The Impact of Public Relations on the Cannabis Sector
January 26, 2023
In this episode of CannaCast, Eric Altstadter, Partner and leader of EisnerAmper’s Cannabis and Hemp Group, speaks with Jordan Isenstadt, SVP and leader of the Cannabis Practice at Marino, a full-service PR and marketing firm. The two discuss the importance of strategic communications for cannabis, the tenets of a sound PR plan, and how savvy business leaders are communicating to spark business growth.
Jordan, how did Marino and you get involved in the cannabis industry?
JI:Well, Marino is a, like you said before, 30-year-old strategic communications firm, but we are willing to take risks. Some of the larger PR firms are a little less risk averse, but because we're sort of a mid-size boutique firm, we have historically looked at emerging industries and been willing to take a flyer jump in, see what's going on, and see how we could support players in the industry.
Cannabis was very similar to this. About five and a half years ago or so, we saw what was happening in New York, New Jersey, the northeast in general, Massachusetts was going to be coming online at that point pretty soon, and we said, "Hey, let's jump in, see if we can make any clients, see if we could create a practice in the space." And five plus years later, here we are. It's Marino's fastest growing practice, and we're having a lot of fun while we're doing it as well. Like you said, we've been able to create a who's who of cannabis clients that are kind of based in the northeast, a lot of them based in New York. We've had the chance to do some national PR campaigns as well for cannabis brands, and we're having a good run, but we're only just getting started.
EA:You've been working in public relations for a while now. How different are cannabis entrepreneurs from other industries you work with?
JI:Well, one of the things we say in the cannabis industry is that cannabis years are like dog years. So these five years or so have been some of the most exciting and fortunate sort of years of my career, but also very long, very long days, very long years. So working with cannabis companies, they're all, even the large ones, are still operating like mom-and-pop entrepreneurs. Even the large MSOs, they still kind of operate not in the way that sort of normal corporate entities do, and they're all moving so, so, so fast.
So the difference for us is that the PR story, the narrative and the storytelling, it's all just accelerated. We just have to do everything a bit faster and a bit more aggressively than we might on behalf of other clients. And then of course, there's sort of the limitations and stigma that we're dealing with in the cannabis sector as well. So cannabis companies and entrepreneurs just take a bit more handholding, but also a lot of care in terms of the way that we shape their storylines, because there's still a lot of remaining stigma from different audiences as well as legal limitations in terms of certain things that we can do. For instance, social media there's a lot of limitations, which I'm sure we'll get into in a little while. But cannabis entrepreneurs and companies are a unique breed for sure.
EA:I've heard public relations professionals use the term PESO, P-E-S-O, which stands for paid, earned, social and owned. Explain what that is and how it relates to the cannabis industry.
JI:Sure. Yeah, so PESO's kind of an acronym that we use in the space. The focus of Marino and my agency, and usually when you hear PR, is on the E, which is what we call earns media. So that's media relations, getting our clients in the news, whether quoted or on TV or a feature on them, and that is something that the client did not pay the media outlet for. Someone got paid, but it was essentially earned through storytelling and pitching on behalf of Marino or whomever the PR firm is. So back to PESO. So P is paid, that's essentially advertising, all forms of advertising. And then S is social, so that's social media, so that's all your social channels, LinkedIn, Twitter, Instagram, TikTok, et cetera. And then O is owned. So that is your website, your blog, channels that you completely own.
So when we come into a client engagement, we often will want to get what's the full marketing mix here? Even if we are only on the earn side, at least we need to have some visibility of what's the paid strategy? What's the social strategy? What are our own channels? Is there information on own channels that we can use for PR? And then vice versa, placements that we get should also end up on owned channels. So it's critically important when you're in any kind of marketing space, whether it's cannabis or non-cannabis, that you have a window into the full content and marketing mix. When it comes to cannabis clients, again, everything is a little more accelerated and a little bit more aggressive, and dollars and cents really count in the cannabis space as well. So oftentimes at Marino, we're sort of tasked with overseeing the full marketing mix. So the full PESO, essentially, the paid, the earns, the social, and the owned. It's not uncommon necessarily to do that in other industries, but I find that in cannabis it's even more important that all of these areas are being coordinated together.
