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Nov. 3, 2016, 9:14 a.m.
Business Models

As opinions shift, a new wave of cannabis-focused sites hopes more advertisers will loosen their pockets

There’s money in marijuana, but is there money in marijuana coverage? (Yes, yes there is.)

For three years, The Cannabist, a promising digital project from the struggling Denver Post, has been covering the marijuana industry in Colorado, where marijuana for recreational use has been legal since 2012. In August the site attracted 885,000 unique visitors, making up more than 13 percent of the Post’s digital traffic. The development of the site was profiled in the documentary Rolling Papers.

Still, there are businesses hesitant to advertise with The Cannabist. All of its advertising is paid with cash: Marijuana businesses looking to advertise are themselves often dealing only in cash, with few banks and credit unions willing to take on their accounts. And it was only this past fall that The Cannabist was finally approved to use Facebook’s ad platform. The restriction had hampered its growth, especially since the site strives to be national in scope. (Its presence is all the more impressive given that it was entirely driven by a single writer, Ricardo Baca, the first couple of years.)

“For the most part, Facebook will absolutely say no to anything that has to do with marijuana. We’ve only just recently been allowed to use Facebook’s ad platform,” Brad Bogus, The Cannabist’s new general manager, told me. The site is on track to make $1 million in revenue next year. “We’ll be able to promote our content there, increase our audience numbers, increase our inventory. There are a lot of new revenue opportunities we didn’t have before, as well as an ability to provide a much larger impact for our advertisers beyond just display advertising. That’s a special thing in our industry.”

Legal marijuana is already a $6 billion industry. Public support across the U.S. for legalizing marijuana is up to 60 percent, according to a recent Gallup poll. Marijuana reform is on the ballot in nine states this November (including here in Massachusetts).

“The cannabis industry is more malleable than it’ll ever be again,” Nushin Rashidian, cofounder of the year-old digital publication Cannabis Wire, said. Rashidian is also a research fellow at the Tow Center for Digital Journalism at Columbia University and recently wrote a piece for our sibling publication Nieman Reports on the need for serious cannabis coverage. “People should be thinking about not just whether we legalize, but also what we want this industry to be. The industry is young enough that if a lot of attention is drawn to a particular aspect of it that’s not working, there can be enough public pressure to change it. And the industry wants voters to embrace it enough that it’s willing to be on its toes.” (At launch, Cannabis Wire had to use the name “CWire” in order to appease Facebook; now it’s using its full name on social and is verified.)

Cannabis Wire was initially funded through a Brown Institute Magic Grant, with a mandate to “document the end of a prohibition and the birth of an industry,” but as its editorial focus sharpened in the past year, its cofounders began to settle on a business model — a Politico Pro-type subscription aimed at industry insiders — to move the publication beyond grant funding. The site currently has a newsletter unique open rate of 40 percent. Site visitors read an average of four pages per visit. Cannabis Wire is also testing its first paid product, a $199 research report on the impact of cannabis legalization in California and beyond.

“When we launched, we were a ‘cannabis news organization.’ That quickly changed. We used to think of ourselves as working at the intersection of criminal justice, science, and health. But it became almost backward-looking to look at the idea of prohibition ending. Our mandate was to inform and educate the public, and we realized this kept taking us back to regulation, and the regulation always had to do with the industry itself,” Rashidian said. “We decided we were going to cover the hell out of the cannabis industry, and we were going to call ourselves global — because even companies based in U.S. may have branches abroad — and we would have really granular, industry-focused coverage. What business model can sustain that? That is going to be a subscription model.”

For cannabis-focused digital outlets, shifting public opinion and the momentum of legalization in several states lend a growing sense of normalcy to their coverage. These sites are figuring out paths to sustainability and the appropriate revenue streams for their strains of coverage, as they’re straddling not only changing legalities around the industry they cover, but also the business pressures surrounding online news.

Weed businesses advertising on weed-focused publications seems like an obvious symbiotic relationship. But these businesses are severely restricted in where they can advertise, even in a legal environment like Colorado, since it’s difficult for them to be absolutely certain their ads aren’t seen by people under 21.

