a constant influx of new brands, dispensaries, growers and service companies, while consumer demographics are changing, too. The elderly are the fastest-growing pot demographic in the US, using the drug to relieve age-related aches, pains and insomnia. However, the cannabis industry doesn’t seem to have a concrete image of who their customer is. They market their goods to anybody who’s ever experienced stress or insomnia – in other words, everybody and their mother.
“I think brands are starting to realize that their customer base is like the customer base for any other product [...] and everyone’s trying to dig out their niche now,” said Nison.
In 2016, he co-founded medical cannabis brand Whoopi & Maya with actress Whoopi Goldberg, selling women-focused products designed to relieve menstrual cramps, including edibles, tinctures, topicals and THC-infused bath soaks.
Cannabis is an incredibly complicated plant. THC gets you high while CBD can relax or alleviate pain. Sellers market their products as one or the other, but in reality, it’s tough for growers to isolate strains that don’t offer an overlap of both.
However, indoor cannabis growers like Flowr, a cultivation company in Canada, can control the growing process and produce the same product every time. These so-called “designer cannabis” brands tend to carry a higher price, but won’t produce any unforeseen side effects.
“People are paying not only for the growing practices and quality of the indoor cannabis flower but also the name and branding behind it,” said El Sayed.
Meanwhile, OLO, which produces cannabis-infused strips that go under the tongue like a Listerine strip, has begun offering its product in four distinct yet standardized experiences: Active, Focus, Social and Chill.
Cannabis legalization started as a social issue, not a commercial one
In the PR and advocacy work that he does in the legal cannabis, medical marijuana and hemp industries, Nison says it’s important to remind people that the movement to legalize marijuana is not to push marijuana products on consumers or promote stoner culture.
It’s a social movement that started with decriminalizing non-violent, drug-related offenses, which disproportionately affects communities of color. Now it’s about advocating for the mainstream benefits of marijuana as a stress reliever, pain killer and sleep aid, as well its medical uses for treating conditions like Alzheimer’s, cancer and epilepsy, and other chronic diseases.
“It’s not that I’m trying to push cannabis on society; it’s that I think prohibition is bad and repealing prohibition is good for society,” said Nison.
“I think because it was one of the first if not the only social movement that I can think of that created an industry, I think it would be cool if we could set an example for other industries.”