Legal sales of marijuana for recreational use by adults began in Michigan on Sunday, but promotional products professionals in the Wolverine State have differing views on what the nascent market will mean for the local ad specialty industry.

Some distributors with whom Counselor spoke expressed buoyant optimism about the promo sales potential in the legal marijuana niche. Others said they’re leery, believing restrictions on advertising and other challenges could prevent cannabis from being a cash cow for merch providers.

Back of the line! 🤷🙋🙋♂️🙋♂️🙋🤨

Michigan’s first recreational marijuana customers are here and willing to wait in line for some 🌳https://t.co/YfNWMqKcs2

— Marijuana News (@WeedFeed) December 1, 2019

The dichotomous views are indicative of the divide seen in other states where recreational marijuana has become legal, and representative of the uncertainty stemming from how to capitalize on an industry that’s predicted to be enormous but still in its infancy and experiencing growing pains.

The basic facts on Michigan are this: The state is now the 10th overall to officially allow sales of recreational cannabis. Over the weekend, several dispensaries in Ann Arbor became the first to sell weed legally for recreational use in Michigan. People 21 or older can, with a valid ID/driver’s license, buy cannabis from a licensed dispensary. Individuals may possess up to 2.5 ounces on their person, or up to 10 ounces at home.

Recreational marijuana is legal in Michigan and will soon be legal in Illinois

Here's what to know:https://t.co/vk5TkxdPud

— Marijuana News (@WeedFeed) December 1, 2019

With some estimates indicating that the Michigan cannabis market could quickly become a $1.7 billion industry, certain distributors are excited about what they see as the potential to partner with an array of new clients in the space.

Sandra Kelley is among the optimistic. The chief operating officer of Grand Blanc, MI-based Prestige Promotions powered by Proforma (asi/300094) said she and her team have been investigating who cannabis’ big players will be and developing a marketing plan to court them. Part of the strategy includes preparing to make inroads at what’s billed as Michigan’s largest cannabis expo, which is scheduled for March 2020. “It’s an opportunity to make ourselves known among the players and establish ourselves as a viable marketing option for them,” Kelley told Counselor.

As Kelley sees it, promo product purveyors are especially well-suited to help cannabis companies. “The marijuana industry has not been embraced by the more traditional forms of advertising – i.e. television, magazines, radio – so that leaves a gap for the promotional marketing industry to fill,” Kelley told Counselor. “Timing is everything, so I think now is the time for us to grow with what I believe will be a booming industry.”

Similarly, the Michigan Promotional Professionals Association (MIPPA) sees legal cannabis as a source of substantial opportunity for the state’s promo distributors, Paul Kiewiet, the association’s executive director, told Counselor. “The legalization of recreational marijuana opens up a great market for distributors in Michigan,” Kiewiet said. “The dispensaries will become competitive and necessarily work to develop loyal customers and market differentiation. This creates the need for dispensary-branded merchandise. Promotional products should become an important part of the cannabis market’s advertising mix, as well as a powerful brand-building tool.”

As an industry organization, MIPPA will “allow and encourage” supplier members to help educate distributors on how best to capitalize on the cannabis space. Kiewiet also noted that the association respects industry companies that are opposed to doing business with cannabis companies – a reality that could stem, in cases, from lingering stigmas. “There will be some who are opposed to the market segment or may fear association with it,” he told Counselor.

Paul Zafarana doesn’t object to pursuing business with the marijuana market on moral or religious grounds, but the vice president/founder of PICA Marketing Group powered by American Solutions for Business (asi/120075) doesn’t plan to court sales in the vertical. “There seem to be a ton of regulations on both product and marketing efforts that are tying our hands at the moment,” Zafarana told Counselor. “Once the regulations are ironed out, the market is ripe for the picking, but only for a limited time.”

Protesters rally in support of the legalization of marijuana in front of The White House.

Zafarana explained further about why he believes the window for promo sales could, once open, close again quickly: “There’s limited time for the promo distributors to get on this bandwagon. Look at the tobacco industry and what has befallen them. Regulations have limited that industry’s ability to market from a promotional standpoint. … Regulations can squash the cannabis industry from a marketing standpoint, too.”

Additionally, Zafarana has concerns about how to handle payment transactions with businesses selling a product that’s still technically illegal at the federal level. “There are barriers to entry and doing business,” he told Counselor.

Bret Bonnet, president/co-founder of Top 40 distributor Quality Logo Products (QLP; asi/302967), told Counselor he doesn’t expect a significant uptick in cannabis-related sales as a result of legalization in Michigan – or in Illinois, which is on track to become the 11th state to allow legal sales of recreational marijuana, as retailing of cannabis is slated to begin there on Jan.1. Based in Illinois, QLP is an e-commerce-driven distributor.

“There are still many restrictions on how/where one can advertise,” Bonnet told Counselor. “This will ultimately limit the opportunity for distributors. The last thing I want to do is sell a customer a product they’re legally not allowed to use for the purpose they intended. Some people will push the limits, some won’t, but I really don’t think anything is going to change with legalization, especially when there’s a shortage on cannabis product that will limit the budding (pun intended) industry’s growth.”

None of the regulations in Michigan or Illinois appear to expressly ban promotional products for the cannabis industry. Still, there are regulations to be aware of. In Illinois, for instance, marketing/advertising can’t depict consumption of cannabis, promote overconsumption, depict people under 21 with cannabis, make health/medical/therapeutic claims, include the image of a cannabis leaf or bud, and/or include any image that’s designed or likely to appeal to minors, among other restrictions. Meanwhile, Michigan’s regulations include prohibiting marijuana retailers from referring to themselves as “dispensaries” in advertising/marketing. The rules also say that cannabis products can’t be marketed/advertised to people under 21, among other restrictions.

Despite QLP selling across geographic markets in the U.S.,the company’s cannabis sales haven’t been overwhelming to date. Bonnet noted that QLP has been offering cannabis-related promo products from various industry vendors for about a year. However, demand “for these products is pretty light still, even in areas where recreational use has been legal for years,” he said.

It’s not to say he doesn’t see some opportunity, though, in Michigan and Illinois. “With any controlled substance, there’s always some sort of education/awareness required,” Bonnet told Counselor. “You’re going to find businesses and governments reminding employees that the ‘mile-high club’ is closed while on the clock. It’s going to be more municipalities/governmental bodies and private businesses purchasing promo for these reasons, rather than dispensaries themselves.”

Even so, other distributors see cannabis as a burgeoning market ripe with potential. At the least, they point out that dispensaries and growers will likely need branded merchandise for internal purposes. Logoed apparel and accessories for staff, as well as branded items to give employees and business partners, are likely to be on the table. Others note, too, that cannabis-related firms could try to distinguish their brands by the launching merch lines, as others have done. Writing instruments for use by staff or within the businesses are other possibilities that have some distributors optimistic.

“Times are changing, and people are becoming more acceptive of the cannabis industry,” Kelley told Counselor. “I do believe the recreational marijuana market is ‘the next big thing,’ and more and more states will vote to approve it. I’m very excited about the new market opportunity.”