Marijuana-related Businesses Tread Carefully Through Google And Other Ad Systems

Julie Weed ,
Entrepreneurs in the world of pot face a double-edged sword. As new legal markets open, consumers rush to buy products they couldn’t before and the first companies to enter those markets and establish their brands can see strong sales. At the same time, restrictions posed by business partners can hamper marketing activities, even on those companies that don’t “touch the plant.” Graham Gibson, CEO of KandyPens, attests to that first hand. He sells vaporizers for medical marijuana patients and recreational users but can barely say so.

When he brought his idea to the crowd-funding website Indiegogo to find capital, the response was wonderful according to Gibson. “I saw the need for a high quality vaporizer that came with a warranty, great customer service and a lower price than what was out there,” he said. The campaign quickly netted him sixty thousand dollars in cash, one hundred and fifty thousand dollars’ worth of wholesale orders, and even an offer to buy the company (which he declined.) “The interest in cannabis-related products is enormous,” said Gibson.

That interest also translates to high returns on advertising investment, provided the right vehicles are used said Gibson. While magazine ads and YouTube commercials did not work well, ”We spend $50,000 to $80,000 per month on advertising and get a 600%-800% return which is fantastic,” he said. Advertising vehicles include the High Times website and product placement in music videos.
Gibson also buys Google GOOGL +0.44% Ad Words, but those come with restrictions so he has had to make significant changes to the Kandypens website to be able to use those services.

“First we had to remove all references to tobacco and marijuana from our website and use the description ‘ground materials,” he said, “Recently we were told Google wants us to replace that with ‘aromatic blend.” Google  has also requested the company remove the music video that features people using Kandypens according to Gibson.
Google’s website notes on its “dangerous products or services” page that it will not allow ads for recreational drugs, tobacco, or related equipment.

Other companies in the industry face even more restrictive marketing limitations. Joel Milton is the founder of Baker, a Denver–based company that offers a reservation and loyalty rewards tool for the cannabis industry akin to a frequent flyer program. Customers can reserve their order online and pick it up at the dispensary without waiting in line, and accrue points for each purchase. Google Ad Words and Facebook FB +1.06% would be his company’s two preferred methods of advertising he said, but “given their restrictions,” he can’t use them.  

The company is able to advertise using “Mantis”  a cannabis-specific ad network that places banner ads on cannabis focused websites.

Limitations extend beyond online advertisers. High There! is a social network for cannabis enthusiasts aimed at connecting the millions of “mainstream” users around the world, according to company co-founder Todd Mitchem. His company would like to advertise through Facebook, but cannot he said, so it holds its own events and sponsors others. Even sponsorships can run into roadblocks though.

“This last weekend, we were told by a band at the last minute that we could not advertise at their show AFTER we paid thousands of dollars to be there,” said Mitchum, “All because we were affiliated with weed.”
Kandypen’s Gibson hopes for a future when he will no longer need to use Google Ad Words. “We already have 3,000 to 5,000 unique visitors to the site each day and expect to quadruple sales from 10,000 units sold in 2014 to about 40,000 this year,” he said, “Google can’t control everything.”