The Cannabist has gone for hard news but also reviews and cultural coverage, and its editorial breadth has opened it up to a range of advertisers, not just businesses selling marijuana, which are themselves constrained by federal regulations. It’s also dabbling in merchandise, coupons, and sponsored widgets, and bringing advertisers to its Cannabist Show. The site’s annual awards ceremony, in Las Vegas this year, has expanded from 10 to 41 different award categories, all of which can be sponsored by companies, and Bogus said he expects it to bring in $100,000 worth of revenue (The Cannabist is also planning at least one event per quarter).

NowThis Weed, a year-old Facebook vertical of social video giant NowThis, has exported its captioned native video model, with a mix of news nuggets (“Oregon is banning strain names that appeal to kids”) and the social fare (“Snoop Dogg had the realest rant about marijuana use in the NFL”). Branded content is a major source of revenue for the company, and NowThis Weed has been wary of Facebook’s rules around promoting cannabis-related content, though executive producer Sarah Frank said this fall at an Online News Association panel that the team hasn’t yet encountered any negative reaction from Facebook and is receiving interest from a range of potential advertisers.

Cannabis-focused digital efforts that have launched over the past few years have begun to find their niche within a subject area that is becoming less niche itself. Cannabis Wire is somewhat wonky; NowThis is focused on video, fun with a progressive bent. (It’s also partnered with Reveal from the Center for Investigative Reporting on video around an investigation into inhumane practices on pot farms in California’s Emerald Triangle.)

Alex Halperin, a freelance journalist who moved from New York to Colorado and is now moving to California to cover the cannabis industry, runs a weekly newsletter for insiders called WeedWeek, with around 5,000 subscribers, and has been able to hire someone who works on commission to handle ad sales and marketing.

“Cannabis deserves to be taken seriously. This is one of the fastest growing industries in the country. Mainstream media hasn’t dedicated substantial resources to this story — everybody has done a little bit, but none of the really big players are covering it in a serious way yet,” Halperin said. “This allows a lot of smaller efforts to move in.”

A chunk of WeedWeek’s advertising has “been bartered, essentially, for publicity in other places,” Halperin said, and that’s common in a growing industry where everyone is elbowing for visibility. But “the ad money is coming, and we’ve just had our best ad sales month yet.”

“The whole point of our site is two-pronged,” Kelly Barbieri, editor-in-chief of the new cannabis lifestyle and entertainment The Fresh Toast, said. “We want to be a place of delight and discovery and be fun to look at — we want to use that perspective to normalize the cannabis conversation. We wanted to create a place where anybody could go: whether you’re just curious, want medical information, want some cannabis information, but also maybe want cute cat videos.”

Only two of the verticals on The Fresh Toast are explicitly about marijuana (leading the site when I last checked was the listicle “How Vine Shaped Music And Made These Songs Blow Up”), which helps it get around issues of Facebook promotion. The site is also exploring content partnerships to grow its audience: “I can’t go into those details yet, but I’ve got to tell you, there are a lot of people very interested in our coverage,” Barbieri said.

The Fresh Toast, which launched last month, has already raised $2.8 million and has built in several revenue possibilities — standard advertising; a directory that provides advice and resources related to medicinal marijuana; data and research; and events. It’s also building a live entertainment component called The Fresh Toast Stage, geared toward unsigned musicians and comedians.

Most of the people I spoke with were confident cannabis-focused sites will see an increasing number of advertisers willing to align with their sites.

“Totino’s Pizza Rolls advertised on 4/20,” Bogus said, laughing a little. “But other than the obvious [advertisers] like pizza and munchies, there’s tourism, hotels, car companies…We’re looking at cross-promoting with vacation-related businesses. It’s not something I just envision — it’s something we’re actively working on.”

Photo by Cannabis Pictures used under a Creative Commons license.

POSTED     Nov. 3, 2016, 9:14 a.m.
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