Cannabis Investing and Marketing

Gone are the days when cannabis was restricted to black market deals and underground consumption. When California legalized medical cannabis back in 1996, few could foresee just how mainstream legal cannabis would become.

With each passing year, more U.S states vote to legalize cannabis. At present, 36 states have medical programs, and an additional 15 states as well as Washington D.C. legalized adult use. As such, there are now billions of dollars being spent on marketing and advertising products to consumers.

The growing cannabis industry presents opportunities for investors and brands to create jobs and help support the community. This chapter offers an introduction to investing, marketing for cannabis brands, how legal cannabis helps communities and more.

Cannabis Stocks

Cannabis investing isn’t always right for those who want to minimize risk, but there is much growth promise in cannabis that makes these investment opportunities worthy additions to your portfolio. Because cannabis is still illegal on the federal level, there is still an overall lack of publicly-listed US cannabis stocks on major exchanges.

However, publicly-listed cannabis stocks are on the upswing, generally speaking. As investors evaluate their options, it’s crucial to pay attention to the market cap of cannabis companies. If a company has a large market cap, it may have a better chance of long-term financial stability.

There are four major categories of cannabis stocks. Each one is associated with different facets of our industry and is therefore subject to the various ebbs and flows of such sectors. Those four categories include:

• Growing Facilities: these are companies that own cannabis cultivation farms and facilities, actively growing the plant.
• Retailers: Brick-and-mortar dispensaries that sell cannabis products like flower, edibles, and concentrates.
• Manufacturers: ancillary companies help support various needs of the industry. These include extraction labs, growing equipment companies, and plant inputs.
• Drugmakers: perhaps the most controversial on this list, among cannabis lovers, are pharmaceutical companies. However, there are pharmaceutical companies using biotechnology to create cannabis-derived drugs that help patients. An example of this is Marinol, for which we’ve provided a link in our sources section.

We must reiterate the volatility of cannabis stocks, even though our industry continues to legitimize itself. While their agendas are questioned, the SEC has alerted investors of “unlicensed sellers, unsolicited investment offers, and market manipulation” when considering investing in cannabis stocks.

Exchange-Traded Funds (ETFs)

For newer investors, many financial advisors recommend that ETFs are a great way to start. For cannabis investors, ETFs combine some of the positive aspects of both conventional stocks as well as mutual funds. ETFs allow investors to diversify with lower expenses than traditional stocks.

Some ETF managers have a goal of delivering investment results based on underlying indexes, while other funds have active management. Funds that are actively managed offer an investment incentive of the fund’s ability to respond to cannabis industry news, which may be either positive or negative – and then respond accordingly.

Emerging Cannabis Investment Niches:

While cannabis stocks and ETFs offer potentially lucrative investment opportunities, investing in startups as well as those that are scaling their cannabis business also can make you some coin. Here are a few examples of emerging cannabis investment niches.

Cannabis Consumption Lounges

Another fast-growing and potentially lucrative niche in the cannabis space is cannabis consumption lounges. Despite cannabis being legal in dozens of states, public consumption is still prohibited. States like Nevada aim to change this by passing public consumption bills that will allow establishments to sell cannabis to consumers that enjoy the products on the premises.

This niche area of the cannabis industry not only has the potential to create even more jobs for employees in the hospitality and kitchen staff, but it also presents potential investment opportunities as well. Lounges will look to partner with growing and extraction facilities that can offer exclusive products to specific establishments. For investors, putting money into these niches could end up being a lucrative endeavor.

Canna-Tourism

Another interesting and growing area of legal cannabis is the tourism market. As consumption becomes more widely accepted, hospitality firms could start offering more cannabis-centric trips that include a vaping-friendly hotel stay, coupled with access to products and discounts at a local consumption lounge.

For private property owners, cannabis tourism is already a lucrative part of the industry. For instance, owners have listed their canna-friendly vacation rentals on Airbnb for several years now. These owners tend to request that smoking be done out on the balcony or not at all, but vaporizing is typically allowed.

