Advertising & Marketing Cannabis Businesses In California
Many cannabis businesses have expressed concerns about advertising and marketing their business after Jan 1, 2018. These concerns stem from the restrictions in California’s primary cannabis regulation, the Medical and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) which was created by the passage of SB 94. MAUCRSA is the latest consolidation of California’s cannabis laws. Put into effect in July of 2017, MAUCRSA will rule the commercial cannabis landscape come 2018.
MAUCRSA is restrictive throughout, and the rules surrounding advertising and marketing cannabis businesses are no exception. The draconian restrictions remind us of the Reefer Madness mindset that many hoped was going to disappear following legalization.
REQUIRED BY MAUCRSA
California requires certain things in cannabis advertising, and forbids others. First, all advertising must be truthful. Not only do cannabis businesses have to make truthful claims in their advertising, but any claims must be appropriately substantiated, which means business owners have to back up their claims. Second, all cannabis advertising has to clearly identify the cannabis company. This means the cannabis business’ license number must be included in all advertising and marketing.
Pretty simple right? Tell the truth, and make sure to include your name and license number. If only it were that simple…
On top of having to be truthful and identify the cannabis business, MAUCRSA requires additional measures for television, radio, print, and digital advertising. If a cannabis business advertises through any of these channels (which they almost certainly will), then the advertisement can only be displayed where at least 71.6% of the audience is over 21 years old. This extra hurdle will apply to the bulk of cannabis advertising, and getting over this hurdle will be a key to success for cannabis businesses in California.
PROHIBITED BY MAUCRSA
At its core, MAUCRSA is really about telling cannabis businesses what they can’t do. So there are far more cannabis advertising prohibitions than there are requirements.
Not only must cannabis advertising be true and substantiated, it also cannot tend to create a misleading impression. Regardless of whether an advertisement is true or false, if it could be misleading it is probably not allowed. A skilled cannabis business lawyer can help keep a marketing and advertising campaign compliant with this hazy standard.
Also, cannabis advertising cannot be inconsistent with the brand or product’s label. This includes claiming that cannabis originated in a particular place or region that is not indicated on the product’s label. For example, a company advertising that their cannabis is from Humboldt County needs to have that on the label and the product has to have actually been grown in Humboldt.
Cannabis businesses cannot advertise or market in a manner that encourages use by people under the age of 21. Beyond not encouraging use, cannabis advertising also cannot be attractive to children. What this means has yet to be determined, but could be anything from cartoon-style imagery to celebrity endorsements. Businesses will have to consider the impact of their advertising and omit anything that could be attractive to children.
And for those of us who were picturing driving down a highway lined with seeing cannabis billboards everywhere are going to have to take the backroads for our vision to become a reality—California’s interstates will have a blanket ban on cannabis billboards.
Finally, cannabis businesses will not be allowed to give away any cannabis products or accessories. It appears that branded “swag” such as shirts and hats can be given away, but not such things as grinders or rolling papers that are cannabis accessories. We are currently helping clients develop MAUCRSA-compliant marketing campaigns so they hit the ground running on day one.
WHAT IS ADVERTISING AND MARKETING?
So exactly what do these restrictions apply to? In short, MAUCRSA impacts everything a cannabis business does to promote their product. While the law distinguishes between “Advertising” and “Marketing,” the regulations apply equally to both.
Advertising is anything a cannabis business communicates to the world to generate sales. This includes written or verbal statements as well as illustrations. These could be a storefront sign, a billboard, or a radio/tv ad.
Marketing is the act of promoting or selling cannabis products. This means that marketing extends beyond advertising to include all promotional activities, such as the sponsorship of events, point of sale advertising, and giving away branded merchandise.
MAUCRSA explicitly excludes two things from its definition of advertising. The first is the label and any included packaging attached to a cannabis product. The second is any editorial or reading material, as long as the business neither paid for the article nor wrote it themselves.
While the label and included packaging are excluded from MAUCRSA’s Advertising and Marketing provisions, they have their own regulations, which will be covered in an upcoming article.
These are only some of the restrictions that will be enforced as of January 2018, but it is clear that cannabis advertising and marketing will be heavily regulated. Cannabis businesses will have to be meticulous about their marketing plan in order to navigate this regulatory environment. Those businesses that succeed will have mastered the art of appeasing the state while creating value for their customers. The guidance of a forward-thinking cannabis business lawyer will be critical to survival in an industry transitioning from Wild West to Wall Street.