EA:You were touching a little bit about cannabis versus other industries. How important is public relations to the cannabis industry?
JI:Public relations is so critical in the cannabis industry. I cannot say that enough, and it's something that I say a lot when I'm in new business pitches. Because of federal prohibition, cannabis companies are limited in terms of what they can do and say on paid channels as well as social channels. It's been well covered that cannabis companies are generally not able to advertise through social media. Facebook and Instagram won't take cannabis money. Even organic posts that people post on those channels also sometimes have their channels pulled down, if you use the wrong words, if certain things get flagged, and we've had a number of clients or friends in the industry whose Instagram's have been pulled down and it's dramatically terrible for their business.
So that's what makes earns media and PR so important is that that is a channel that you can always use and always use as a means to tell your story, because you are limited in terms of advertising, you are limited in terms of social media. So we're often telling our clients is that you always want to try to get your story out and your perspective out and whatever it is you're doing on multiple channels, but PR really should not be ignored and it should not be ignored really from the start of a company's life cycle because you need to be out there telling your story, and earn channels are some of the strongest and most accessible channels for cannabis companies.
In fact, what we're seeing in the media right now is there's, as stigmas break down, as things are changing, as legal markets are coming online, there's a lot more hunger and thirst for cannabis coverage in media outlets. So we find that those channels are some of the most effective. And part of the reason for that as well is that earns media often feels more trustworthy to the consumer, to the audience as compared to a paid, which is essentially an ad or social media, which is the company is giving you a message. When it comes through a third party, an earns channel, it often comes off also as more trustworthy. So PR is essential for cannabis companies, and I always tell my... when I'm in new business, I'm like, "Ignore PR at your own risk." But it's very important to dig into the PR messaging and narrative at an early stage.
EA:You talked about... that's perfect. My next question, how early in a company's life cycle should they begin to think about public relations and at what point should they contact you?
JI:Great question. Yeah. I mean, frankly, as early as possible. Oftentimes what will happen is we'll work with clients from day one, or even from before they launch, so that we can... we only have one chance to launch and make that first impression. So very often we'll kick off with a client, tell their launch story, get them out there, and then we might slow down for a little while as they're sort of building their brand, and then we'll start to ramp up. But you really only have one chance to launch and get your perspective out there, so we're always kind of the mind that you should start with PR as early as possible, as early as you can stomach it from a financial perspective. And most cannabis PR firms out there also get that there's sort of ebbs and flows here. So we're willing to work with people around their life cycle.
EA:What's that old expression? You only have one chance to make a first impression.
EA:Yeah. You talked about the stigma associated with the cannabis industry. Is that changing at all these days?
JI:The stigma is definitely changing. You look at some of the numbers that are kind of put out there about what percentage of people approve of medical cannabis, what percentage of people approve of adult use cannabis. They split those numbers into Democrats and Republicans. And I mean, cannabis happens to be one of those things that more people actually in America agree on legal cannabis than almost anything else. 91% of Americans are perfectly fine with legal, medical cannabis. There's lower percentage in terms of adult use cannabis, but it's changing, and the numbers are only increasing.
So stigmas are starting to break down. People are starting to understand that cannabis is really a tool for wellness, and they also see that there's an industry being built here, and frankly, we're a little too far down the line to push back. There's no chance we're going back towards prohibition. So people have to start to, even those who are against it, have to understand that this is going to be a part of society, whether, obviously we're talking largely about the Northeast and the United States, but internationally as well. Attitudes about cannabis are changing.
EA:Has the mainstream media's view of the industry changed over the past few years?
