Cannabis Companies Try the Metaverse as a New Marketing Platform

There is an opportunity to educate consumers about brands using virtual worlds, but the traffic is low.

Cannabis companies are using virtual reality to set up shops, promote their core product, and sell real-world merchandise and nonfungible tokens.

Major brands such as Miller Lite, Wendy’s, Estée Lauder and JPMorgan Chase & Co. have also experimented with using digital worlds for marketing, but cannabis marketers think the virtual reality could offer some advantages of particular interest to them.

Lisa Buffo, founder and chief executive of the Cannabis Marketing Association, said that because the metaverse operates on the principles of Web3, which decentralizes control over the web, cannabis marketers might be able to talk more freely about their products on platforms such as Facebook.

"It is a wide open space in Web3...regulators haven't wrapped their head around it yet," Ms. Buffo said.

Higher Life CBD Dispensary LLC opened a store in Voxels in December. The company partnered with Saucey Farms & Extracts LLC in February to take over the store's second floor.

People who visit the virtual store can't order Higher Life's CBD products directly, but they can click a mock cash register to visit Higher Life's website and order CBD products there.

Brandon Howard, the CEO of Higher Life, said that about a thousand people visit the store every day.

The floor at Saucey includes another cash register, which again leads to a website where visitors can shop, in this case for non-cannabis merchandise such as grinders.

Alex Todd, the co-founder of Saucey, said that the company hasn't sold many items to visitors who click its cash register. But he expects that to change when more people join the metaverse.

Mr. Todd said that the metaverse might be able to sell cannabis within the next five years. He predicts that U.S. federal regulations prohibiting the sale of cannabis will ease within that time frame.

Meanwhile, NFTs can help Saucey spread awareness of the brand, particularly as more people join the metaverse and seek clothes and accessories for their avatars, he said.

“It is going to be a great tool for the cannabis space,” he said.

Kandy Girl, a cannabis brand known for selling a THC-infused gummy that can ship to all 50 states, acquired land in Decentraland in December to promote the company and sell NFTs. It has sold and given away virtual wearables with accompanying NFTs, including wings that look like marijuana leaves. So far, Kandy Girl said its NFT sales in Decentraland have totaled about $30,000.

At the moment, there are not enough people using virtual reality to make it worth staffing a virtual dispensary with a real person. Ben Boyce, chief marketing officer at Kandy Girl and owner of Boyce Capital LLC, said this. However, when there are a million people logged in at once, it will make more sense to have someone working at the dispensary. In the meantime, cannabis brands are taking advantage of the freedom they have on virtual reality platforms like Facebook, Instagram, and Google.

Meta's community standards forbid any content that promotes the sale or use of marijuana, whether it is paid advertising or unpaid organic content. Additionally, companies are not allowed to promote the sale or use of illicit or recreational drugs through their advertising.

Different metaverse platforms have different rules about cannabis. Roblox Corp. says that its videogame platform "prohibits users from discussing, depicting, or promoting illegal or highly-regulated activities." Sandbox says that any metadata associated with a piece of the platform's digital real estate "cannot link or contain any material or content that is...illegal." In Meta's Horizon Worlds platform, any content that depicts marijuana is forbidden.

However, Decentraland and Voxels said they work with cannabis companies.

"We support various cannabis communities that follow the law," said Adam de Cata, head of partnerships at Decentraland.

Cannabis companies that open in Decentraland need to observe legal regulations, including not serving users in countries where the product is prohibited, said Sam Hamilton, creative director of Decentraland Foundation.

However, as a decentralized platform, it is not the Foundation's role to decide which user-generated content is appropriate or to police the philosophies of the community. Voxels does not allow the sale of cannabis on its platform, but it does not object if its users open simulated dispensaries on its platform.

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