Businesses selling cannabis legally in California are losing revenue because their efforts to market via texting have been hampered. (Shutterstock)

Businesses selling cannabis legally in California are losing revenue because their efforts to market via texting have been hampered. (Shutterstock)

The texting conundrum facing cannabis companies

‘It’s like all mainstream pipelines of information have gatekeepers’

By Veronica Irwin

Examiner staff writer

Martin Olive, the executive director of San Francisco’s oldest cannabis dispensary, began noticing something was amiss at the beginning of this year.

His shop, Vapor Room, used a third-party short message service marketing platform to send automated text messages with sales and specials to his customers. But not all of his patrons were receiving the texts, and, after running several tests, he realized he wasn’t receiving them on his own phone, either. Between January and March, as fewer and fewer texts reached his customers, sales began to decline. When his contract ended with the marketing platform in June, he didn’t renew it.

Left: Martin Olive, executive director of Vapor Room, a SoMa dispensary, switched messaging services after he realized customers weren’t getting his company’s texts. <ins>(Kevin N. Hume/The Examiner)</ins>

Left: Martin Olive, executive director of Vapor Room, a SoMa dispensary, switched messaging services after he realized customers weren’t getting his company’s texts. (Kevin N. Hume/The Examiner)

“It wasn’t like there was a mass filtering out of messages, but a percentage were,” said Olive. “It was just so inconsistent.”

Several months ago, major cellular service providers Verizon, AT&T and T-Mobile updated rules they set for which phone numbers they block from reaching their customers. The rules were designed to improve deliverability and protect customers from spam via a two-pronged approach: requiring businesses to register with SMS providers, and filtering out text messages from businesses which violate usage requirements.

But because cannabis is still federally illegal, even state-regulated dispensaries technically are breaking federal law. This prohibits them from registering with national SMS cell service providers, and text messages about sales or deals on cannabis products violate usage requirements. Twilio, for example, a San Francisco cloud communications platform that serviced hundreds of the biggest dispensaries, now bans cannabis clients altogether (though communications director Cris Paden insists the move has “nothing to do with making a value judgement on these businesses”).

The result is a trickling-down of service interruptions from major cell service providers, through third party SMS, to many small, local cannabis businesses. And federal prohibition also affects social media policies: Instagram and Facebook restrict cannabis companies from marketing on their platforms, and Google Ads blocks similar advertisements.

Fly T, a cannabis delivery company servicing most of the Bay Area, has had its Facebook account deactivated twice, and lost two separate Instagram accounts. When it lost its SMS messaging capabilities, marketing efforts were severely damaged. “It’s like all the mainstream pipelines of information have gatekeepers just throttling who is able to have a business,” said CEO Paul Semonian.

The financial toll of these policies varies by a business’ structure and size. Delivery services, with no physical storefront by which to interface with customers, are more severely affected than brick-and-mortar shops. Semonian estimates the service interruptions have cost him several thousand dollars. Others, like Vapor Room, sink the $300-$500 monthly fee they spend on SMS.

After months of operating without SMS messaging at all, Olive switched to using San Francisco software company Meadow to reach his customers. Meadow only works with cannabis businesses, and co-founder and CEO David Hua says that the company has been wary of running into trouble with cell service providers from the start.

Vapor Room is using Meadow, a San Francisco software company that works specifically with cannabis businesses, to reach consumers via text messaging. <ins>(Kevin N. Hume/The Examiner)</ins>

Vapor Room is using Meadow, a San Francisco software company that works specifically with cannabis businesses, to reach consumers via text messaging. (Kevin N. Hume/The Examiner)

Since Meadow launched its SMS marketing in October of 2020, it prohibited clients from sending texts with words like “cannabis” or “pot” — words Hua calls “trigger words” for automated artificial intelligence and federal watchdogs. Meadow also makes sure that all customers receiving SMS messages explicitly opted in when they first registered as a customer in stores, and clearly explains how customers can opt out. These measures help their texts avoid getting flagged as “spam.”

“Discretion has always been part of our DNA,” explained Hua. “We only operate in California, we only work with licensed dispensaries with customers who have opted into that messaging, and we’ve taken the route that if carriers look at it, they’ll see we’re following state laws.”

For Hua, providing SMS isn’t just about rolling out a profitable new product. He hopes to ultimately fight back against prohibitionist federal policies. “At this point, you just have to be the change you want to see in the world,” he said. “Cannabis should be treated like everything else.”

virwin@sfexaminer.com

cannabisdispensariesInternet and Telecomlegalized marijuanamarijuana dispensaries

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