Pubdate: Fri, 20 Jun 2014
Source: San Francisco Chronicle (CA)
Copyright: 2014 Hearst Communications Inc.
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Author: Joe Garofoli
Page: C1

SITES JUST SAY NO TO POT ADS

Google, Twitter Facebook Reject Them in Colorado

With recreational marijuana legal in Colorado, the pioneers in the 
burgeoning market are struggling with an odd business scenario: It's 
easier to buy cannabis than it is to buy an online advertisement for it.

Bay Area tech companies including Google, Facebook and Twitter do not 
accept ads for cannabis-related businesses (even medical marijuana) - 
and many say it's hurting the fledgling $2.3 billion legal cannabis 
industry in Colorado.

"It's really holding back the industry because it is preventing us 
from targeting our potential customers," said Isaac Dietrich, the CEO 
of MassRoots, a year-old mobile social network positioning itself as 
the Instagram of weed. Dietrich hopes to take advantage of the online 
ad void by selling ad space on MassRoots, where users can chat up 
their favorite strains of pot and share photos they otherwise might 
not be comfortable posting if they count family and employers among 
their Facebook friends.

As the heavy hitters in the cannabis industry gather in Colorado next 
week for some of its largest-ever business related conferences, 
Silicon Valley's cold shoulder is one of the industry's nagging concerns.

According to its advertising guidelines, Facebook will not allow ads 
that "promote or facilitate the sale or consumption of illegal or 
recreational drugs, tobacco products, or drug or tobacco paraphernalia."

Twitter's ad policy is more specific, banning ads including "all 
accessories related to drug use, such as bongs, pipes, vaporizers and 
grinders ... (and) products and services furthering access to drugs, 
such as dispensary directories."

Google "doesn't allow substances that can alter the function of the 
brain to induce unnatural euphoria, or alter reality, such as 
marijuana, cocaine, magic mushrooms, herbal ecstasy, etc." according 
to its policy. It allows ads that refer to smoking accessories like 
vaporizers only "when promoted as a humidifier or an aromatherapy device."

While the legal weed business is projected to grow 68 percent 
annually for the next few years and has raised $17.9 million in tax 
revenue for Colorado in its first four months, there is a growing 
concern that cannabis-related businesses won't be able to realize 
their potential without far-reaching online advertising.

Legal weed entrepreneurs can use direct mail and limited forms of 
print advertising to broaden their audience, but Dietrich says it's 
not cost-effective. Colorado's new marijuana laws prohibit cannabis 
shops from placing ads in print publications unless the outlet "has 
reliable evidence that no more than 30 percent of the publication's 
readership is reasonably expected to be under the age of 21." Several 
publishers are suing the state over the rules.

However, many entrepreneurs and analysts are concerned more about the 
limits on online networks, where the market is migrating.

"It makes it hard to drive people to your business," said Brigette 
Schabdach, who is scheduled to speak about marketing practices at the 
National Cannabis Industry Association's first business summit 
starting Monday in Denver.

There's a fear that merchants of ancillary products like smoking 
accessories will suffer most.

"For a lot of smaller companies, they don't have a lot of channels to 
reach consumers," said Paris Holley, a co-founder of the Mantis Ad 
Network, which is trying to appeal to cannabis businesses frozen out 
of the larger networks.

It's not as much of a problem for dispensaries or places where weed 
is sold legally, Holley said. "For anything that 'touches the 
flower,' their market will always find them."

But online ad rules are strict for any product connected to the industry.

"To reach a large-scale audience, these rules are limiting," said 
Emily Paxhia, a founder of Poseidon Asset Management, a 
cannabis-oriented hedge fund in San Francisco.

She is one of many Californians closely watching the developments in 
Colorado. Legalization supporters - including Lt. Gov. Gavin Newsom - 
are planning to bring a legalization measure to the California ballot 
in November 2016. According to two statewide polls taken last fall, 
upward of 60 percent of likely California voters would support a 
measure to tax and regulate marijuana.

But Alan Brachstein, the founder of 420 Investor, who will be 
speaking at the Weedstock business conference next week in Colorado, 
says there are more pressing concerns for the growing industry beyond 
the online ad stalemate. He expects that online advertising rules 
will soften in step with federal regulation of the drug.

"Long term," Brachstein said, "that's going to change."
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MAP posted-by: Jay Bergstrom