The Case for National Pot Ad Standards Before Pot Is Legal Nationally

The National Association of Cannabis Businesses' draft guidelines to establish a country-wide advertising standard for the marijuana industry was the subject of a months-long comment period and is expected to be finalized this summer. Doug Fischer, chief legal officer for the NACB, believes such a criterion is needed as soon as possible, even though cannabis remains illegal on a federal level.

In his words, "The time to do this is now."

The draft includes rules against making false or misleading statements and an edict against creating any advertisement "that includes a cartoon character, toy, mascot, brand sponsorship, logo, animal, celebrity endorsement or any other depiction that targets an underage person or is commonly used to market products to persons under 21 years of age."

Despite the proliferation of polls showing that the majority of Americans want pot prohibition to end, Fischer doesn't see the administration of President Donald Trump and Attorney General/renowned pot hater Jeff Sessions legalizing commercial marijuana sales anytime soon.

"I think we're a ways off from the possibility of having a federally regulated cannabis industry, or a comprehensively regulated one, at least," he acknowledges. "The bill that's gathered the most momentum or support in Congress so far has been the STATES Act from senators Elizabeth Warren and Cory Gardner, which essentially says marijuana isn't subject to the Controlled Substances Act in states that have legalized it and implemented a regulatory regime. But even if that were to become law, there would be a patchwork of state regulations with varying degrees of effectiveness for both the business community and public safety."

For that reason, he continues, "it behooves the industry to really seize control of the regulatory future and put out standards we believe it would make sense for states to adopt. And if the federal government does get involved, those standards also have the possibility of serving as the standard for the federal regulation of cannabis."

Making such guidelines even more necessary, in Fischer's view, is "the momentum we're seeing from states already heading in the direction of legalizing recreational cannabis sales, particularly on the East Coast. Massachusetts will be recreational — the law passed in 2016, and there will be an active market this summer. And for other states, that could speed up the process. I predict it will happen whether the STATES Act becomes law or not."

As such, the NACB's goal is "to really influence what the state regulations look like and provide some stability within each state, and from state to state. All the states are rightfully experimenting with their regulations and change them annually, if not more frequently. They're still figuring out what's most effective. Our hope is that our standards demonstrate what some of the most effective ways to regulate can be, so there can be less constant change in regulation."

In this respect, "Colorado is a model," Fischer believes. "It's the most mature of the regulatory systems. But even they have taken different approaches to regulations. There will always be some variations until this becomes a purely federal industry. But we can minimize the differences, eliminate rules that are ineffective and strengthen those that work best to protect the public."

Not that there's been universal acceptance of the draft's language. Taylor West, senior communications director at COHNNABIS, a Denver-based cannabis marketing agency, has called into question a passage that reads: "A Cannabis Establishment shall not publish or otherwise disseminate an Advertisement via television, print, radio, the internet or an event unless it is reasonably expected that no more than 15 percent of the audience is under 21 years of age." After all, Colorado statutes, which are seen as among the tightest in all the states that have legalized limited recreational cannabis sales, set that number at 30 percent — twice as high as the NACB suggestion.

In response, Fischer says, "we want to strike the right balance between what's helpful for the industry and what protects public safety. The reason our members agreed for the purposes of the draft to the 15 percent audience is that there's data around tobacco that says there's a difference in youth use based on that kind of restriction and marketing. But I can understand that there are valid reasons for it to be 30 percent-70 percent or 28 percent-72 percent, as California's is."

The NACB will "take up that issue with our members," he continues. "But it's important to understand that the industry can put itself into a bad situation if it's not very careful about its public face. Look at e-cigarettes, which, because of unforced errors on that industry's part, has seen FDA enforcement actions. So we're still considering the 15 percent rule — but it's important to realize that what may seem to be burdensome and restrictive could actually help grow these businesses over the long term."

The NACB membership has already voted to adopt national labeling standards, which are scheduled to go into effect in November; click for more details. Fischer sees advertising guidelines as the logical next step, "so we can demonstrate that our members are among the most responsible, compliant and ethical businesses out there and show regulators a set of rules that's both effective and fair."

Continue to read the National Association of Cannabis Businesses' draft advertising standard.
DEFINITIONS

(1) "Advertise" means the publication or dissemination of an Advertisement.

