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Mar 15, 2024

Functional mushrooms marketing guide—brands clash with Meta as industry grows

Alice, a functional mushroom brand. While psychedelic mushrooms are generating tons of buzz lately, including recent media coverage about tech entrepreneurs taking them, a more legal variety of fungi

Alice, a functional mushroom brand.

While psychedelic mushrooms are generating tons of buzz lately, including recent media coverage about tech entrepreneurs taking them, a more legal variety of fungi is gaining traction.

So-called functional mushrooms—which don't get you high—are rising in popularity due to the health benefits touted by advocates, including a range of direct-to-consumer marketers selling them in various forms such as chocolates, tinctures and powders. These marketers are seizing on demand for a global industry that was worth $26.7 billion in 2021 and is expected to grow at a compound annual growth rate of 10.8% from 2022 to 2030, according to a report from market research firm Grand View Research.

Despite that promising forecast, there have been a few bumps on the road to the ’shroom boom. DTC functional mushroom brands such as Alice Mushrooms, Fungtion, Mojo and many more say digital advertising is tricky—especially on Meta-owned Facebook and Instagram, where brand operators say their ads and sometimes entire brand accounts are being taken down.

Below, a closer look at the functional mushroom industry and the digital advertising dynamics at play.

Psychedelic, or “magic,” mushrooms contain the psychoactive compound psilocybin and can make the user hallucinate, among other psychedelic effects.

Functional mushrooms, on the other hand, are simply mushrooms that functional medicine advocates believe have certain nutritional or mental health benefits. They’re often added to supplements, powders or other ingestibles. The efficacy of functional mushrooms remains a subject of debate in the medical community. “Plant chemicals and components in mushrooms may exert antioxidant, anti-inflammatory, and anticancer effects, but the exact mechanism is still unclear and an area of active research,” according to Harvard’s T.H. Chan School of Public Health.

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Functional mushrooms are as legal as shiitake mushrooms from the grocery store, according to Charlotte Cruze, co-founder and chief operating officer at Alice Mushrooms (a company that sells chocolates containing functional mushrooms). Despite their many advocates, the U.S. Food and Drug Administration has not approved functional mushrooms for the treatment of any medical conditions.

Psychedelic mushrooms are federally illegal in the U.S. In Oregon and Colorado, certain uses of psychedelic mushrooms have been legalized, while some municipalities have eased laws against them.

Some of the major functional mushroom players in the global market include Nammex, Mitoku Company, Hokkaido Reishi Co. Ltd. and Lianfeng (Suizhou) Food Co. Ltd, according to Grand View Research. Other brands include Marley One, which markets functional and psychedelic mushrooms. The brand, controlled by the family of Bob Marley, struck a licensing deal with Silo Wellness in 2021 for the offerings.

DTC functional mushroom brands are often newer and still building their businesses with small teams, such as Alice Mushrooms, Gwella/Mojo and Fungtion, among others.

Putting some @Marleyone_ Mushrooms in my smoothie. #OneHarmony helps with digestion!https://t.co/uc74TGSoFS pic.twitter.com/TxxAhweGEf

None of the major social media platforms—Meta, X (formerly known as Twitter), and TikTok—explicitly mention functional mushrooms in their advertising guidelines. But that hasn’t stopped some of them from policing the industry’s ads.

“Technically functional mushrooms shouldn't be violating any policies whatsoever. But in the same way that people conflate non-psychoactive CBD and cannabis, I think there’s a lot of conflation between functional mushrooms and psychoactive mushrooms,” said Lisa Weser, CEO at Trailblaze, a marketing agency that has worked with DTC functional mushroom brands, in an interview.

On TikTok, ads for products containing functional mushrooms can be promoted with restrictions, including limiting ads to audiences over 18, according to a TikTok spokesperson, who added that ads for products containing psilocybin are prohibited from the platform. These distinctions are not made in TikTok’s advertising guidelines, which don’t mention mushrooms at all.

Instagram and Facebook both have similarly vague policies. For instance, Meta’s branded content policy states that the promotion of “drugs and drug-related products, including illegal or recreational drugs” is prohibited, but does not mention any kind of mushrooms specifically.

A Meta representative did not respond to a request to clarify the company’s policy on functional mushroom advertising.

Google allows ads for supplements including non-psychoactive functional mushrooms as long as they comply with its policies, including its policy on unapproved pharmaceuticals and supplements, according to a spokesperson. Google's policies on supplements are informed by government regulations and monitored by its third-party partner, LegitScript. Psilocybin mushrooms are not allowed to advertise on Google platforms under its recreational drugs policy, according to the spokesperson.

