In the fast-paced world of cannabis, where regulations shift and competition grows fiercer by the day, making every marketing dollar count is more critical than ever. This is where ROI—Return on Investment—comes into play. ROI isn’t just a buzzword; it’s the metric that helps cannabis businesses understand whether their marketing efforts are paying off. Yet, too many cannabis companies dive into expensive campaigns without a clear plan to track success, often leaving money on the table.
At The Hood Collective, we’ve been helping cannabis businesses navigate marketing challenges since 2017, and one thing has become abundantly clear: ROI is the cornerstone of any successful strategy. But judging ROI in the cannabis industry comes with unique obstacles, from advertising restrictions to difficulty in tracking offline efforts like billboards or event sponsorships. This guide will provide practical insights and actionable steps to help you more effectively judge your cannabis marketing ROI in 2025 and beyond.
Why ROI is the Foundation of Cannabis Marketing Success
ROI is not just a number on a spreadsheet. It is the foundation of effective and sustainable cannabis marketing. For businesses in one of the most highly regulated industries, ROI ensures that every marketing dollar is spent wisely and delivers tangible results, such as increased sales, stronger customer retention, or enhanced brand visibility. In a field where advertising options are limited and competition continues to grow, ROI provides clarity by highlighting what works and what doesn’t.
From my personal experience, I’ve seen too many cannabis businesses waste money on flashy and expensive marketing strategies. These might include highway billboards, national influencer endorsements, or glossy ad placements. The problem is that many of these businesses dive in without a clear plan for tracking effectiveness. Fundamental questions often go unanswered. Is this campaign reaching the target audience? Are these efforts converting into actual sales? Without solid metrics to measure success, resources are frequently wasted on efforts that look impressive but fail to deliver results.
Neglecting ROI creates real risks for cannabis businesses. One of the biggest is the mismanagement of resources. In a space where budgets are often tight and competition grows fiercer by the day, failing to measure ROI means businesses are making decisions in the dark. You could be spending thousands on a campaign that fails to resonate with your audience while overlooking strategies that could deliver real results. Without ROI data, there is no way to adjust campaigns and improve their effectiveness, which leads to wasted time and effort.
ROI is especially critical for cannabis businesses because traditional advertising channels, like Google Ads and social media promotions, are usually off-limits due to strict regulations. This means alternative strategies—like SEO, email marketing, and community-driven events—must be carefully planned and evaluated. Focusing on ROI allows businesses to test unconventional methods, understand what works, and shift resources to the most impactful strategies.
Measuring and Tracking Cannabis ROI Effectively
Tracking ROI for cannabis businesses requires both creativity and precision due to unique challenges like advertising restrictions and limited access to mainstream tools. Here’s how to measure ROI effectively across various campaigns while leveraging cannabis-specific solutions.
Tools and Methods for Tracking Campaign ROI
Cannabis-Specific Email Marketing Platforms
Platforms like Springbig, Klaviyo (if used with care), and Drip are designed to comply with cannabis marketing restrictions. These tools track open rates, click-through rates, and customer actions like coupon redemptions.
Example: Use unique promo codes in email campaigns to tie sales directly to that specific effort. For instance, a “New Year’s Sale” email offering 15% off can be tracked by how many customers redeem the code at checkout.
POS System Integration
Treez, Flowhub, and Blaze are cannabis-focused POS systems that not only track sales but integrate with loyalty programs and CRM tools. These systems allow businesses to measure the ROI of in-store promotions and customer behavior trends.
Example: When running a loyalty program, track how many points are redeemed and correlate that with increased purchase frequency or higher average spend.
Google Analytics and Website Metrics
While not cannabis-specific, Google Analytics is invaluable for tracking website traffic, conversion rates, and campaign performance. Paired with cannabis-friendly e-commerce platforms like Dutchi, you can measure how marketing drives sales.
Example: Track which blog posts or landing pages drive the most purchases, and optimize campaigns based on high-performing content.