JI:Mainstream media has definitely changed their point of view on cannabis. It is really a state by state kind of thing though, because the West Coast obviously was much earlier to legal cannabis. So you had California, Washington, Oregon, Colorado publications and outlets that were really covering cannabis and covering the cannabis industry at a much earlier stage. Now that cannabis is kind of becoming more acceptable on the East Coast, and we have more markets coming online, Connecticut was just coming online now, obviously, we're in these early days of legal adult use cannabis here, and what we're seeing is more mainstream media outlets are starting to designate and appoint cannabis beat reporter. One of our... like the New York Times is always the gold standard, and so up until a few months ago, there was no cannabis beat reporter at the New York Times.
And so every time we wanted to tell a cannabis story, we had to work with someone who was a cannabis novice or knew nothing about cannabis, and frankly, we were educating them on cannabis. Now, there is a cannabis beat reporter at the New York Times, Ashley, Ashley Southall. She goes to cannabis events. You see her out there all the time. She knows everybody in the sector. So I think as a high mark indicator, the New York Times having a cannabis beat reporter, that is a major stat. Just on a local level, I'll also say that NY1, a very popular outlet for us New York City folks, was a little hesitant to cover cannabis. They cover it when they had to. Now, Bobby Cuza is one of their most popular reporters. In addition to being their top political reporter, he is also covering cannabis regularly. So we're starting to see mainstream media change their perspective.
EA:Tremaine Wright said that New York State would begin to sell cannabis before the end of the year, and they did. They got it in the last couple of days of 2022. How did the process go in New York as compared to other states?
JI:Well, what I really appreciated about what we did in New York State was that we did not go for the easy path. The easy path would've been, "Hey, you large operators, the Curaleafs and Crescos of the world, you guys get the first sale. You're already operational." That's what they did in New Jersey last year was the large operators basically got the first bite at the apple because they were set up, they had product, and frankly, it kind of made sense. New York's MRTA, our cannabis legalization and regulation legislation, clearly spelled out a social equity focus, and there was no way in hell that the MSOs were going to have the first bite at the apple in New York. In fact, they're going to have to wait a few years before they even can get in on the adult use game.
So New York, to their credit, the regulators, they stuck to their guns. They stuck to the integrity and the spirit of the MRTA and they completely honored it. And by having one of the nonprofits be the first adult use dispensary in New York, again, something that also has really never been done before, was pretty monumental. So I give everyone a lot of credit for getting it done. It was definitely rushed, and I don't think we're anywhere close to having a sense of what adult use in New York will look like, but as a starting point, I think they did right by the MRTA. 2023 is going to be a big year though. We'll see how the next 300 and what 55 days go, how many dispensaries we can get open, and really what the experience is ultimately like.
EA:You mentioned Connecticut. Connecticut just went live with its adult use recreational program. What can we expect from the state of Connecticut this year?
JI:Yeah, look, I think New York... rather Connecticut is going to be an exciting program. They're doing some interesting things over there with social equity, but relatively, it's still a small market. I don't think that's really a threat to New York. I know people have been talking about how, "Oh, New Jersey and Connecticut are a real threat to the New York cannabis market." I don't really see that. Clearly there's demands in Connecticut, and I think they're going to create a market there that will meet the demand.
EA:Where are your clients located and where do their operations take place?
JI:So our clientele, first of all, is all along the supply chain, from cultivators to processors to retailers, both medical and adult use. We have a number of applicants and then card licensees as well in our midst. So we definitely have a strong focus on New York. So about 75% of our cannabis clients are based in New York State. They're all over the state, though. The cultivators and processors are largely upstate. The brands and retailers are largely downstate in New York City. We also have clients on Long Island. So we have clients all over the state.
We also work with some entities out in New Jersey. We do work with a few of the large MSOs, one of whom is based in Florida and another based in California. We've worked with companies in Colorado, and we're also currently working with a cannabis brand out in Washington state. In terms of our overall experience, though, we've been fortunate, partially because we have worked with some of the MSOs, we've been fortunate to do PR efforts on behalf of cannabis clients in over 20 states at this point.
