Like tobacco, alcohol, adult entertainment, and all other vices strictly regulated by the government, the cannabis industry has been forced to contend with a variety of time, place, and manner restrictions governing the advertising of cannabis products. Arguably, the primary purpose of these regulations and restrictions, which are continuously in flux and State-dependent, is to ensure that minors are not excessively exposed to (and thereby enticed to purchase) cannabis goods. As cannabis startups design advertising campaigns to push their products to market, it is absolutely essential that these marketing campaigns are fully compliant with State law.
Unfortunately, State regulatory systems across the country have been notoriously scattered and ineffectual at developing and articulating these rules. The State of California, however, has done quite a good job outlining the advertising rules, albeit with rigorous terms that should make any company’s compliance officer think twice before approving a cannabis advertising campaign.
California’s Advertising Restrictions – Straight from the Government
California’s Business and Professions Code (BPC), Division 10, Chapter 15 (26150-26156) lays out the salient rules and regulations for cannabis marketing and advertising in the State of California. There are, of course, quite a few (and nuanced) implications for each law but let’s consider some of the more important features of this legislation.
1. So, what exactly qualifies as an “Advertisement”? According to the bill:
“Advertisement” includes any written or verbal statement, illustration, or depiction which is calculated to induce sales of cannabis or cannabis products, including any written, printed, graphic, or other material, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media; except that such term shall not include:
(1) Any label affixed to any cannabis or cannabis products, or any individual covering, carton, or other wrapper of that container that constitutes a part of the labeling under provisions of this division.
(2) Any editorial or other reading material, such as a news release, in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any licensee, and which is not written by or at the direction of the licensee.
There is a lot to unpack here but please note that “Advertising”, as contemplated by this law, is immensely broad and encompassing. Indeed, the word is meant to capture any such written or verbal statement that is intended to induce sales of cannabis or cannabis products. Therefore, if you are planning on launching a marketing campaign with the ultimate objective of selling your marijuana products (the goal of any effective marketing campaign!), there is a very good chance indeed that your advertising content will qualify under the terms of this bill.
2. Cannabis is legal in the State of California – but not for everybody. According to the legislation:
A Licensee shall not …. Advertise or market cannabis or cannabis products in a manner intended to encourage persons under 21 years of age to consume cannabis or cannabis products.
Remember, just because California is canna-friendly does not mean it wants canna-anarchy. The State has made it exceedingly clear that Cannabis can only be sold to and consumed by individuals of age and in order to ensure that there is not a widespread appeal for the herb among children and young adults, the State takes this particular rule very seriously. Will your advertisement trigger this prohibition? Each advertisement in question will be judged on a case-by-case basis so make sure to contact a cannabis lawyer to discuss your particular circumstances.
Here are a few considerations to start with: Does your advertisement appear in an adolescent-targeted environment like a video game? Does your advertisement contain offers of non-cannabis goods that are otherwise appealing to adolescents? Does your advertisement use a mascot or figure that one may reasonably suspect, attracts children and adolescents? If you answered yes to any of these questions, please reconsider the message of your marketing campaign.
3. Give a Little to Get a Little. Except not in the Cannabis Game:
A licensee shall not give away any amount of cannabis or cannabis products, or any cannabis accessories, as part of a business promotion or other commercial activity.
Traditional marketing strategies often include bearing the short-term cost of giving away free product with the hope of enticing and obtaining long-term customers. The State of California says that this strategy is illegitimate vis-à-vis the Cannabis industry and specifically prohibits providing customers with free weed to allure them into buying cannabis in the future. While tempting, don’t do it.
4. What if my cannabis business is a tech-based, directory platform and involves the advertisement of cannabis products sold by another company? Well, you still have responsibilities.
The law states:
A technology platform shall not display an advertisement by a licensee on an Internet Web page unless the advertisement displays the license number of the licensee.
You might very well be thinking, I started an online platform to promote other companies, so I don’t have to worry about cannabis specific laws! This rule is a rude awakening for those individuals who think they can operate like any normal business, just because they are not actually selling the cannabis themselves. While subtle, this rule conveys that California is treating cannabis companies that are even peripherally involved in the industry as being part of the industry, and therefore subject to idiosyncratic cannabis laws. Presently, this means an affirmative duty for a Canna-directory platform to ensure that the businesses being promoted on the platform are actually licensed to sell Cannabis by the State.
The Takeaway: Cannabis Advertising in California is Tricky
The advertising industry often gets a bad name because of the rather intangible quality of the resulting yield from the advertisement; I spent $10,000 on a billboard – did I really gain any new customers from it? While a healthy bit of skepticism about your advertising agency’s bill is to be expected, the seriousness of California’s Cannabis Advertising Legislation serves to remind us that advertising, if done correctly, really does work. Indeed, California has chosen to place a great deal of emphasis on Spiderman’s original directive that, “With great power comes great responsibility” – if you want to be in the cannabis industry, California says you better do it the right way.
Abe Cohn manages THC Legal Group, a Marijuana Law Firm specializing in the cannabis industry. Their attorneys assist startups, entrepreneurs and established businesses protect their most prized assets. Connect with them to learn more. As always, #PROTECTYOURSTASH
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