Cannabis Cancel Culture: Overcoming Top Industry Challenges in 2022
It's been a wild ride for the cannabis industry since 2020. The momentum didn’t slow down last year. Legal cannabis sales are estimated to have grown by 41%. By 2026, analysts think the total cannabis market in the US will be worth more than $40 billion.
On the ground, it can feel different - there are still plenty of cannabis industry challenges to overcome. In many states, local and state taxes are squeezing dispensary profits at a time when there’s already a lot of competition and unpredictable enforcement. Even states with the biggest cannabis markets, like California, face hard challenges - especially considering only 32% of the state has access to legal dispensaries due to local legislation about cannabis.
The growth of the cannabis industry is undeniable and inevitable, but that doesn't mean it's going to be a smooth ride. Surfside has been helping dispensaries and cannabis brands overcome the challenges that come with advertising and reaching the right cannabis consumers for years. We’ve heard the day-to-day challenges that face businesses across the country.
Everyone in the cannabis industry has felt the effects of cannabis cancel culture somehow. There are three main factors contributing to what we call “cannabis cancel culture,"
1. Legislation
Did you know 39% of NY municipalities have decided to block dispensaries from opening? That's about the same number (36%) of people who still believe cannabis will lead to higher drug use.
When states do legalize, they have one thing on the mind: tax revenue. And the legislation always ends up showing it. The Washington cannabis tax rate is 46% and California stands at 45%. In Oregon, taxes on cannabis & alcohol were *some of the only things that grew during the pandemic.
But by putting the undue tax burden on the cannabis industry, states are accidentally canceling the industry itself - forcing dispensaries to run extremely lean business models with more expensive products when the black market is still twice as large as legal cannabis.
A cannabis business can be canceled by over-taxation. That’s why it’s important to create an amazing consumer experience from start to finish. Even if products are cheaper in the illicit cannabis market, you can compete by knowing exactly what your customer wants and offering the right range of safely tested cannabis products.
Cannabis is personal. If you can’t give consumers the right recommendations, you might be canceled.
2. Consumer Sentiment
On paper, consumers say cannabis should be legal: 91% say cannabis should be legal in some form. But only 60% say it should be legal recreationally. That's technically a majority. But, really... is it?
There is a more important factor than overall consumer cannabis sentiment about legalization. Let’s call it cannabis familiarity: only 11% of Americans say they have used cannabis in the past month and 18% say they’ve used it in the past year.
Roughly nine in ten Americans don’t use cannabis regularly. That’s a big potential market with potential consumers who may not have met the right format or strain of THC. On the other hand, this is a good indicator of why cannabis legislation isn’t a priority for the majority of the American public. As broad as the conversation around cannabis is, the issues are still only part of a niche market.
Cannabis brands get banned from Instagram and Facebook all the time, losing tens of thousands of followers overnight. Just imagine the outrage if Instagram banned Budweiser's page and you’ll get an idea of how sentiment differs for cannabis.
3. Advertising
There are a lot of stories about how trendy D2C brands were founded on the power of Instagram advertising alone. Before that, Facebook was seen as a miraculous way to grow your followers and target new customers that looked like those followers (ie lookalike audiences). Tik-Tok, which had more traffic than Google and Facebook in 2021, could now be the new business silver bullet.
Cannabis companies are still left playing a guessing game when it comes to advertising to new customers in a way that doesn't get them canceled. It can take years to build an audience on social media channels and just a single post to have everything wiped out.
That’s where Surfside has stepped in to help. We like to think of Surfside as a cure for cannabis cancel culture. Not just by helping clients advertise on more than 1 million websites and mobile apps - but by delivering great experiences for every cannabis consumer by making ads just as personal as cannabis.
We believe that by making ads more compliant and personalized, and showing the exact product that consumers want, we can help cure the woes of legislation and consumer sentiment.
Canceling Cannabis Cancel Culture
As we kick off the New Year, the march toward a greener future has picked up the pace. This year, new recreational markets like Montana are already off to a great start, seeing $1.5 million in sales on opening weekend. Who’s next for recreational markets? Delaware, Hawaii, Minnesota, Maryland, Pennsylvania, and Rhode Island are all considering bills that could put them on the map. Connecticut is accepting licenses next month. And, in 2023, the tri-state area will fully come online as dispensaries start opening in New Jersey and New York.
The factors of cannabis cancel culture will start to fade as the stigma around cannabis falls away. That all starts with everyday education and ensuring that the public understands the personal benefits of cannabis for each consumer. By really understanding what each of their customers needs and providing a great experience each time, dispensaries and cannabis brands can help that future become a reality.
What challenges are you facing in 2022? Register for a demo with Surfside to start the year off right!