States that allow adult-use cannabis see about $37.5 million more in revenue than medical only cannabis states. In NJ’s first day of adult-use sales, gross sales at the 13 dispensaries were almost $1.9 million. Does your marketing strategy include the opportunity this recreational use market provides?
Read on for how to prepare your cannabis dispensary for the transition and to update your marketing strategy to include the adult-use market.
Updating Your Cannabis Business: Medical Use to Adult-Use
Obtaining recreational licensing: a little research will need to go into how to go about getting a recreational license for your state, how much it will cost, and the requirements that need to be met initially and consistently to keep the license up to date.
Market Research: When including recreational use customers into your business plan, do some market research to understand the TAM (total addressable market) you could reach. For example, New Jersey cannabis dispensaries and retail can find out the average number of cannabis consumers by state, find out the state’s total population (8,882,000), and multiply by the percentage of cannabis users (15.29%) to give you over 1,358,057 users. This can give your business a good starting point to finding out the size of your target audience in a specific state.
Audit competition’s products: compile a list of adult-use cannabis retailers, delivery services, and dispensaries in a 30-mile radius to your business’ location. Find out the location of the business, proximity to high-traffic roads, and how many parking spots are on site. Review all of your competition’s offerings to find unavailable products, average pricing, how many items offered per category type, and what brands are in stock. You’re looking for duplications in the market, but more importantly, to find product gaps and what your competition offers in your area. Be sure to make your pricing competitive because this will definitely come into play with online sales as recreational users like to shop around.
Review competition’s online presence: compare your competition’s Google reviews and average online rating to your own. Where are the differences? Look over their business website, branding, and how they present themselves to customers online. Keep tabs on what people are saying about competition in those reviews or on social media sites to see if there are pain points your business can solve or use in marketing materials.
Update marketing strategy and language: by adding recreational use, you’ll have a larger customer base when you make the shift so language will need to shift from medical only usage to adult-use. When marketing to medical cannabis users, you can only speak in terms of insomnia, pain, and other conditions, but adult-use brings in different customer bases and needs, such as relaxing and sports performance.
New Jersey Adult-Use Cannabis Stats
If your cannabis business is located in New Jersey, here is some helpful information to know when transitioning your business to adult-use as of May 2022:
- Thirteen of eighteen total NJ dispensaries were granted initial approval to sell to recreational markets in NJ
- Limit of 37 cannabis cultivator licenses; new licenses will be issued if the market demands it
- 1 ounce allowed per transaction: 1 oz of dried flower; 5g of concentrates, oils or resins; or 1,000mg of ingestible products
- Can be delivered in-state in a vehicle with a secure area, GPS, and functioning heating and air for correct temperature of storage of the cannabis
- ability to offer online and delivery services is an option but business still needs a storefront
- Dispensary Advertising Regulations: N.J. Admin. Code § 17:30-14.2
- Cannot be appealing to minors, promote excessive use or illegal activity
- Cannot depict anyone under the age of 21, or toys, characters, or cartoons that are appealing to someone under the age of 21
- Cannot be on TV or radio between 6am and 10pm
- Cannot be within 200 feet of an elementary or secondary school grounds
- Cannot be on location-based devices unless the owner is 21 years of age and includes opt-out feature and warnings
- Pricing of cannabis products outside the business or website
- Cannot sponsor events, unless the advertiser or sponsor has reliable evidence that no more than 20 percent of the audience at the event is reasonably expected to be under 21.
- On a billboard outside of the real property where a cannabis business is located
- On a sign or placard in an arena, stadium, shopping mall, fair that receives State allocations, or video game arcade, unless such a site is an adult-only facility that prohibits persons under 21 years of age from entering;
- In a manner that falsely disparages the products of another cannabis business
- In a manner that suggests that cannabis items are safe solely based on the fact that they are regulated by the Commission or have been tested by a licensed testing laboratory
- In a manner that promotes rapid consumption or overconsumption of cannabis
Digital Advertising Cannabis Compliance Best Practices
- No consumption allowed in videos or images.
- Ads should be free of cartoon characters or elements that might appeal to anyone under 21.
