Smoke Screens: How Legal Issues Cloud Cannabis Advertising

The growing segment faces challenges

Advertising in cannabis is a practice that varies drastically from one state to the next. While some states have not legalized cannabis at all, and many have only legalized it for medical purposes, advertising is only permitted in those states where recreational adult-use sales are legal. As Muse readers know well, much advertising these days—whether cannabis-related or not—is distributed through channels that are not state-specific. Whether the medium is print, radio, television or online, ads inevitably has the potential to cross state lines. Given that the federal government has the exclusive authority to regulate channels of trade across interstate commerce—including internet, radio, and many aspects of TV—the fact that cannabis remains illegal at the federal level complicates the cannabis ecosystem even further.

However, that does not mean that cannabis cannot be advertised. And in fact, opportunities for cannabis advertising continue to expand, as more states legalize adult-use sales and permit dispensaries to open, and as social media platforms change their ad policies. Compliance with these many layers of rules and regulations is not an easy task, yet it is vitally important for companies that aim to reach new customers. Here are a few issues that companies in every state will need to consider.

Please, no cartoons, young people or celebs.

Every state has protections in place to ensure minimal exposure of cannabis products and advertisements to individuals under the age of 21. This applies to both the product-packaging and the media used to promote the products. Designers need to be keenly aware that advertising and product packaging generally cannot be "attractive" to individuals under age 21—so no cartoons, no young people portrayed, no public figures who would draw the attention of young people, and no "bubble-like" or "cartoon-like" fonts. Further, advertisements need to be placed and timed in such a way that there is low risk of an under-21 audience for the ads. Some states require that cannabis companies gather evidence of the audience demographics to certify a minimal presence of individuals under age 21 in the expected audience.

Do your homework about OOH.

Second, some states allow cannabis operators to utilize billboards, while others do not. Some states allow out-of-state cannabis operators to put up billboards in their state, and others do not. Notably, Massachusetts allows substantial use of billboards in the cannabis industry, and many Mass.-based companies have put up billboards in neighboring New York and Connecticut. However, Connecticut recently announced that out-of-state cannabis companies would no longer be permitted to put up billboards within their state lines. Expect the law in this area to keep shifting, as the neighboring-legal-states issue touches on much bigger constitutional questions not fully resolved.

The internet poses special challenges.

Third, the internet presents a huge number of opportunities, yet social media platforms—where much of that opportunity lives—have been slow to adapt to the changing landscape. Meta generally does not permit any form of cannabis advertising, so there is very little that can be done on Facebook or Instagram, besides brand-level marketing or sharing pictures of products with large disclaimers stating that the items are not available for sale. Google only recently changed its policies to allow advertisement of CBD products (i.e. hemp-derived products with no more than 0.3 percent THC content)—but only after advertisers jump through a number of not-insignificant hoops. There is no indication of if or when Google will allow advertising of products containing more than 0.3 percent THC, even in states where those products can be legally sold to individuals over 21. Notably, Twitter recently announced a big change in its policy to allow advertising of a wide range of cannabis products and brands—but curiously, its own guidelines state that "Advertisers may not promote or offer the sale of Cannabis (including CBD-cannabinoids)." So it is unclear how exactly cannabis advertising will work on Twitter.

Radio and TV may prove less than ideal.

Radio and television are in an interesting and less-than-ideal position. Many states allow cannabis licensees to advertise on radio and TV, yet stations operate under license from the Federal Communications Commission, which generally does not allow them to carry ads for products or services that are illegal under federal law. Broadcasters' trade associations are working on this, but it's currently a tricky gray area that cannabis companies need to be aware of before investing significant resources in these media.

Marking your territory?

Fifth, and the last point (though there is much more that could be discussed) concerns trademarks. While cannabis companies that "touch the plant" cannot obtain a federal trademark registration, this does not make them immune from potential trademark infringement issues. Many of us have seen creative attempts by cannabis companies to piggyback on well recognized (non-cannabis) brands, creating packaging that almost looks like a parody of a famous brand's packaging. The owners of these famous brands can and do enforce their trademarks and shut down these cases of infringement. So while it may seem like a fun concept to create packaging for edibles that looks like a well-known brand of gummy candies, designers and the brands hiring them need to consider whether they're exposing themselves to high-dollar lawsuits—and whether doing so is a good idea.

This article was just an overview of some high points in the area of cannabis advertising, and there is much more that can be discussed. Each state has its own unique issues, and interstate issues are still being hammered out through the gray area of federal illegality and constitutional law. We have only just begun to see social media and internet companies make policy adjustments, and we can certainly expect to see these policies evolve as more states open up legal recreational-cannabis markets.

Until then, the best practice is for cannabis businesses, as well as the agencies and designers they hire, to pay close attention to the state-level rules and regulations for the states in which they hold licenses to operate; to review packaging and advertising materials for compliance before printing; and to consult with an attorney who can help guide companies through these ever-changing rules.

The price of not doing so could mean wasting thousands of dollars' worth of packaging material, facing fines and other enforcement, or even putting the company’s license in jeopardy.

Profile picture for user Max Hass
Max Hass
Max Hass is a partner at Parlatore Law Group, practicing in entertainment, intellectual property and business law. He is also a founder of the firm's Cannabis Practice Group. Parlatore is a full-service, nationwide, cloud-based law firm, with attorneys across 20+ states. Max is licensed in Colorado, Louisiana and New York, and he works out of Denver.

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