Cannabis Ads Get Standards From Industry Group

Advertising Law

Aiming to establish “a trustworthy, professional and ethical business space,” the cannabis industry’s self-regulatory organization finalized its first Advertising Standards.

Calling cannabis advertising “the public face of the industry,” the National Association of Cannabis Businesses (NACB) designed the standards to protect consumers and demonstrate to regulators, financial institutions and the public that its members operate at the highest levels of ethics and responsibility, the group said.

The standards—which define an advertisement as “any written or verbal statement, illustration, or depiction that 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”—mandate the inclusion of several statements in cannabis ads.

Advertisements must include a statement that the product is for use only by adults (for retail cannabis products) or that the product is for use only by authorized patients (for medical cannabis). In addition, advertisers must include a warning that there may be health risks associated with the consumption of the product and that there may be additional health risks for women who are pregnant or breastfeeding.

An advertisement may describe the cannabis product itself or an intended physical or psychological effect of cannabis if the statement includes a warning that the effects may vary by consumer and the warning has not been approved by the Food and Drug Administration.

The standards prohibit any false or misleading statements and ads that disparage or degrade individuals on the basis of race, gender, religion or orientation. Also banned: the depiction of any person “inhaling, exhaling or ingesting” cannabis or cannabis products; ads intended to encourage underage persons to consume cannabis; advertising that specifically targets persons located outside the licensing state; and the use of a cartoon character, toy, mascot, brand sponsorship, logo, animal, celebrity endorsement or any other depiction that targets an underage person.

However, the standards do permit endorsements that do not target underage persons as well as depictions of the external use or application of topical cannabis products (such as lotions or salves).

Minors cannot make up more than 15 percent of the audience composition for television, print, radio or Internet advertising or an event featuring a cannabis ad, while any direct individualized communication requires a method of age affirmation to verify the recipient is not underage. Product placement in movies, television shows, live performances, commercial films, and videos or video games requires “reliable evidence” that no more than 15 percent of the audience is reasonably expected to be underage.

Digital ads must employ a “neutral age-screening mechanism,” and if the advertisement is intended to be forwarded by users, it must contain instructions that it should not be forwarded to underage persons. The use of a check box stating “I am over 21 years old” would not be considered a neutral age-screening mechanism, according to the NACB, although a text box or drop-down to enter the user’s full birth date would suffice.

The standards also prohibit pop-up ads for cannabis products as well as digital marketing directed toward location-based devices, unless the owner of the device is not underage and the advertising includes a “permanent and easy” opt-out feature.

Although advertisements on public transit vehicles or shelters are banned under the standards, the self-regulatory group permits event sponsorship if the event is not targeted at underage persons and reliable evidence exists that no more than 30 percent of the audience is reasonably expected to be underage.

Cannabis businesses may offer price discounts or gifts based on loyalty programs that comply with applicable law, but gifts or prizes based on proof of purchase are not permitted. If state law allows cannabis businesses to create or disseminate cannabis-branded merchandise, the NACB requires that they comply with the other provisions of the standards (with the exception of offers or sales to underage persons, which are banned).

The standards require that cannabis businesses maintain “clear and complete” records of their advertising activities—and audience composition data—for a period of no less than two years.

To read the NACB’s Advertising Standards, click here.

Why it matters: Self-regulation not only allows the industry to demonstrate its commitment to operating at high levels of ethics and responsibility, but also heads off governmental regulation, the NACB explained. “It is important that the cannabis industry develop a robust set of business-approved guidelines to build trust amongst market participants and local, state and national regulators,” Eugene Morgulis, director of NACB’s Legal and Strategic Initiatives, said in a statement. “With consumer-targeted ads becoming more prevalent, we need to self-regulate or we will face charges by heavy-handed government-driven rules that may hinder business’s ability to market to and educate consumers.” Noncompliance with the Advertising Standards “can result in expulsion from the NACB or other consequences,” the group warned.