Cannabis Companies Try the Metaverse as a New Marketing Platform

To the degree that the metaverse operates on the principles of Web3, in which decentralization replaces corporate control over the web, cannabis marketers might be able to talk up their products more freely than they can on platforms such as

Facebook,

said

Lisa Buffo,

founder and chief executive of the Cannabis Marketing Association.

“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 in December opened a store in Voxels, a metaverse-like platform that was called Cryptovoxels until a rebrand in May. The company partnered with Saucey Farms & Extracts LLC in February to take over the store’s second floor.

Virtual visitors can’t order Higher Life’s CBD products directly within the virtual store, but they can click a mock cash register to visit Higher Life’s website and order CBD products there.

About a thousand people visit the store a day, said

Brandon Howard,

chief executive of Higher Life.

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

Saucey hasn’t sold many items to visitors who click its cash register, said

Alex Todd,

co-founder of the company. But Saucey expects that to change when more people join the metaverse, he said.

The metaverse is perhaps within five years of actually being able to sell cannabis, Mr. Todd said, predicting U.S. federal regulations prohibiting the sale of the product could ease in 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.

Cannabis brand Kandy Girl, which is 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. Its NFT sales in Decentraland have totaled about $30,000 so far, Kandy Girl said.

But there aren’t enough users currently to take the effort to the next level, said

Ben Boyce,

chief marketing officer at Kandy Girl, which is owned by Boyce Capital LLC.

“When there’s a million people logged into a metaverse at any given time, that’s when it is going to make sense to staff [a virtual] dispensary with a real live human being,” Mr. Boyce said.

For now, cannabis brands are enjoying the relative freedom of the metaverse, where they can use tactics that are often prohibited on dominant digital advertising platforms such as Meta Platforms Inc.’s Facebook and Instagram and

Alphabet Inc.’s

Google.

Meta’s community standards ban content, whether paid advertising or unpaid organic content, “that attempts to buy, sell, trade, donate or gift or asks for marijuana.” Its advertising policies say companies “must not promote the sale or use of illicit or recreational drugs.”

Metaverse platforms have varying rules around cannabis.

Roblox Corp.

says in its terms of use that it videogame platform “prohibits users from discussing, depicting, or promoting illegal or highly-regulated activities.” Sandbox says 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.

But Decentraland and Voxels said they work with cannabis companies.

“We have supported various NFT cannabis communities—as long as they meet the terms and conditions,” 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, which builds tools for the platform and handles its marketing.

But “as a decentralized platform, it is not the Foundation’s role to curate user-generated content or police the philosophies of the community,” Mr. Hamilton said.

Voxels prohibits selling cannabis on its platform, but has no objection if its users open simulated dispensaries on its platform, said

Ben Nolan,

founder of the company.

Write to Ann-Marie Alcántara at ann-marie.alcantara@wsj.com