In recent months, the cannabis industry has been battered by proposed Telephone Consumer Protection Act (“TCPA”) class action suits and the message to this industry couldn’t be clearer: cannabis companies, big or small, that are using text messaging face the risk of staggering statutory damages liability if texts are not in compliance with the TCPA. The statute provides for damages of $500 - $1,500 per call or text placed either directly or indirectly to consumers (so that a mere 10,000 violative calls/texts could lead up to $150 million in claimed damages).
More than 15 TCPA class actions suit against cannabis companies have been filed in the last few months around the country. One recent suit was filed just last week in the U.S. District Court for the Central District of California, Christian Lemus v. 2015 Halladay Wellness, Inc. The allegations of TCPA violations in that case are virtually identical to the ones asserted in TCPA class action suits filed against other cannabis companies: Plaintiff alleges, on behalf of a nationwide class, that the company – either directly or indirectly via a third-party marketing service provider – sent unsolicited generic promotional or transactional texts to consumers.
These cases are being brought even though a key element of Section 227(b) of the TCPA (i.e., the definition of automatic telephone dialing system (ATDS) restricted by the TCPA) is set to be decided by the United States Supreme Court in Facebook v. Duguid, with oral argument heard in that matter on December 8, 2020. If the Supreme Court sides with Facebook and holds that ATDS systems are those that sequentially/randomly generate and dial numbers, which various circuit courts have recently found, then ATDS-based litigations could drop. However, if the Supreme Court sides with Duguid and current Ninth Circuit precedent, then ATDS could be defined broadly and TCPA litigation against cannabis companies claiming “robotexts” or “robocalls” will likely continue to increase.
Before sending text messages or placing calls to consumers, even if through a third-party marketing company, cannabis companies may want to consider whether their procedures for placing calls and sending text messages to customers are in full compliance with state and federal laws such as the TCPA.
Under the federal Controlled Substances Act it continues to be a criminal offense – punishable by forfeiture, fines, and imprisonment – to manufacture, distribute, dispense, or possess marijuana, even where state law authorizes its use. Whatever the federal government’s current position on enforcement of federal law, that position does not change the law itself, or negate the possibility that the enforcement position may change.
