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How Twilio’s Recent Policy Shift Impacts Cannabis Businesses

Ashley Priest

by Ashley Priest

October 24, 2023 08:00 am ET Estimated Read Time: 5 Minutes
How Twilio’s Recent Policy Shift Impacts Cannabis Businesses

Cannabis businesses face many hurdles. These include everything from a lack of banking options and operating in mainly cash to highly restrictive regulations and intense oversight. Let’s not forget to mention the elevated taxes and IRS obstacles owners face despite being a federally illegal industry.

Perhaps the most frustrating issue faced by cannabis businesses though, is finding a reliable communication channel. This includes clientele as well as potential new customers. Twilio, a prominent provider of SMS services across various industries, was one of the few companies willing to provide communication services to compliant cannabis businesses. This included integration with other services using the company’s tech. That was, until recently when the company announced it would no longer work with the cannabis sector, “regardless of the federal or state legality.”

Over the years, there have been many fly-by-night companies that have offered their services to cannabis companies, only to fall out a few months later. Still, Twilio’s departure makes it hard to not feel like the cannabis industry has a target on its back. Twilio, however, disputes this claim.  The SMS service said it would also stop providing its services to the tobacco, firearms, gambling, debt collection, cryptocurrency, and sex industries.

Here’s what Twilio spokesperson Caitlin Epstein had to say in a recent email to media sources:

“If we discover a customer is violating the law or another provision of our policies, we take the action necessary to stop the activity, up to and including account suspension. This approach applies not only to cannabis but any other violations of federal law.”

A Change That’s Been Long on the Horizon

Twilio’s website reflects the implementation of these changes. Their site states the following in regard to their inability to work with cannabis or CBD-related businesses in the US. There are also similar statements surrounding Canada-based cannabis businesses on their website.

The following statement has been published on their website since at least 2022. This suggests they have been working on implementing this for some time, and it was not an overnight change.

“SMS or MMS messages related to cannabis are not allowed in the United States, as federal laws prohibit its sale, even though some states have legalized it.  Similarly, messages related to CBD products are not permissible in the United States, as certain states prohibit its sale. Twilio’s Messaging Policy is reflective of US carrier rules in this area, and there are no exceptions to this policy. Twilio defines a cannabis-related message as any message which relates to the marketing or sale of a cannabis product, regardless of whether or not those messages explicitly contain cannabis terms, images, or links to cannabis websites.”

This is unfortunate as Twilio is a leader in cloud communication services. Media reports the company has a market cap of almost $11 billion. Considering this, it is likely the company decided to halt these services to avoid regulatory audit risks.

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How Twilio Can Still Help Cannabis Businesses

Thankfully, there are other ways that cannabis businesses can still utilize the services offered by Twilio. This, of course, is under specific non-negotiable terms and requirements. This Twilio support page at the time of this writing suggests a few ways cannabis businesses may still be able to benefit from their offerings.

“The Twilio SendGrid Email API is a good option for cannabis-related traffic, as long as you have proper age gating in place and are sending toward recipients in a locale where the substance is legal (such as US states which have legalized cannabis).”

“In addition, Twilio Programmable Voice is not subject to the same carrier restrictions as SMS. Cannabis customers could use voice calling for delivery or order pickup notifications, for example, by calling the recipient and using a TwiML <Say> verb to read an automated message.”

What Options Does That Leave for SMS/MMS Services for Cannabis Businesses?

Text messaging is a vital marketing tool for cannabis businesses, as it is for businesses in nearly every sector. SMS offers one of the highest open rates in marketing. Studies suggest that 41% of consumers prefer SMS communications. Cannabis businesses use these services to notify subscribers of discounts, special promos, or new products and services.

Luckily, there are a few SMS platforms that are still friendly to those working in this sector. Cannabis Creative Group reports that the following providers are still cannabis friendly:

Even with the friendly providers above, there are specific things you still cannot say or do. That is without some form of workaround. This is because the providers that have opted out of working with cannabis businesses are subject to federal regulations. As you know, cannabis is still a highly illegal substance at the federal level, and communication companies such as these are required to abide by federal law just as AT&T, T-Mobile, Verizon, and other telecommunication companies must.

10DLC (short for 10 Digit Long Codes) is how providers such as Twilio send SMS messages. To stay in compliance with 10DLC-related federal regulations, providers must not allow forbidden content known as SHAFT content (which includes cannabis) to go over their platform to subscribers on networks such as AT&T, T-Mobile, Verizon, and others. If they do, they could face up to a $1,000 fine per violation. Unfortunately, until cannabis’s legality is changed at the federal level, it looks like this communication route is just one more hurdle that cannabis entrepreneurs will learn to overcome and continue to navigate.

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