As Bloomberg’s Tiffany Kary has covered alcohol, tobacco and cannabis, the power of social media and online engagement has emerged as a common theme. Christian Richey takes a deeper dive this week as a guest writer for the latest newsletter on the cannabis and psychedelics industries.
Weed sellers find target audience on social media
Social media sites like Instagram are popular platforms for advertisers looking to target a massive user base of young people. One unintended consequence for app owner Meta Platforms Inc., though, is that’s also made the app an ideal vehicle for illegal marijuana sellers.
New York last week became the latest state to issue licenses to legally sell recreational cannabis, taking steps to regulate and tax an industry where a gray market of illicit storefronts has thrived. It aims to follow other states with legalized pot that have issued tight constraints on pot advertising akin to rules regarding alcohol and tobacco marketing — especially those targeting people under age 21.
The problem is, even if retail locations come above board there’s still little oversight of the digital-only pot sellers that have pounced on Instagram to market their goods.
“Meta is very good at getting themselves incorporated into people’s daily routines,” said Mike, a New York City cannabis grower who asked Bloomberg News to withhold his last name because he hasn’t applied for a license to sell pot. “You reach more people through Instagram.”
A Bloomberg News search on Instagram revealed a bevy of sponsored posts and stories featuring cannabis clubs, growers and sellers with some pages linking to illicit cannabis sellers. After sharing some of the marijuana ads that Bloomberg News found, the company said it would remove two pages for violating its policies. The posts, however, remained online.
A Meta spokesperson said marijuana content isn’t allowed on Instagram. Its so-called restricted goods policy disallows content that attempts to buy, sell, trade, donate or gift or asks for marijuana, as well as tobacco and e-cigarettes.
Hemp products may be advertised, but with some restrictions, as the products can’t include any CBD and may have no more than 0.3% THC.
“We prohibit content — both in ads and organically on pages — that promotes the buying and selling of drugs, including marijuana, and remove it whenever we find it,” Rachel Hamrick, a Meta spokesperson, said in an emailed statement.
To skirt around the regulations, some cannabis companies say they include disclaimers noting that marijuana is “not for sale.”
Often these accounts link to an external store page or feature a phone number through which a transaction can take place. Others have multiple backup pages, or a second account where followers can congregate in case the main page is taken down.
“I’ve already been taken down like about three times,” said Phil, who runs a New York-based cannabis delivery service that uses Instagram to reach new customers. Phil also asked to withhold his last name because he hasn’t yet applied for a license to legally sell pot.
Instagram isn’t the only social media platform pot sellers use to attract new clients and market to existing customers. Pot sellers say Snapchat, Discord and Telegram are among other sites that they’re on, and upstarts like WeedTube and Social Club have sprung up to target pot consumers.
But Instagram has a wider audience with a younger user base important to pot sellers: Nearly 35% of people between 18 and 25 used marijuana in 2020, more than any other age group, according to the Substance Abuse and Mental Health Services Administration.
Plus, 71% of people ages 18 to 29 use Instagram, according to 2021 data from Pew Research Center, the most of any demographic.
Number of the week
- 60%The amount of fentanyl-laced fake prescription pills that contain a potentially lethal dose, up from 40% last year, according to the US Drug Enforcement Administration. Fake Xanax, Percocet and OxyContin are being produced by the same Mexican cartels that also traffic illicit marijuana.
Quote of the week
What you need to know
- New York’s legal recreational marijuana market is ready to open after the state awarded the first 37 retail licenses to entrepreneurs with prior pot convictions and well-known nonprofits including the anti-poverty Doe Fund and an affiliate of thrift-store operator Housing Works.
- Months after Thailand became the first Asian country to decriminalize cannabis, weed-related businesses have sprung up in cities all around the country, bolstered by the expectation of revenue from weed tourism.
- Bruce Linton, the former chairman of Canopy Growth Corp., made a bet on the legal cannabis market in Germany by acquiring a stake in Munich-based SynBiotic SE when it raised capital last month.
- Cannabis consolidation is expected to increase in 2023 as weaker firms succumb to tough price competition in markets such as Canada, Oregon and California.
Christian Richey – Bloomberg – 2022-11-28.
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