On Friday, April 23, 1999, the lights went out in Times Square—and in countless locations coast to coast—for tobacco advertising. That was the date by which the largest tobacco companies in the country agreed to ensure all cigarette advertisements were removed from billboards, transit locations, malls, stadiums, arenas and just about every other public place, in accordance with a settlement agreement involving most every state and territory in the United States. See The Tobacco Master Settlement Agreement (MSA); https://www.tobaccofreekids.org/press-releases/id_0017.
The so-called Master Settlement Agreement resolved lawsuits between the country’s largest tobacco companies and more than 50 state and territorial attorneys general. Among its principal features was the imposition of significant restrictions on the marketing activities employed by tobacco companies, particularly any advertising and promotion practices that might target or appeal to young people. See https://www.naag.org/our-work/naag-center-for-tobacco-and-public-health/the-master-settlement-agreement/.
Fast forward 25 years to the present, and Pennsylvania seeks to become the 25th state to legalize recreational cannabis for adult use and establish standards for, among other things, the marketing of cannabis facilities and products. With respect to advertising, the proposed Pennsylvania legislation seeks to strike a balance between the ability of a cannabis business to engage in “reasonable marketing and promotional activities” and “ensuring advertising and marketing does not target minors [and] reasonably restricting access to minors by taking steps to ensure the audience will be predominantly over 21 years of age for advertising and marketing.”
To that end, Pennsylvania’s proposed legislation provides that cannabis businesses may generally market themselves, but must avoid advertising activities that contain any statement or image that: is false or misleading; promotes over-consumption; depicts a person under 21 years of age consuming cannabis; makes any unsupported health claims about cannabis or cannabis products; or includes any image designed or likely to appeal to a minor.
The proposed Pennsylvania law defines advertising to include a broad range of media types, including newspaper, radio, internet, electronic media and television advertising. Regardless of media type, marketing activities must ensure the viewing audience will be predominantly over 21 years of age. Billboard advertising is also permitted under the proposed legislation. Billboards have become a significant and highly visible medium for cannabis advertising. Indeed, last year alone, cannabis companies spent $56 million on billboard advertising.
Given the prominent placement of many billboards on highways and other heavily trafficked roadways, and presumably informed by lessons learned from the tobacco advertising practices that ultimately led to the Master Settlement Agreement, states that have legalized adult-use cannabis have implemented varying approaches to whether and on what terms they will permit cannabis advertising on billboards.
For example, California is generally permissive of cannabis advertising on billboards, albeit subject to certain content and location restrictions aimed at promoting safe use and avoiding viewership by and appeals to minors. California’s cannabis advertising rules also contain a somewhat unique prohibition on advertising along any interstate or state highway that crosses California state borders. See CA Bus. & Prof. Code Section 26152(d). California’s neighbor Oregon, meanwhile, likewise allows billboard advertising and imposes similar rules on content, but does not require any restrictions on location. Yet, unlike California, the Oregon regulations mandate specific warnings that must appear on cannabis ads, including that cannabis use is limited to adults 21 years and older, that those under the influence of cannabis should not operate vehicles or machinery, and that cannabis should be kept “out of the reach of children.” See Oregon Administrative Rules 845-025-8040.
Other states are even more prescriptive in their approach to cannabis advertising. For instance, Massachusetts, which began allowing sales of adult-use cannabis around the same time as California, only allows cannabis billboard or other outdoor advertising if “at least 85% of the audience is reasonably expected to be 21 years of age or older.” In addition to billboards, Massachusetts applies this restriction to other modes of advertising such as television, radio, internet, mobile applications, social media or other electronic communication or print publication. Moreover, any cannabis advertisement in Massachusetts must include several conspicuous statements on the face of the ad, including a lengthy warning as well as the phrase “Please Consume Responsibly” and a minimum of two of the following additional messages: “This product may cause impairment and may be habit forming,” “Marijuana can impair concentration, coordination and judgment. Do not operate a vehicle or machinery under the influence of this drug,” “There may be health risks associated with consumption of this product,” or “Marijuana should not be used by women who are pregnant or breastfeeding.”
Other states are even more restrictive. New York, which only relatively recently rolled out its adult-use cannabis law, has an outright ban on billboards for all cannabis businesses. See N.Y. Cannabis Law Section 86. The state permits the use of some signs by cannabis businesses that conduct retail sales or delivery, but such signs must be located on the same site as the business, are restricted in total number, and may contain only limited identification information about the business without the use of logos or images. Other advertising formats, such as internet and print, are subject to additional content and location rules.
