For any industry that deals in consumer packaged goods marketing, product sampling is a go-to tactic. Give consumers a little nibble of your new cookie at the grocery store or a little folder with a sample of your latest perfume – it offers prospective customers the chance to try something new with no cost or risk. It can also be a means to lure prime retailers into providing a product prime shelf space. But as our Los Angeles cannabis lawyers can explain, this practice has always been legally problematic for pot shops.
Some of the legal barriers to California cannabis samples:
- Age restrictions
- Public consumption bans
- Legal licensing and distribution laws
These were exacerbated by the COVID-19 pandemic.
But there is good reason for manufacturers to keep trying because we know that free samples can boost sales of a product by as much as 2,000 percent. More than one-third of customers who sample a product end up buying a full-size version during that same shopping trip. If you offer in-store samples, you have the potential to increase sales by more than 100 percent, even nearly a half a year after the samples were offered.
With this kind of incentive, cannabis company entrepreneurs have had to get creative – starting with CBD.
We should point out that federal law does not allow hemp companies to put CBD into topicals or foods. However, enforcement on this has been incredibly lax. Some companies have taken advantage of that, even going so far as to have brand ambassadors offering up drink samples outside their brick-and-mortar stores. As a result, sales went up. Similar successes were noted for CBD tonics as well.
Given that CBD companies haven’t received much pushback, purveyors of THC products have taken note. Some THC product makers have begun infusing some of their regular product lines with CBD (as opposed to THC) in order to get the item in front of customers. Companies say that gives people the opportunity to experience the general flavor profile, and get the experience of a fast-acting impact, without the lasting high they’d get with the “real” THC product. This strategy has proven so successful for some companies that they ended up adding an entire CBD line to their regular THC offerings.
But while food products companies can typically get away with providing samples with relatively little red tape, cannabis companies need to proceed with greater caution. In addition to concerns about whether offering samples is legally allowed in your region in the first place, you should also touch base with your cannabis business lawyer to see what – if any – tax implications there might be for distributing free samples. Specifically, you may incur something called a “use tax” when products are used for free as part of a company promotion.
Marijuana product manufacturers may want to consider setting up a sample shop at places that are already age-restricted or designated as “consumption lounges” to limit potential liability. They might also consider partnering with a reputable, professional sampling partner company. Finally, they may want to market to existing customers by tucking in a free sample to a customer who has already placed an order.
Before initiating a cannabis sample campaign, it is highly recommended that you discuss your plans with your Los Angeles cannabis business lawyer to ensure you aren’t running afoul of any state or local regulations.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
Cannabis product sampling is taking off, despite legal and pandemic challenges, May 16, 2022, By Kristen Nichols, MJBizDaily
More Blog Entries:
Study: California Cannabis Companies 100% Compliant With ID Checks to Prevent Youth Purchases, June 25, 2022, Los Angeles Cannabis Business Lawyer