The cannabis industry is taking off — especially in California. Not only are direct-to-consumer cannabis businesses finally marketing their mark, but business services companies that support the cannabis industry are also thriving.
And yet, plenty of barriers remain.
Many cannabis businesses struggle to obtain financing and banking services because of steadfast federal laws criminalizing the product. Even with legalization and decriminalization, the industry is heavily regulated. There are even limits to when, where, and how cannabis businesses can advertise.
One advertising expert who serves the cannabis industry said, “about 80% of what you can do in the advertising world is locked off from the cannabis world.”
This has caused cannabis companies to focus on under-the-radar marketing tactics. For example, in 2017, one study revealed that “Word of Mouth” was still the most effective marketing method among 27% of “plant-touching” businesses and a surprising 38.2% of ancillary cannabis businesses, according to respondents.
As states continue to flesh out their regulations, some of these barriers may fall. But likely, cannabis and the advertising of cannabis products will continue to be regulated like the alcohol and tobacco industry.
If you’re a cannabis business or ancillary cannabis business operating in California, here’s what you need to know about current laws regulating California cannabis advertising.
Determine Whether You’re Placing a “Cannabis Advertisement”
According to amendments made to Section 2651 of the California Business and Professions Code, a cannabis 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, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media.”
Essentially, if your advertisement may lead to the sale of a cannabis product, you must adhere to the rules.
Some ancillary businesses may not be burdened by these rules. For example, a company that provides software to cannabis product manufacturers and distributors can probably operate just like any other business. But if your ads depict cannabis plants, make implications about cannabis consumption, or even mention cannabis, you need to comply.
Check Your Audience Data
If you intend to place an advertisement on television, radio, print, or in a digital communication, you have a legal responsibility to be reasonably sure your audience is over 21 years of age. More precisely, your ad is only permitted where at least 71.6% of the audience is reasonably expected to be over 21.
This may sound like how the tobacco and alcohol industries are regulated, but there’s one glaring difference. Typically, it is the broadcaster who must meet this obligation. In this case, it’s the responsibility of the business placing the ad.
This places an enormous burden on cannabis companies, many of which are still in the startup phase. But advertising is not impossible. With the right guidance, you can still get a positive ROI from your ads.
Always Be True to Your Product
Even if you don’t sell cannabis products outright, you cannot say anything misleading about your product or service. This is true across the board when it comes to advertising, but bad advertising practices are highly scrutinized in heavily-regulated industries like the cannabis industry.
For example, you cannot imply that your products lead to any type of health benefits unless this is backed up by publicly available scientific evidence. There isn’t much leeway when it comes to this rule.
Even though numerous health benefits have been informally attributed to CBD oil, the science isn’t settled yet. Manufacturers, distributors, and advertisers of such products cannot imply CBD oil has any specific health benefits.
Keep an Eye on Federal Law
As far as the federal government is concerned, if a product is legal, it can be advertised.
However, cannabis consumption and cannabis itself are still illegal under federal law. Under the Controlled Substances Act (CSA), it is illegal to place ads for the sale of illegal substances. Doing so can even result in jail time.
That being said, no business has ever been prosecuted for putting out cannabis ads in states where cannabis is legal, as long as they have followed state regulations. The federal government could technically prosecute businesses for cannabis advertising, but there isn’t much impetus to do so. The feds have more important things to worry about.
Additionally, attitudes about cannabis are quickly changing. Once thought impossible, if the momentum of legalization and decriminalization continues, bills could emerge in Congress soon that legalize cannabis across the country.
The Bottom Line on Cannabis Advertising
If you are placing a cannabis advertisement, know your audience. Make sure your advertisement is only going to be seen by Californians who are over the age of 21. Always tell the truth about your product, and steer clear of any information that could be construed as misleading or ambiguous.
If you follow California’s regulations on cannabis advertising, there is very little risk of running afoul with the law.
If you need help navigating the law or implementing best practices in your cannabis marketing, Contact us at ReadyGreen today. We can also help you grow your traffic, leads, and sales.
