This story was republished with permission from Crain’s Cleveland Business.
Due to the way adult-use sales were launched in Ohio, the state is currently one of the most restrictive markets in the country when it comes to advertisements around legal marijuana.
This is a result of how the rec market has been initially rolled out under medical program rules, which are prohibitively restrictive when it comes to advertising.
These restrictions are among some of the various rules cannabis companies are hoping to see changed as regulators adopt official rules for the adult-use program, something that remains a work in progress.
“In today’s day and age where people are barraged with information – whether it’s advertising on your phone, social media sites, on your TV or driving down the street – it can be hard to break through to deliver your message,” said Tom Haren, spokesman for the OHCANN trade group. “And while that is not a problem unique to cannabis, what is unique are the restrictions placed on content and the medium of advertising.”
“It can be a struggle for Ohio operators to connect with prospective patients or customers,” he added, “because they’re indisputably more restricted than non-cannabis businesses in how they are permitted to advertise under current rules.”
What cannabis companies can say or show when it comes to ads and promotions is extremely limited, and messaging must be approved by regulators first. Slang terminology is explicitly forbidden, for example, as well as referring to the market for adults 21 and older as anything besides “non-medical.”
This dynamic also is why the public hasn’t seen any marijuana ads on billboards in Ohio – unlike Michigan, where motorists are bombarded with dispensary ads when driving into the state – or noticed any commercials on TV, radio or the internet.
While Ohio’s adult-use launch has been generally successful with nearly $55 million in non-medical sales recorded between Aug. 6 and Sept. 7, many operators believe that sales could be even better if marketing was less prohibitive.
“What we saw (with adult-use) was a nice lift in business – not the same as Massachusetts but better than what we saw in Connecticut – which has been nice,” said Peter Gallagher, CEO of Insa, a Massachusetts-based multistate operator with a dispensary in Willoughby Hills. “But I do think the marketing and advertising restrictions are holding back the market.”
Andy Rayburn, CEO of Buckeye Relief (which operates the Amplify retail brand) and president of the OHCANN, said that he expects the Ohio market to continue to grow not just as prices come down but as the public becomes more familiar with the industry.
“The main factor there is that we do not feel that the majority of the consuming market knows that there are legal marijuana products available at legal dispensaries,” he said, noting that a lot of awareness in the public is spreading right now through media and word of mouth. “We think the knowledge base is still building and has a long way to go.”
In terms of the prevalence of billboards, operators don’t necessarily want Ohio to look like Michigan. And regulators certainly don’t. Yet companies would like to see some kind of middle ground between current prohibitions and a free-for-all.
“Advertising is important to create awareness in a new industry, but nobody wants to hit a barrage of billboards like you see crossing into Michigan,” said Jason Erkes, spokesman for Cresco Labs, a Chicago-based multi-state operator behind the Sunnyside brand of dispensaries. “We’re optimistic the regulators will find a happy medium of an appropriate way to market the cannabis industry.”
At least five Ohio companies have been fined for violating advertising rules before or around the state’s adult-use launch on Aug. 6, amounting to a total of $212,500 in penalties, according to state records.
All five were issued fines of $12,500 for allegedly violating regulations to related to language in exterior signage, social media posts or email correspondence, including: GTI Ohio (OTC: GTBIF)(operator of the RISE retail brand); Guaranteed Investment OH (operator of the Guaranteed Dispensary brand); Bloom Medicinals (operator of Bloom retail brand); Greenleaf Apothecaries (operator of the Botanist retail brand); and Standard Farms (a marijuana processor).
GTI said in an email that it was preparing to serve “recreational and medical” customers, and Guaranteed listed on its website that it was a “recreational and medical” dispensary, according to regulators. “Recreational” is not permitted language in Ohio with respect to the cannabis industry.
Bloom, in June, had erected a billboard unattached to its building that read “Bloom Medical Marijuana” that violated signage rules, according to the state.
The Botanist “featured promotions/menus with a header ‘Can you take me higher?’” And Standard sent out emails saying it was approved for “adult use/recreational sales” that included the phrase “some HIGHlights below!,” according to their fines.
The state also fined The Botanist an additional $150,000—or three $50,000 penalties—for having an ice cream truck on dispensary premises on the first day of adult-use sales (rules disallow food or beverages from being furnished or consumed on retail premises), promoting that free ice cream on social media and using unpermitted external signage.
Crain’s has reached out to GTI/Botanist for comment on those violations.
Regulators have posted some preliminary rules under consideration that touch on advertising restrictions for the adult-use program, but they remain quite prohibitive.
The currently proposed rules continue to prevent any marketing that might be included in TV, radio or internet programming or posted in public transit or shelter areas. Also restricted are ads in stadiums or arenas or any publicly owned or operated property and anything that encourages consumption.
What final rules ultimately look like are to be determined.
In general, operators say that they want opportunities to get their names out there and inform potential customers in more ways than are permitted today.
“I think with responsible regulation, it is a way to educate consumers as to where your business is,” Gallagher said. “So, we do hope there is an opportunity for that in the future.”
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