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california cannabis market breakdown

The cannabis industry has had few friends as reliable as California, home to the largest legal market in the United States. In 1996, it became the first state to legalize medical marijuana, and, 20 years later, it became among the first states to legalize recreational cannabis sales with the passage of Proposition 64. Since its inception – and especially since the recreational cannabis market was deemed licit – California’s legal marijuana industry has boomed. 

Per MJBizDaily, cannabis businesses, including agriculture, manufacturing, and retail stores, are expected to contribute nearly $20 billion into California’s economy in 2021 alone, continuing the year-to-year increases in commercial cannabis businesses’ economic contributions. In the years ahead, cannabis companies can expect the cannabis industry to continue its success.

Californian cannabis is hardly limited to its legal cannabis markets. There is a thriving illicit market for cannabis as well, with certain consumers from Humboldt County down to San Diego County historically preferring the black market to the possible inconveniences of participation in the legal industry. 

However, licit cannabis companies – recreational and medical marijuana dispensaries alike – have good reason for optimism. As Statista forecasts, the market share of illicit sales will shrink by over a quarter between 2019 and 2024, while legal sales will more than double over the same span. This seems to be attributable to a rise in overall demand for cannabis products, among new and old users alike, which is positive for any cannabis business.

Additionally, there is an increase in general availability and ease-of-access for legal marijuana products. With the average consumer having convenient access to a nearby cannabis dispensary or a delivery service, it has never been easier to be a consumer of legal Californian cannabis products. With the state and municipality governments enjoying all the tax revenue generated, expect the market and the issuance of cannabis licensing to continue their expansion.

While these trends are certainly grounds for optimism, cannabis firms ought to proceed with some caution. As the industry grows and marijuana sales spike, competition is stiffening, especially for smaller-scale cannabis stores. Accordingly, cannabis companies must up their game to differentiate themselves among the many players in the crowded cannabis market. To do so, a dynamic digital marketing strategy is a must.

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Cannabis Marketing in California

Cannabis companies often employ a range of approaches to market their brand. These include designing and purchasing ads in print or digital media, marketing on social media platforms like Facebook, Instagram, and Twitter, or gaining a rapport among your neighborhood customers and relying on word of mouth or positive customer reviews. 

While social media marketing and these other approaches may ultimately develop your brand awareness and contribute to success, a more holistic marketing approach is important for maximizing the success of your dispensary, brand, or business. This holistic approach begins with an understanding of why marketing cannabis in California is unlike any other marketing effort.

Cannabis marketing is unlike marketing in any other industry, mostly due to the abundant restrictions placed on cannabis advertising in Proposition 64. There are a number of important regulations in Proposition 64 that every cannabis business must become well acquainted with in order to operate a fully compliant marketing campaign.

These regulations concern the specifics of a cannabis marketing and advertising campaign as well as dictates the do’s and don’ts of cannabis ads. Restrictions prohibit advertising that suggests a target audience under 21, such as through use of toys or cartoon characters, and forbid the use of giveaways, including gifts or buy-one-get-one promotions.

Perhaps most significantly, however, section 26151 of Proposition 64 requires that “Any advertising or marketing placed in broadcast, cable, radio, print and digital communications shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.” This regulation makes mass advertising techniques commonly used in other industries, such as billboards or TV commercials, less viable for cannabis advertising . Firms must identify an alternative cannabis marketing strategy.

The “71.6 percent” regulation suggests that a cannabis business’s best marketing strategy is to reach potential customers individually through targeted cannabis advertising. However, section 26151 also makes targeted marketing and advertising difficult to navigate. Clause C dictates that individualized marketing communications must use some method to affirm the recipient is over 21. This leaves cannabis businesses in a tough spot. 

On the one hand, mass advertising campaigns are severely limited by the “71.6 percent” rule, but, on the other hand, individualized campaigns must have an effective method of ensuring recipients are over 21. Any lapse in compliance is a huge risk for California cannabis firms, who can run into devastating legal trouble. 

Fortunately, a simple solution exists with springbig’s marketing suite, which, among its features, ensures your business’s marketing efforts remain compliant with all relevant laws and restrictions. You no longer need to stress over all those pesky regulatory burdens. Let us handle it. 

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Build a winning marketing strategy with springbig

With springbig’s marketing suite, cannabis retail operations are proven to enhance their businesses through our fully automated yet entirely customizable marketing strategy and platform. Our dynamic loyalty program rewards your most consistent customers, keeping them in your shop, while our advanced text messaging marketing platform uses its reach of millions of consumers of cannabis products to keep old customers informed and get new customers curious. We use a personalized and segmented approach to reach your target audience, ensuring your messaging is relevant to each recipient.

If you are a cannabis business trying to make it in this ultra fast-paced cannabis industry, springbig will provide the digital marketing platform you need to succeed. 

To show you just how effective text message marketing and loyalty programs can be, we analyzed the marketing performance of Beyond Hello in California. We looked to see the increase in spend on days when text messages were sent, the ROI, and how long it took to gain ROI.