As Pennsylvania weighs the pending adult-use cannabis legislation and determines its own approach to what manner of marketing will be permitted for cannabis businesses, it is important to recognize the benefits to all stakeholders in allowing some degree of cannabis advertising. First, it is in the licensees’ interest to be able to advertise their soon-to-be legal businesses given the significant investment they will have made to become licensed and operate in the growing and competitive cannabis industry. Second, it is in the commonwealth’s interest to ensure that licensees are permitted to advertise in order to support the legal operators in this new industry, prevent the proliferation of unlicensed, unsafe and unregulated cannabis sellers in the illicit market, and increase sales within the commonwealth in order to retain the resulting tax revenue and deter the purchase and transport of cannabis products from neighboring states. Third, it is in the public’s interest to promote the aims of the push toward legalization by supporting legal cannabis businesses and knowing where they can find lawful—and regulated—products within the commonwealth.
It is equally important for Pennsylvania to get the regulatory process right once adult-use legislation passes in order to avoid potential legal challenges. Earlier this April, a Supreme Court justice in New York’s Albany County initially invalidated the entire regulatory scheme promulgated by the state’s cannabis regulatory agencies. The following day, the judge scaled back his ruling and invalidated only certain marketing regulations as arbitrary, capricious and unconstitutional. While the final ruling was limited, the court noted that the rulemaking process suffered from significant substantive and procedural deficiencies that could well serve as precedent for future challenges to other cannabis regulations. See Leafly Holdings v. New York State Office of Cannabis Management, (No. 908706-23).
Cannabis companies too should support reasonable regulations that ensure their products are not being advertised to children or in unsafe ways while also allowing for creative and effective marketing. The industry will do well to remember the history of the tobacco companies who, after numerous lawsuits and public opposition, eventually found themselves agreeing to refrain from essentially all public advertising of their products. Reasonable restrictions on content and location could indeed help prevent public pushback, and cannabis operators and regulators alike should consider the effect of pushing the limits of what the public will accept. Take for example a 2020 case in California where a father of two, frustrated by the proliferation of cannabis billboards on the side of the road, successfully sued the state Bureau of Cannabis Control after it allowed cannabis businesses to place billboards along interstate highways in violation of its advertising law, resulting in a more restrictive application of the state’s cannabis advertising location rules. See Farmer v. Bureau of Cannabis Control, No. 19-cv-0597 (San Luis Obispo Super. Ct.); https://www.latimes.com/california/story/2020-11-23/cannabis-billboards-california-highways-court-ruling.
Of course, regulators have a substantial governmental interest in imposing reasonable restrictions on cannabis advertising without infringing on cannabis businesses’ right to engage in commercial speech. See Central Hudson Gas & Electric v. Public Services Commission, 447 U.S. 557 (1980). But, any advertising regulations should be clear, easy for operators themselves to follow and reflective of public sentiment. Such an approach would help avoid regulators having to devote already thin governmental resources to unnecessary enforcement actions or turning the cannabis agency into a fulltime clearinghouse for reviewing advertising copy, while also avoiding some of the legal and public pitfalls seen elsewhere. Reasonable restrictions on advertising, particularly those aimed at deterring interstate commercial cannabis activity, limiting unsubstantiated marketing claims and promoting safe adult-only use, could also prevent the federal government from stepping in to regulate cannabis advertising or restricting the practice entirely. Indeed, the Federal Trade Commission and the U.S. Food and Drug Administration have previously brought enforcement actions in situations involving the marketing practices of cannabis-related business, See https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-sends-cease-desist-letters-fda-companies-selling-edible-products-containing-delta-8-thc, and despite recent pushes to deschedule or reschedule cannabis, it remains a highly restricted Schedule I drug under federal law. See https://www.dea.gov/drug-information/drug-scheduling
It is clear that very soon a majority of states in the United States will have a legal regime for adult-use cannabis, while those states that have already brought adult-use online will have occasion to revisit and refine their cannabis laws and regulations. Allowing for reasonable marketing practices that support legal cannabis businesses can and should be a key focus of legislators and regulators when considering cannabis laws. Such laws should seek to avoid practices that overly burden regulators or invite federal oversight and should recognize the public interest in ensuring that advertising is subject to sensible content and location guidelines that meet community standards and protect the underage population. By striking this balance, both state authorities and cannabis businesses can help ensure the lights stay on—for their ads and their businesses—for a long time to come.
Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.
