Cannabis Industry Sets High Bar With Ad Guidelines

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

The National Association of Cannabis Businesses (NACB) recently released a proposed advertising standard for public comment that would place a host of restrictions on ads for cannabis products.

Defining an “advertisement” broadly to include any label, editorial or other reading material, educational or instructional material, sign, or identification of the establishment as the sponsor of a charity or public good, the standard would establish several required statements.

All ads would need to include statements that the product is for use only by adults age 21 or older and a warning that there may be health risks associated with consumption of the product, as well as an additional warning for women who are pregnant or breastfeeding. Medical cannabis ads need to state the product is to be used only by authorized patients.

False or misleading statements are prohibited, but advertisers may describe an “intended physical or psychological effect” of cannabis or a cannabis product if it includes warnings that the claim has not been approved by the Food and Drug Administration and that the effects of the cannabis may vary by consumer.

Advertisements “that promote[] excessive consumption” of cannabis products or that represent the product as safe because it is regulated by a state licensing authority or tested by a cannabis testing facility are banned. In states that permit only medicinal use of cannabis, advertisements cannot promote or encourage nonmedicinal use.

The actual depiction of cannabis use would be prohibited (although demonstrations of external use or the application of topical cannabis products would be allowed). Cartoon characters, toys, mascots, brand sponsorships, logos, animals, celebrity endorsements and “any other depiction that targets an underage person or is commonly used to market products to persons under 21 years of age” would also be banned under the proposed standard.

As for audience composition, advertisers would need to ensure that no more than 15 percent of their audience is under 21 years of age in order to promote their products. Any advertising or marketing involving direct, individualized communication or dialogue requires a method of age affirmation, and cannabis establishments may not engage in advertising targeting individuals located outside the licensing state.

On the web, cannabis companies would need to employ a neutral age-screening mechanism before allowing users to access their websites; a text box or drop-down to enter a full birth date would pass muster, but simply checking a box would not. Pop-up ads would be banned, and geolocation targeting limited.

Also prohibited are ads on publicly owned property, public transit vehicles, or shelters, as well as awarding gifts or prizes in exchange for proofs of purchase. Customer loyalty programs that offer price discounts would be permitted, as would sponsorship of charitable, sports or music events as long as the cannabis establishment has reliable evidence that no more than 15 percent of the audience at the event is expected to be under the age of 21.

To read the NACB’s proposed Advertising Standard, click here.

Why it matters: “Advertising is the face of the industry to the public, even to people who are not cannabis consumers, so we’ve made it a priority,” Doug Fischer, NACB’s Chief Legal Officer, told Adweek. “We want to create uniformity.” Comments will be accepted on the proposed standard until May 25. If adopted, the standards would be voluntary for cannabis marketers but mandatory for members of the NACB.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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