Alpine IQ
This cannabis-specific CRM and marketing platform combines customer data with campaign analytics to provide a detailed view of ROI.
Example: Use Alpine IQ to monitor how a loyalty program or SMS campaign affects customer retention and spending habits.
Event Sponsorship Tools
Use QR codes or custom URLs at events to measure how many attendees convert into paying customers.
Monitor event-related social media mentions and hashtag engagement to gauge brand visibility and community impact.
Creative Approaches for Tracking ROI on Hard-to-Measure Campaigns
Outdoor Advertising (Billboards and Transit Ads)
Before-and-After Metrics: Compare sales data in a specific area before and after launching a billboard.
Geotargeting Surveys: Use customer surveys at the point of sale to ask how they heard about your store or promotion.
Seasonal Comparison: Adjust for factors like holidays or cannabis events (e.g., 4/20) to isolate the impact of the ad.
Brand-Building Campaigns
Track social media engagement following a campaign by monitoring increases in followers, mentions, and shares.
Use customer satisfaction surveys or net promoter scores to measure how brand perception shifts after a campaign.
Influencer Marketing
Collaborate with local cannabis influencers and track the ROI of sponsored posts using unique discount codes or affiliate links.
Measure the growth in social media followers, website visits, or inquiries that coincide with influencer campaigns.
Importance of Before-and-After Metrics
Consistently tracking metrics before and after any campaign provides valuable context. Whether it’s a billboard, social media ad, or in-store event, isolating the impact of each initiative ensures you’re not attributing success to unrelated factors. For instance, a spike in sales during 4/20 may not stem solely from a specific marketing effort, but comparing year-over-year growth during that period can reveal the campaign's real value.
By combining these tools and approaches, cannabis businesses can make informed decisions, optimize their marketing efforts, and ensure they maximize their ROI, even in a challenging advertising landscape.
Targeting the Right Cannabis Audience for Maximum ROI
Effectively targeting your audience is one of the most important factors in maximizing ROI for your cannabis business. Aligning campaigns with specific audience segments ensures your marketing dollars are spent on reaching the people most likely to convert, driving better performance and minimizing waste.
The Power of Audience Segmentation
Cannabis consumers are not a monolith—they include a diverse range of demographics with unique needs and preferences. Whether you’re targeting medical patients, recreational users, or cannabis entrepreneurs, understanding these groups’ pain points allows you to craft campaigns that resonate.
Examples of Segments:
Medical Users: Highlight product benefits for symptom relief and prioritize educational content.
Recreational Users: Create lifestyle-focused campaigns that emphasize relaxation or creativity.
Cannabis Newbies: Offer beginner-friendly content, such as product guides or strain recommendations.
Cannabis Connoisseurs: Showcase premium products and rare strains to appeal to sophisticated palates.
Local Influencers vs. National Celebrities
Influencer marketing can be a powerful tool for cannabis businesses, but the choice between local influencers and national celebrities can significantly impact your ROI.
Local Influencers
Cost-Effective: Local influencers typically charge lower fees while providing access to a highly relevant audience.
Community Trust: These influencers often have a closer connection with their followers, leading to higher engagement and trust.
Example: Partnering with a popular local budtender or cannabis advocate who regularly interacts with your target demographic can generate more meaningful connections and better conversions than a generic celebrity endorsement.
National Celebrities
Wider Reach: A national celebrity (Ex: Snoop Dogg or Seth Rogen) offers exposure to millions but may lack relevance to your specific audience.
High Cost: While their reach is impressive, the expense may outweigh the ROI, especially for smaller cannabis brands with localized operations.
Example: If you’re targeting a state-specific market, paying for a national audience could result in wasted resources since only a fraction of their followers are in your geographic area.
The Role of Tailored Messaging
Generic campaigns rarely perform well in the cannabis industry, where authenticity and trust are essential. Tailored messaging that speaks directly to the concerns and desires of your audience boosts engagement and ROI.
Tailoring Strategies:
For medical patients, focus on health benefits, research-backed claims, and testimonials from other patients.
