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The buzz in the cannabis industry is circling around the potential for rescheduling or de-scheduling cannabis and the hope for the end of 280E tax restrictions. Cannabis Tech spoke with Matt Taverna, Statara Principal, about the impact of these regulatory shifts on cannabis advertising and marketing.
Cannabis Advertising Q&A with Matt Taverna from Stratara
Q: Before we dive into the meat of our conversation, Matt, tell me a little bit about Statara.
So for about a decade or more my co-founder, Bryan Whitaker, and I were building a lot of the data that was used by political campaigns and public affairs campaigns here in Washington, DC. Using that experience and our varied experience with public affairs campaigns and big datasets, we founded Statara and built a 266 million-person consumer database with close to 1,700 different kinds of consumer behaviors on every 18+ American.
Statara also makes that data actionable. We have integrations with software companies, advertising platforms, and DSPs and we provide tools to target audiences and chop that data up into audiences that are specific to cannabis retail. Specifically in cannabis, Statara is the data backend for a media buying platform called MediaJel.
We also have a really good way of discerning age. We have deterministic age data on almost 200 million, 21, and older Americans and so when we create audiences for digital advertising or direct mail, cannabis brands and companies can confidently target folks who are 21 and over and comply with all the state-level regulations around age targeting.
Q. As a Schedule 1, Federally Illegal substance, state-legal cannabis businesses face extreme tax restrictions thanks to tax code 280E. What kind of impact has 280E had on cannabis advertising, and how will the proposed regulatory changes make a difference?
It has stifled the voices of cannabis brands and companies – and their ancillary companies – because they are unable to take advantage of tax benefits and deductions in the way that other consumer products can. Combined with the other regulations, like 21-plus targeting, particularly in newer states(New York has a 90% rule in particular), advertising seems like a minefield for cannabis companies. Then there’s another barrier to entry with the inability to advertise on mainstream social media.
There are some pretty obvious benefits to being able to deduct marketing expenses from taxes, but I think that there will be a good response from ad tech overall on the acceptance of cannabis advertising.
Honestly, I think innovation will boom.
Q. What do you think cannabis companies can expect in terms of changes in regulations and how will advertising be impacted?
I think the good news is that companies like Statara and others have been dealing with these kinds of regulations at the state level – and having to deal with them in 30-some-odd states. So any movement towards clear requirements for compliance would be an overall benefit to ad tech as well.
And frankly, it benefits state governments that are, for better or for worse, betting on tax revenues coming from cannabis. Changes to 280E have the potential to greatly increase cannabis sales because those changes can decrease the financial burden on cannabis companies. The high tide will hopefully lift all the boats. There are enough ancillary companies out there that I’m hopeful that what makes cannabis unique will only be emboldened by normalization.
Q. As cannabis legalization and acceptance start to change at a federal level, how do you think the message will shift? How can cannabis companies prepare to shift with it?
Knowing your customer; having a good read on your customer list and keeping that data updated is paramount.
Something that I’ve learned in politics is that the best indicator of future behavior is past behavior. I think that goes for anything – knowing your customers and knowing what they buy and when they come in, you can apply that to your marketing strategy.
Another thing I learned in politics is that no one’s going to vote for you if you don’t ask them to vote. It’s a hard thing. No one’s going to donate to your campaign unless you ask them to donate.
There are enough people out there with enough technology that we can actually find new customers that look like current customers. Because we can comply with state-level regulations on advertising to 21+ and other means of “smart” advertising, such as making sure we’re not advertising in school zones and properties. We can do this in a compliant way; we can do it safely.
Responsibly doing this with the technology that’s available now, I think is so exciting.
Q: So, although acceptance and legal status may be changing, you’re saying it’s not the time for cannabis businesses to expect lighter regulations?
I would argue that the need for compliance will actually be worse. As you begin to deduct or get tax benefits from marketing – the feds will be watching closer.
Basically, it’s a “Welcome to the NFL Moment” for cannabis. Are you ready? I’m ready to fight with you!
Preparing for the Shift in Message and Strategy
Throughout our discussion, Taverna’s insights painted a dynamic picture of an industry on the brink of change. As cannabis businesses brace for potential shifts, understanding and adapting to evolving regulations will be vital in navigating the intricate landscape of cannabis marketing.
Matt’s anticipation of innovation in ad tech and the potential positive response to cannabis advertising certainly align with the industry’s resilience and adaptability. The coming years might indeed usher in a new era for cannabis marketing, provided businesses stay agile and informed.