With the first retail sales of adult-use marijuana slated to take place in just a few months, the Massachusetts Cannabis Control Commission is working overtime to regulate an industry that some project will exceed $1 billion in revenue by 2020.
As the July 1 target date for the opening of retail cannabis shops approaches, one area that will undoubtedly become a focal point is the ability of retailers to market their wares.
Not surprisingly, the commission has already begun to craft detailed regulations specific to the retail cannabis industry, including regulations regarding advertising practices. The commission’s draft advertising regulations fall broadly into four categories: a) regulations prohibiting false or misleading claims; b) regulations seeking to restrict advertising to anyone under 21 years old; c) regulations limiting conspicuous advertising; and d) regulations warning of potential risks associated with marijuana consumption.
False or Misleading Claims
The regulations prohibit advertisers from making deceptive, false, misleading or untrue claims. In general, claims made in an ad must be substantiated by reliable and competent evidence.
The commission specifically prohibits advertisements asserting that marijuana products are “safe” or have “therapeutic effects,” unless such claims are supported by “substantial evidence or substantial clinical data with reasonable scientific rigor as determined by the commission.” Any advertisement making health-related claims (such as “reduces anxiety” or “safe pain relief”) are likely to draw attention from regulators and should be avoided unless backed up by strong clinical data. Anecdotal evidence is not enough.
But the focus on claim substantiation should not be limited to health claims. Any claim related to the quality, performance or characteristics of a cannabis-related product is subject to scrutiny by federal and state regulators. This includes virtually any objective, measurable statement about a product — everything from claims that a product is “natural” or “organic,” to claims that the product is the “lowest price” or “best value.”
Age-Based Restrictions
In a move that will significantly curtail the ability of retailers to reach a mass audience, the commission has restricted all advertising, marketing and branding unless at least 85% of the audience is reasonably expected to be 21 years of age or older. This provision was inspired by a similar provision in effect in Colorado (although Colorado cannabis advertisers are required to show only that at least 70% of the audience is 21 or older). The 85% restriction applies to television, radio, the Internet, billboards and print publications, as well as at various events.
However, a retailer’s ability to advertise may still be restricted, even where an audience is composed solely of individuals at least 21 years old. Specifically, the regulations prohibit ads for any “brand or kind of marijuana product” on the exterior or interior of any “licensed premises wherein marijuana products are not regularly and usually kept for sale,” including bars and clubs.
In addition, the regulations restrict advertisements that depict anyone under the age of 21 or that use elements like mascots, cartoons, sponsorships or celebrity endorsements that are “deemed to appeal to a person less than 21 years of age.”
Conspicuous Advertising
Judging from the draft regulations, the commission very much wants to keep promotion of marijuana products on the down-low. Of course, that is contrary to the very purpose of advertising.
Consider, for example, the rules specifying what elements may be used in an advertiser’s logo. While the regulations explicitly allow cannabis-related businesses of all types (cultivators, testing labs, manufacturers and retailers) to use a logo, they prohibit any reference to cannabis, including images and “colloquial references.” Effectively, this means that logos must be composed of elements that give consumers no clue as to the nature of the business.
Other regulations only further hamper advertisers’ ability to engage in anything but the most discreet of ad campaigns. Among the marketing activities expressly prohibited by the regulations are: the illumination of external signage during daylight hours (more than 30 minutes before sundown) or after closing; the use of vehicles equipped with radio or loudspeakers for the advertising of marijuana; advertising of marijuana or marijuana products on clothing, cups, drink holders, apparel accessories, electronic equipment, sporting equipment and novelty items; advertising on or in public or private vehicles and at transportation venues, and; giveaways, coupons or free products.
Warning Labels
Even within the fairly narrow confines of permissible advertising, the regulations require extensive risk disclosures. These warnings are mandatory, right down to the required use of all-caps.
Compared to the succinct warnings often used in alcohol advertising (“Drink Responsibly”), the commission’s proposed marijuana warnings are a mouthful. In addition to the phrase “Please Consume Responsibly,” all ads produced by or on behalf of a marijuana establishment must include a 113-word disclosure focused on risks and uncertainties associated with cannabis consumption, as well as at least two additional warnings.
Advertisers should leave plenty of room in their ads for mandatory disclosures.
Neil Austin is a partner in Foley Hoag’s Boston office. His practice is built on a foundation of state and federal trial experience, with particular emphasis on litigating and resolving business disputes, representing clients in government and internal investigations, and advising clients on infrastructure and construction matters.