For recreational users, create playful and relatable campaigns, such as promoting cannabis-friendly activities or events.
For local campaigns, include region-specific details, like highlighting local dispensary partnerships or cannabis events.
Using Data to Refine Your Targeting
Regularly reviewing data from customer surveys, sales metrics, and analytics tools allows you to refine your audience segmentation and messaging. For example:
If analytics show a spike in sales after email campaigns, this could indicate your audience values educational content delivered directly to their inbox.
If your social media posts featuring premium products outperform those with discounts, it may be a sign your audience is less price-sensitive and values quality.
By aligning campaigns with your audience’s preferences, you ensure every dollar spent has a higher chance of yielding returns. Combining tailored messaging, local expertise, and data-driven decisions enables cannabis businesses to thrive in an increasingly competitive market.
Balancing Cannabis ROI with Brand-Building Investments
Balancing cannabis ROI with brand-building investments requires a strategic perspective that acknowledges both short-term gains and long-term value. While campaigns focused on immediate returns, like promotions and email blasts, are essential for generating quick revenue, they often overlook the broader picture of brand loyalty and market positioning. A successful cannabis business needs to integrate both approaches to create a sustainable marketing strategy.
Brand-building campaigns might not always have direct sales attribution, but their influence is undeniable. For example, creating a compelling brand narrative or investing in high-quality design elements, such as packaging or a memorable logo, helps establish your business as credible and trustworthy. These efforts are particularly important in the cannabis industry, where consumer trust is critical due to lingering stigmas and regulatory challenges. Over time, a strong brand identity fosters customer loyalty, encourages repeat purchases, and reduces the cost of acquiring new customers.
The value of brand-building lies in its ability to support and enhance more targeted marketing efforts. Imagine a dispensary investing in storytelling content that highlights their dedication to community engagement or sustainable practices. While this content may not lead to an immediate spike in sales, it primes the audience to respond positively to future campaigns. Customers who connect with the brand’s values are more likely to open promotional emails, click on ads, or engage with social media posts, improving the overall effectiveness of direct marketing efforts.
Cannabis businesses that successfully balance brand-building with short-term ROI strategies often stand out in the market. For instance, companies like Lowell Farms have built a strong identity around artisanal quality and sustainability, which resonates with their audience and elevates their product offerings. Even their promotional efforts, like limited-edition product launches, are more impactful because of the foundation of trust and authenticity they’ve established through brand-building.
In an industry as competitive and heavily regulated as cannabis, the long-term benefits of investing in your brand cannot be overstated. Strong branding creates a ripple effect, influencing how customers perceive your products, how they talk about your business, and how likely they are to stay loyal. By finding the right balance between immediate ROI-focused campaigns and long-term brand-building investments, cannabis businesses can achieve sustainable growth and solidify their place in a rapidly evolving market.
Maximize Your Cannabis ROI with The Hood Collective
In 2025, mastering ROI is no longer optional—it's a critical component of successful cannabis marketing. From tracking the effectiveness of your digital campaigns to investing in brand-building efforts that pay dividends over time, a thoughtful approach to ROI ensures that every dollar spent contributes to your business’s growth. While it's easy to focus solely on short-term gains, the most successful cannabis companies know how to balance these with long-term brand-building strategies that foster loyalty and trust.
When businesses come to The Hood Collective for marketing help, we're just as likely to advise them not to spend money as we are to create a strategy. Why? Because effective marketing starts with understanding what works, what doesn’t, and where your investment will generate the most impact. Whether it's developing creative campaigns that drive immediate sales or strengthening your brand to ensure lasting market relevance, our goal is to make your marketing dollars work harder for you.
Partnering with The Hood Collective means tapping into a team that understands the unique challenges and opportunities of the cannabis industry. We bring expertise in branding, digital marketing, and content creation, all tailored to help cannabis businesses thrive in a competitive market. Ready to enhance your ROI and take your business to the next level? Contact us today to explore how we can help you achieve measurable success.
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