Many accommodating owners even provide their guests with vaporizers. Savvy owners may even look into partnering with a vaporizer company and offer their guests to keep the vaporizer provided by said vape manufacturer, as just one example. This is another potential area that could prove to be lucrative as the industry evolves.

Infused Beverages

Perhaps the fastest-growing niche in legal cannabis is the infused beverage market. Many of the same skill sets that are valuable for professionals in other beverage spaces translate into success with cannabis-infused beverages. For instance, much of the pasteurization process that a craft beer brewery employs is helpful to use for pasteurizing cannabis beverages that must have the alcohol removed.

These are just a few examples of some emerging markets in the cannabis industry that could present investment opportunities. For a more in-depth look at the division of labor and the various niches in our industry, be sure to check out our introduction chapter on Cannabis Careers.

NFTs

NFTs, or non-fungible tokens, are hot-button topics among investors and techies. Generally speaking, these digital assets are about as volatile as investments come. For cannabis, NTFS presents another way to possibly enhance the consumer experience while adding a revenue stream for brands. NFTs give investors, consumers, and brands the possibility, for example, to offer consumers an exclusive digital experience they otherwise wouldn’t have.

For instance, a lifestyle or canna-tourism brand could offer a package deal of a tour of a sponsored cultivation facility, a 420-friendly tour bus, naturally a stop at a dispensary, then end the evening with dining on delicious infused food at a restaurant in your network. This is just one example of the future possibilities NFTs offer for brands and cannabis consumers.

Cannabis Tech

One of the fastest-growing facets of the cannabis industry is the ever-increasing need for improved technology. Some examples of cannabis tech companies include those that provide point-of-sale systems (POS), ecommerce ordering functionality, delivery apps, and more.

Tech companies in cannabis have a unique opportunity to position themselves as industry leaders in this up-and-coming space. One such cannabis tech company is HashDash. If you’re ready to explore the opportunities of partnering with us, we’d love to hear from you.

Legal Cannabis Helps Economies and Communities

Beyond the obvious help to an economy that job creation legal cannabis brings to state and local economies, the tax revenue is very lucrative as well. In Massachusetts, the first two years of just recreational sales netted the state over $120 million in taxes.

This is just what the state collected, not to mention what counties and townships collected. Massachusetts is still an emerging market and is not even close to its full lucrative potential. Tax collectors in more developed markets like California have taken in over $1 billion in taxes.

On top of the obvious financial advantages that legal cannabis can bring, the plant can also help communities. When patients have better, increased access to medical cannabis, their quality of life tends to improve. When recreational consumers have access to the plant without fear of arrest, alcohol consumption, for example, tends to decline.

When consumers are living a higher quality of life and drinking less alcohol, this creates a ripple effect and offers a possibly better, safer public space for everyone. At its absolute best, an investment in legal cannabis is an investment in the innovation of plant medicine, the advancement of science, and a dedication to making cannabinoid products safer for everyone.

Agencies Dedicated to Cannabis Marketing

One of the fastest-growing sectors and areas of focus for marketing and advertising agencies is legal cannabis. This is because many cannabis business owners find themselves in uncharted territory, in which they have precious little experience marketing their products effectively. If you feel this may apply to your business, professionals like those here at HashDash can help.

There are a few things that many, if not most, would-be successful cannabis entrepreneurs who aren’t business savvy are unaware of when building their brand’s marketing as well as their online presence.

Building a Digital Presence for Cannabis Brands

Cannabis entrepreneurs and operators will want to get their digital marketing up and running sooner rather than later. Here are just a few examples of building a digital presence you might not be aware of:

Custom Websites Take Months to Build

A good web presence for your business in any industry optimizes your chances of success. Building a quality website and social media is something many business owners don’t start doing soon enough.