(2) "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, other periodical literature, publication, or in a radio or television broadcast, or in any other media, except that such term shall not include:

a. any label affixed to any Cannabis or Cannabis Product, or any individual covering, carton, or other wrapper of that container that constitutes a part of the labeling under provisions of these Standards;

b. 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 Cannabis Establishment, and which is not written by or at the direction of the licensee;

c. any educational or instructional material that is not intended to induce sales and that does not propose an economic transaction, but which merely provides information to the public in an unbiased manner;

d. a sign attached to the premises of a Cannabis Establishment that merely identifies the location of the Cannabis Establishment; or

e. identification of a Cannabis Establishment as the sponsor of a charity or public good, including but not limited to, an Adopt-A-Highway program.

Standard 3.01. Signage for Cannabis Establishments.

If a Cannabis Establishment’s signs identifying its premises contain content aside from its business or trade name and location, such as graphics or logos, the additional content shall conform to the requirements in this Article.

Standard 3.02. Required Statements.

a. All Advertising for Cannabis or Cannabis Products shall accurately and legibly identify the licensee responsible for its content.

b. All Advertisements shall include, in substance, the following statements:

1. for retail Cannabis or Cannabis Products, that the product is for use only by adults age 21 or older;

2. for medical Cannabis or Cannabis Products, that the product is for use only by authorized patients;

3. a warning that there may be health risks associated with consumption of the Cannabis or Cannabis Product; and

4. a warning that there may be additional health risks associated with consumption of the Cannabis or Cannabis Product for women who are pregnant or breastfeeding, or that scientific research has not yet established the safety of the use of cannabis by women who are pregnant or breastfeeding.

c. An Advertisement may describe an intended physical or psychological effect of Cannabis or a Cannabis Product only if such statements:

1. comply with the requirements of Packaging and Labeling Standard 2.16;

2. include a warning that the effects of the Cannabis or Cannabis Product may vary by consumer; and

3. include a warning that the claim has not been approved by the U.S. Food and Drug Administration.

Standard 3.03. False or Misleading Statements Prohibited.

a. A Cannabis Establishment shall not make or cause to be made an Advertisement that is false or misleading or that contains false or misleading statements.

b. A Cannabis Establishment shall not make or cause to be made an Advertisement that contains health, medical, or disease claims about Cannabis or a Cannabis Product that do not conform with Packaging and Labeling Standard 2.16.

Standard 3.04. Prohibited Content.

a. A Cannabis Establishment shall not make or cause to be made an Advertisement that promotes excessive consumption of Cannabis or Cannabis Products or cannabis use disorder.

b. A Cannabis Establishment shall not make or cause to be made an Advertisement that represents that Cannabis or a Cannabis Product is safe because it is regulated by a State Licensing Authority, or because it has been tested by a Cannabis Testing Facility. This subsection does not prohibit a Cannabis Establishment from advertising the fact that the Cannabis Establishment is licensed or that its products are tested.

c. A Cannabis Establishment licensed in a state that permits only medicinal use of Cannabis or Cannabis Products shall not make or cause to be made an Advertisement that promotes or encourages non-medicinal use.

d. A Cannabis Establishment shall not make or cause to be made an Advertisement depicting any person consuming Cannabis or Cannabis Products. This subsection does not prohibit depictions of the external use or application of topical Cannabis Products, such as lotions, salves, and transdermal products.

e. A Cannabis Establishment shall not make or cause to be made an Advertisement intended to encourage underage persons to consume Cannabis or Cannabis Products.

f. A Cannabis Establishment shall not make or cause to be made an Advertisement disparaging or degrading the image, form, or status of any group based on ethnicity, race, religion, gender, sexual orientation, or minority or other status.

g. A Cannabis Establishment shall not make or cause to be made an Advertisement that includes a cartoon character, toy, mascot, brand sponsorship, logo, animal, celebrity endorsement, or any other depiction that targets an underage person or is commonly used to market products to persons under 21 years of age.

Standard 3.05. Logos.

a. If the state in which a Cannabis Establishment conducts business has specific requirements regarding logos, the Cannabis Establishment shall comply with the state law.

b. If the state in which a Cannabis Establishment conducts business does not have specific requirements regarding logos, a Cannabis Establishment’s logo shall conform to the requirements in this Article, including Standards 3.03 (False or Misleading Statements) and 3.04 (Prohibited Content).