- No false or misleading statements, suggestions of health or medical benefits or claims made about competitor products
- No pricing, or potency statements
- Ads for infused products must state “For Adult Use Only”
There is incredible potential for exponential sales increase when transitioning from medical to adult-use. Illinois grew by 226% from $39.2M when they first began in January 2020 to $127.8M in July 2021. According to Statista, New Jersey is projected to reach $400M in its first year and $950M by its 4th year of adult-use sales. New York is projected to have $1.1 billion in sales in its first year and grow to $2.1 billion by its 4th year. Market share for these East coast states can expect to be influenced by flower, followed by cartridges
Marketing Strategies for Adult-Use Dispensary
Because there will be a much larger customer base and those customers will have more diverse needs than medical use only, your cannabis business will need to update its marketing strategy.
The first step to take, is to consider the reasons why your customers will be seeking out adult-use cannabis. This will open your business up to exploring the preferences of recreational users. Consider how this shift will affect your inventory and use this information to create customer profiles so you can market to them more effectively.
Update your website, social media content, and all marketing material terminology from medical only to recreational and adult-use. If you sell online, be sure to update your point-of-sale system to be compliant in your state, as well as functional for your customers. A new landing page should be considered that includes adult-use terms for SEO. Along with updating your branding to highlight the shift from medical only.
Dispensary Paid Search Strategy
The second step is to invest in paid search. Include common terms and search keywords for your specific state. For example, “recreational cannabis”, “adult use marijuana”, “New Jersey marijuana legal”, “do I need a medical card in New Jersey”. Focus on keyword groups, limit your budget t0 $3k-5k initially and expand to product category keywords as budget your expands.
Dispensary Display Ad Strategy
Your medical display ad strategy will vary greatly from your adult-use targeting. For medical, you would be targeting the reasons why someone would seek out a medical card (i.e., cancer, anxiety, insomnia, etc.) and building audiences based on locations those types of medical patients would visit. (hospitals, cancer treatment centers, devices with anxiety applications downloaded on them, etc.) When switching to a recreational market, we target more “in-market” cannabis consumers. For example, anyone who has visited other dispensaries, smoke shops, and/or liquor stores.
New landing pages should be considered that include adult-use terms for SEO. What keywords will adult users be searching for online? You should create blogs and social media posts addressing these searches so your business rises to the top of search organically.
- Keyword research around recreational terms
- Identify if you want to build a new recreational page and keep medical page or just override the medical page. This is dependent on the sites keyword rankings and footprint for medical, don’t give up all of your medical search rankings if you dont need to.
- Update landing page copy to reflect recreational vs medical
- Update Landing page url (this is only important if you’re using ‘medical’ in the url string)
- Update landing page meta data with an emphasis on title tags, h1s if they are using “medical”
- Update top navigation to reflect new store designation (rec vs medical)
- Update blog content to reflect new recreational offering
- Update homepage title tags and homepage copy if it mentions medical
- Update “medical” keyword anchor texts on page
- Update GMB profile to reflect rec offering
Challenges for Transitioning Your Business
When transitioning your cannabis dispensary to include adult-use customers there are going to be some challenges along the way and it’s important to understand what this means for your business.
- Obtaining a license and requirements for the license
- Additional costs and taxes surrounding the inclusion of adult-use cannabis
- Keeping up with the surge of new sales and having enough inventory
- New demographics of users; no longer medical patients but customers with different needs that need to be reflected in communications in marketing and from staff
- Cataloging all existing inventory
- Managing expectations based on changing rules and regulations per state
- Hiring and training new staff as demand grows
- Understanding the state’s medical and recreational cannabis laws
Is your cannabis business ready for the transition from medical only use to include adult-use? While there are challenges and a new marketing strategy to implement, the increased business opportunity will be worth the extra work for your dispensary to grab these new customers. Following these tips and best practices will help you get ahead of your competition online and in-person and put your cannabis products in front of your target audience.
Retailers have about 6 months to 1 year to capture as much market as possible before competition increases as it takes about that amount of time to get licensed for a new dispensary.
Will you dominate the adult-use cannabis market before your competition does? Contact us today to get started on your new cannabis marketing plan.