Developing Target Audiences Are Crucial

Yes, your target audience is cannabis consumers. But are they more soccer moms looking for that edible to relax after a long day with the kids, or Gen-Zers looking for the latest concentrate? Figuring out a target audience is crucial for any business, and then speaking their language is just as important.

Optimizing for Mobile and Getting Indexed By Google is Crucial

The majority of customers that visit a retail cannabis location will want to use their mobile devices to find a business. And most of them will Google that business. It takes longer than most business owners think for the search engine to index websites properly.

Many Brands Neglect Quality Writing

This is true for any industry. Great copywriting is a highly specialized field because top companies invest time and money into the words behind their brand. This includes delivering great, well-branded copy and content.

Great website copy and blog content are easy to understand and direct customers to take an action of your choosing. Search engine results rank higher for websites that show consistency, so regular updates on your website and blog can help you rank higher on search engine results.

Challenges with Social Media

One of the largest aspects of building an online presence and digital marketing is gaining a social media following. Social giants like Instagram and Facebook are notorious for removing cannabis brand accounts, or not allowing them to create accounts at all. Instagram is still flagging stories of cannabis brands, without any seeming rhyme or reason. Twitter seems to be a bit better when it comes to not removing cannabis brands.

One of the most successful marketing tactics that dispensaries and retail locations use is a loyalty program based on SMS and email messages. These messages can target an audience with information on deals and new products to try at your favorite dispensary. Another strategy that is gaining in popularity for cannabis brands is to use short video clips on TikTok and Snapchat, where a dispensary might show off a new product they are carrying.

This is why we see cannabis brands often put the phrase “Nothing for sale, 21 and older, please consume responsibly” to protect themselves from legal blowback and hopefully keep their account up and running.

Hopefully, as the cannabis industry continues to become more legitimate, we will see fewer cannabis brand accounts removed from social media. Smaller, much less popular canna-centric social platforms have popped up, but none of them have the reach that Instagram and Facebook do.

Is Traditional Advertising Still Effective for Cannabis Brands?

For the majority of this chapter, we have focused mostly on digital marketing for cannabis brands, because this is where the bulk of the dollars are spent by most businesses. But what about traditional ads, like newspapers, TV, radio spots, billboards, and even business cards? Are they effective?

The answer to that question, as you can guess, is that it’s complicated. What works for one brand might not work for another. Traditional advertising tends to be more expensive and less effective than digital marketing, so most brands opt for the latter. Additionally, most radio and TV stations are still not allowing cannabis brands to advertise on their platforms, due to the federal illegality of the plant.

As previously mentioned, loyalty programs are often an effective way to keep returning customers happy. While these programs usually rely on text messages and email to connect with customers, this doesn’t always have to be the case.

A loyalty program customer might receive a flier in the snail mail that tells them of the upcoming sales and deals they can take advantage of. This is just one example of how cannabis brands get creative and work around the restrictive laws that prevent them from marketing their businesses in the ways that just about every other industry does.

Bottom Line: Cannabis Investing and Marketing

As the cannabis industry moves forward and evolves, so will its need for more investors, better tech, solutions to digital marketing, and so on. At HashDash, we are at the forefront of all of the above and we are just getting started.

If you’d like to discuss marketing further with our team at HashDash, we’d love to schedule a discovery call with you, to see if we are a good fit. Together, we can build a better cannabis experience for everyone: consumers and brands alike.

What We Learned: Cannabis Investing and Marketing

There are a ton of exciting investment opportunities in the emerging cannabis industry. We learned about just a few of these in this chapter. We also learned that:

• While there is much volatility in legal cannabis, investors can still diversify their portfolios by investing in this growing industry.
• Emerging niches in legal cannabis include canna-tourism, NFTs, and tech.
• Building an online presence for cannabis brands starts with a solid website.
• Building and running a social media presence is a challenge for many cannabis brands.
• Traditional advertising might not work for cannabis brands in general, but things like direct mailers and digital signage may offer promotion avenues not available online.

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