Some functional mushroom brands noted that they’ve had an easier time advertising via out-of-home ads or on podcasts, as these industries are less regulated.

“Functional mushrooms are ultimately a supplement, and they should be able to advertise in the same way that any supplement product would,” Weser said.

DTC functional mushroom companies do not typically try to brand themselves as psychedelic drugs—it’s more common to see supplement-style branding. Alice, for instance, uses words such as “focus” and “tranquility” to promote some of its products on its website. The brand, though, does make a reference to hallucinogenics with its name and brand imagery, which subtly alludes to “Alice in Wonderland.” (In the FAQ section of its website, the brand stresses that its products “cannot induce a trip.”)

A post shared by alice mushrooms (@alice.mushrooms)

Mojo, a DTC functional mushroom brand part of Gwella, claims on both its website and Instagram that its gummies help with “productivity” and improve moods.

A post shared by Mojo Microdose (@mojomicrodose)

A post shared by fungtion | nature knows (@letsfungtion)

Many DTC functional mushroom brands say that Meta—which DTC brands have long relied on for sales—has posed advertising challenges.

Alice Mushrooms, for example, was recently kicked off Instagram for 18 straight days and thus couldn't run paid Instagram ads after being flagged for a “community guidelines violation,” Alice's Cruze said.

It’s difficult to contact someone within Meta to get help with the issue unless you have close personal friends there, she added.

“Meta loves to police anything that they think is drugs, and we are not,” Cruze said. “We’re a fully legal business.”

Alice would have spent about $70,000 on Instagram ads during the first week its account was down, Cruze said. That would have led to almost $200,000 in sales, she said. Alice's products include tins of functional mushroom chocolates, which it says improve focus and sleep, that start at $29.

“We are a fully functional business and not selling any psychedelics, but we get taken down a lot,” said Cruze, adding that it’s a “pretty annoying issue” because when Alice’s account is taken down, it “throttles the way” the business can spend and advertise on the platform.

A post shared by alice mushrooms (@alice.mushrooms)

Typically, the account is only taken down for a day or two; but after six days of being down, the team was starting to explore diversification among its marketing platforms, she said. Alice team is interested in paid advertising on TikTok, and already advertises on Google, as well as out-of-home channels, Cruze added.

Phoebe McPherson, who is the head of brand and education at Fungtion, a DTC brand that sells functional mushroom tinctures, said Fungtion has experienced similar issues with Meta.

“The word ‘mushrooms’ oftentimes is stigmatized,” she said in an interview, adding that she thinks Meta isn’t willing to distinguish between psilocybin magic mushrooms and functional mushrooms, despite the fact that one category is federally illegal in the U.S. and the other is not.

“We’re experiencing this thing over and over again where even though we are never violating anything within the terms and conditions, we continue to get penalized for just trying to spread the goodness of functional mushrooms, which is absolutely ridiculous,” McPherson said in an interview.

McPherson said that Fungtion’s ads “get throttled back,” making either the cost per click skyrocket “for absolutely no reason,” or outright rejecting the ads despite not violating any of Meta’s terms or conditions.

Fungtion sells a 30ml tincture, that it says supports energy, libido, cognition and sleep, for $36 without a subscription.

Based on her past experience in the space, McPherson is anticipating Fungtion’s Instagram account being shut down soon when the brand scales up its advertising efforts on the platform.

Fungtion is, according to McPherson, ready to spend “tons and tons and tons of money” on Meta advertising, but the brand has been discouraged from doing so due to its experience thus far.

Due to the way Meta treats functional mushroom brands, Fungtion could not only lose out of tens of thousands of dollars in sales per week if ads get shut down, per McPherson, but is also losing “the opportunity to really reach people that deserve to have these products.”

“It really is a signal that the way that advertising is done in this space is going to have to change—and change pretty rapidly, because there's a lot of money in this space,” McPherson said, adding that Fungtion has had more success advertising with podcasts and newsletters.

A Meta spokesperson told Ad Age that both the Fungtion and Alice accounts are now back up and able to run ads.

In this article:

Phoebe Bain is a senior reporter at Ad Age, covering influencer marketing and DTC brands. Bain joined Ad Age in 2022 after founding Morning Brew's Marketing Brew vertical, where she also covered influencer marketing. Previously, Bain worked at Social Media Today under Industry Dive, as well as Business Insider.