EA:Well, cannabis remains illegal for federal purposes. We've talked about some states that have legalized programs. I think there are about 40 states that have some sort of legalized cannabis, whether it's recreational or medicinal. How different is it to create a public relations program for a federally illegal industry?
JI:That's the million-dollar question there. I love that question, and one of the things we were talking earlier about, what makes cannabis different, another thing that makes cannabis different is that you really can't have a national campaign. It's basically impossible, and there's a variety of reasons for that. One of them is federal prohibition, another being that the way that cannabis is covered, spoken about, and the cannabis culture is different in every state. I mean, essentially what we've done is we've created 40 mini industries, because you mentioned there's about 40 states that have legalized cannabis. So there's about 40 different cannabis industries in the country, and each one is unique. The regulations are different. The packaging regulations are different. The way that the companies can market themselves is completely different. The way the media covers it is different, and the attitudes that consumers and stakeholders have towards cannabis is completely different.
So doing PR for a federally illegal industry definitely has some significant challenges, mostly being that it is a local state by state game. That is a lot of what it comes to. Some of our clients that are a little more national in scope, those that are maybe not plant touching, maybe they're a cannabis law firm, or they work on cannabis workforce development, we need to be looking state by state. Every day I get all my news aggregators, I look at my marijuana moment, my MJ Biz Daily, I look at the news, and we think, "Okay, so let's pitch Connecticut today. Today, Connecticut goes online. So today we're pitching Connecticut." Detroit also went online as Michigan's program opens up. So we're pitching certain clients in the Michigan market. Couple of months ago during the last election, Maryland and Missouri both passed legal adult use cannabis. So we've been pitching those markets. But again, it's a local game. You have to find papers of record in those states, the political reporters in those states and healthcare, and get in front of them.
EA:You talked about the last election. At that last election, we actually had three states that had ballot initiatives that did not pass. So that was kind of a sobering moment for the industry. What states do you think are the next to go legal?
JI:Well, there's a lot of excitement about the South right now. Alabama and Mississippi are getting a lot of attention right now in these small programs. Everyone would love to see Florida eventually go online. So I know there's a push down there. But as far as I'm concerned right now, it's exciting that there's so much interest, but I'm really focused more on the states that have just come online and figuring out how we're going to create equitable, sustainable markets for the future, and New York's market frankly being the most important. I am a native New Yorker, so perhaps I'm being a cocky New Yorker, but as New York goes, so goes the nation. So it's really critical that New York's program is a huge success for all the right reasons, and so we're really focused on making sure that these new markets are the success that they have to be, and then the rest of the country can follow.
EA:Jordan, my last question is the SAFE Banking Act has been passed by the House six times now and has died in the Senate each time. When President Biden was elected, and we had a Democratic House and a Democratic senate, expectations of legalization were a no pun intended aye. Now with the midterm elections in our rear view mirror, what do you see with regard to federal legalization, whether it be the SAFE Banking Act, the state's Reform Act, or any other attempt by the federal government to legalize cannabis?
JI:So I, personally, I am one of the people who never really thought Biden was particularly pro-cannabis and never really thought that we had a good shot. A lot of industry insiders thought we were going to get full legalization by this point, or some kinds of state's Reform Act of some kind, or at least SAFE. I'm not surprised that we got none of it. We certainly got close. It's great that it's a conversation. I think it's a victory that this is a conversation that's happening in the halls of power. As someone who used to work in government though, government is slow, and it's intentionally slow, and the federal government, personally, I still feel like the federal government is five to 10 years away from federal legalization. Some of my colleagues will go, "No, you can't be right." But I think that's really more wishful thinking than anything. I think we're still quite a ways away.
EA:Well, thank you, Jordan, and thanks for listening to CannaCast part of the EisnerAmper podcast series. Visit eisneramper.com/cannabis more information and podcast. Also, please visit M-A-R-I-N-O-P-R.com, marinopr.com, more information about Jordan and Marino. Join us for our next CannaCast podcast where we'll discuss other budding issues.
Transcribed by Rev.com