News and nuggets for cannabis industry practitioners in the Midwest and beyond.
New cannabis advertising framework proposed by Cresco Labs
Although consumers in the U.S. are expected to purchase more than $15 billion in legal cannabis in 2020, advertising regulations for a once taboo drug turned trendy consumer-packaged good are increasingly archaic.
Prescription drug and alcohol companies long ago figured out how to promote mind-altering substances through commercial media. Federal prohibition makes advertising cannabis more challenging, as mainstream digital platforms (i.e. Facebook and Google), TV networks and print publications are not risking retribution (however unlikely) they could face from doing business with state-licensed pot purveyors.
In an effort to reframe advertising parameters in a way to support industry aims, Chicago-based Cresco Labs this week released its own advertising framework, that it is inviting others in the industry to adopt. Published last week in coordination with AdAge, Cresco’s Responsible Advertising and Marketing Standards for U.S. Cannabis Industry report cautions against celebrating over-consumption while also taking to task campaigns that appeal to underage users.
“How we represent ourselves as an industry at this moment will set a tone for the future,” writes Cresco co-founder and CEO Charlie Bachtel within an introductory note in the report. “This effort is part of setting that proper tone and we encourage all operators to join us in following these marketing and advertising standards as we build a responsible cannabis industry together.”
Cannabis home delivery hits metro Detroit
A joint venture between Boston-based cannabis delivery company Lantern and Battle Creek, Michigan-based dispensary chain 3Fifteen last week extended real-time home delivery access to metro Detroit consumers.
Detroit residents, who due to municipal restrictions on recreational sales need to leave the city to visit a dispensary, can now expect cannabis home delivery within the hour. While delivery time is no match for what is guaranteed by Detroit-based pizza chain Little Caesars or Ann Arbor-based Dominos pizza, consumers can order up to 2.5 ounces of flower and 15 grams of concentrate from their Lantern application.
Home delivery was not permitted in Michigan until this past March, when Governor Gretchen Whitmer, under emergency rule during the early days of the covid outbreak, provided all licensed Michigan cannabis retailers with the right to provide home delivery service.
Lantern, was incubated by Boston-based alcohol delivery service Drizly, which has raised nearly $120 million in venture capital. Lantern delivery is also available to Massachusetts recreational and medical consumers.
National accounting firm opens Chicago office with focus on cannabis
Hoping to expand its cannabis clientele in Illinois, where it already includes Chicago-based Green Thumb Industries as a client, L.A.-based accounting firm MGO recently expanded its Windy City operations.
Directors Barbara Webb and Sarah McGuire say cannabis companies in particular need to focus on establishing compliant accounting controls in the complicated, highly regulated industry.
“We often see lack of controls over physical cash management and inventory,” said McGuire, adding that any irregularity, “could be interpreted negatively by regulators as possible lost or stolen product, which is a very big deal.”
Independent operators with aspirations of selling their businesses down the line should anticipate due diligence requirements from day one.
“We have seen deals fall apart primarily due to the length of time necessary for a prospective acquirer to gain clarity regarding the financial and tax records,” said Webb. “Especially in cannabis, the financial accounting and tax advisors should be able to work closely as a team due to the unique nature of the business and the interrelatedness of the rules and standards in both areas.”