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Misconceptions of Cannabis and a Super Bowl Ad

As has been reported by multiple news outlets, CBS has refused to air a pro-medical marijuana Super Bowl commercial by Acreage Holdings, a Canadian publicly-traded portfolio company with investments in Cannabis cultivation, processing and dispensary operations. Their commercial, which you can see here, was the first of its kind. It was previously unheard of for a Cannabis company to foray into mainstream advertising of this size and commitment. The commercial depicts the benefits of using legal medical marijuana products from a variety of perspectives, including veterans and those suffering from seizures and severe pain. The commercial closes with an urging for viewers to contact their congressional representation to support legalization of Cannabis.

It is commonly accepted that the Super Bowl is one of the ultimate digital advertising platforms, with estimates of over 100 million viewers each year. In 2018, the average cost for a 30-second commercial was over $5 million. The typical advertisers for these commercials include alcohol, pharmaceuticals, and web hosting companies, but to date they have not included any representation from the Cannabis industry.

The Super Bowl is no stranger to controversy, as every year there are advertisements which push the boundaries of what some members of the audience are comfortable viewing. Until recently, large alcohol companies used women, parties and celebrities to push their latest beverage or contest. Pharmaceuticals have used NFL games, including the NFL’s largest stage, to push drugs ranging from constipation treatments to those famous little blue pills. A certain web hosting company has become famous for their Super Bowl advertisements utilizing bikini-clad women behaving provocatively.

This exclusion from advertising, while including alcohol and other “sin” industries and advertising methodologies, speaks to the reputation and stereotyping of the Cannabis industry and those businesses that operate within its scope. This is certainly not limited to the Super Bowl, but it does speak to some broader, industry related issues.

It is very difficult, and often times completely disallowed, for Cannabis companies to advertise through most traditional means including social media, television and radio. Facebook and other digital platforms will take down posts and entire accounts for posting what they deem to be “illicit or suggestive” materials.

According to a poll by the Pew Research Center in October 2018, 62% of Americans are in favor of legalizing marijuana. There are 32 states with a medical marijuana program, and 10 states plus the District of Columbia that have legalized the use of Cannabis products for adults over the age of 21. There is legislation being discussed at the national level to remove Cannabis as a Schedule I drug per the Controlled Substances Act and an effort to federally decriminalize marijuana.

The growing trend nationwide is towards legalization, whether via a medicinal program or full adult use. While this may be representative of America’s broad societal views towards the Cannabis industry and legalization, there is still pushback on advertising and industry expansion as well as many misconceptions as to just what the modern Cannabis industry represents.

In Manhasset, NY, local residents were outraged when they learned that MedMen, which currently owns and operates 19 licensed Cannabis facilities across the country, wanted to locate a dispensary in their community. Local politicians cited outdated arguments like the potential decline of real estate property values and the potential for Cannabis products to wind up in the hands of children to successfully stop the dispensary from opening. While these arguments may not be supported by reliable data, they can be quite effective in swaying citizens to oppose a dispensary or other Cannabis-related business from operating in their communities.

These types of arguments are still quite common across the country, and Cannabis companies can suffer from reputational harm from misconceptions and prejudices that were prevalent in prior generations but still hold weight today. Many view Cannabis as being a threat to their neighborhoods, with dispensaries being the equivalent to, or in some cases worse than, establishments that sell alcohol or tobacco products. There is also concern about the type of criminal activity that Cannabis businesses could attract, in the form of a black market or other unsavory dealings.

This is where there is an opportunity for advisors like CPA’s, attorneys and other professionals to guide their clients on how to manage their reputations and public perceptions. It is essential for them to build ties to their communities and avoid some of the pitfalls that can come with being in an industry that is still trying to change the national and local narratives. This challenge is not lost on advisors, as they can face these same challenges as they enter the industry. Reputation management is an often overlooked part of operating and expanding a business, but it is critical in an industry like Cannabis.

Public perception can be managed in a number of ways, at micro and macro levels, but ultimately transparency is key. Most citizens may not realize the intense rules and regulations that Cannabis businesses must remain compliant with, or the level of security and due diligence that is required. Consumer products have specific formulation and packaging requirements that have to be met before they can be sold to consumers. Growers have predetermined thresholds that must be maintained for raw material output, and raw materials have to be transported by specific groups to specified locations. In states that have a medical marijuana program, dispensaries cannot even allow an individual onto the premises without a government issued medical marijuana identification card. If citizens had a greater understanding of the inner workings of Cannabis businesses, they would be more open to welcoming them as a part of their community.

Community outreach can come in many different forms. There are opportunities to adopt a stretch of local highway, donate to a charity with local ties, or even become a little league sponsor.

Dispensaries in legal states have started a trend in which they have worked with their town’s mayor’s office, community board and police department to provide complete transparency. Representatives from the police department have been given all-access tours of facilities before the public launch and were set up with their own access codes to the facilities so that they may have unfettered access. This is both a figurative and literal opening of the doors in an effort to inspire trust and a sense of mutual respect between the Cannabis business owners and their community.

Whether it is by starting a conversation with the local police chief, speaking at a community board meeting or airing a Super Bowl commercial viewed by millions, Cannabis businesses need to continue to address the misconceptions that still exist today.

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Jason Hoffman, CPA is a senior manager at Janover LLC. He is a member of the Real Estate Group and is a co-leader of the Cannabis Industry Group.  Jason serves as the vice-chair of the NYSSCPA’s Real Estate Committee.  He can be reached at: Jason.Hoffman@janoverllc.com or 212-792-0414.

Zachary Gordon, CPA is a senior manager at Janover LLC.  He is a member of the Real Estate Group and member of the Cannabis Industry Group.  Zachary is the chair of NYSSCPA’s Cannabis Committee.  He can be reached at Zachary.Gordon@janoverllc.com or 212-792-0474.

 

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