Standard 3.06. Audience Composition.

a. A Cannabis Establishment shall not publish or otherwise disseminate an Advertisement via television, print, radio, the internet, or an event unless it is reasonably expected that no more than 15 percent of the audience is under 21 years of age. An Advertisement in any media that is intended to be distributed only in a location to which persons under 21 years of age are denied entry meets the requirements of this section.

b. Any advertising or marketing involving direct, individualized communication or dialogue controlled by the Cannabis Establishment shall utilize a method of age affirmation to verify that the recipient is not underage before engaging in that communication or dialogue.

c. A Cannabis Establishment shall not engage in advertising that specifically targets persons located outside the licensing state.

Standard 3.07. Compliance.

a. A Cannabis Establishment that advertises via web page must ensure that individuals visiting the web page are not underage by employing a neutral age-screening mechanism before allowing users to access the website. In this subsection, a “neutral age-screening mechanism” refers to an age verification page or pop-up containing a data entry point that allows users to enter their age accurately, and that restricts or permits access accordingly.

b. A Cannabis Establishment may not engage in advertising or digital marketing via:

1. unsolicited pop-up Advertisements on the internet; or

2. marketing directed towards location-based devices, including but not limited to cellular phones, unless the marketing:

A. is a mobile device application installed on the device by the owner of the device who is 21 years of age or older; and

B. includes a permanent and easy opt-out feature.

a. Digital marketing communications that are intended to be forwarded by users shall include instructions to individuals downloading the content that they should not forward these materials to individuals below the legal age of purchase.

b. When using social media, a Cannabis Establishment shall conform to the requirements in this Article, including Standards 3.03 (False or Misleading Statements) and 3.04 (Prohibited Content).

Notes, Standard 3.07: Simply including a check box stating, "I am over 21 years old" would not be considered a neutral age-screening mechanism, and thus would not comply with subsection (a) of this standard. Conversely, a text box or drop-down allowing entry of the user’s full birth date would suffice.

Standard 3.08. Prohibited Advertisement Placement.

a. A Cannabis Establishment shall not place or cause to be placed any Advertisement for Cannabis or Cannabis Products on publicly owned property.

b. A Cannabis Establishment shall not place or cause to be placed an Advertisement on any public transit vehicle or shelter.

c. A Cannabis Establishment shall not place or cause to be placed an Advertisement on a billboard or similar advertising device located on an Interstate Highway or on a State Highway that crosses the state border.

Standard 3.09. Event Sponsorship.

A Cannabis Establishment may sponsor a charitable, sports, music, or similar event, but a Cannabis Establishment shall not engage in advertising at, or in connection with, such an event unless the Cannabis Establishment has reliable evidence that no more than 15% percent of the audience at the event or viewing advertising in connection with the event is reasonably expected to be under the age of 21.

Standard 3.10. Promotional Gifts.

A Cannabis Establishment shall not offer gifts or prizes in exchange for proofs of purchase. This subsection does not prohibit price discounts based on customer loyalty programs.

Standard 3.11. Cannabis-Branded Merchandise.

a. If the state in which a Cannabis Establishment conducts business does not prohibit Cannabis Establishments from creating or disseminating promotional cannabis-branded merchandise or materials, the Cannabis Establishment may create or disseminate such merchandise or materials, so long as such merchandise or materials conform to the other requirements of this Article.

b. A Cannabis Establishment shall not offer, give, or sell branded merchandise or materials to persons under the age of 21.

Standard 3.12. Product Placement in Entertainment Media.

A Cannabis Establishment shall not directly or indirectly, through payment or other consideration given, promote the use of Cannabis or Cannabis Products in movies, TV shows, live performances, commercial films and videos, or video games, unless the Cannabis Establishment has reliable evidence that no more than 15% percent of the audience is reasonably expected to be under the age of 21.

Standard 3.13. Documentation of Advertising.

Cannabis Establishments shall maintain clear and complete records of their advertising activities, expenditures, and audience composition data for a period of no less than two years from the placement of the Advertisement.

Notes, Standard 3.13: In the case of a billboard or similar Advertisement that is widely visible to the public, the term "placement" in Standard 3.12 shall be construed to mean any day on which such Advertisement was publicly visible. Thus, if a business were to place an Advertisement on a billboard for a period of one year, the two-year period would run from the last day on which the Advertisement appeared on the billboard. In other instances (e.g., publication in a periodical), the two-year period shall run from the day on which the medium containing the Advertisement was first disseminated.