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Cannabis Marketing group releases guide as cannabis sector wrestles with new advertising rules

Part of cannabis and small business and retail

A salesclerk in the Quebec Cannabis Society (SQDC) store finishes bagging a purchase as Canada legalizes recreational marijuana, in Montreal, Oct. 17, 2018.

CHRISTINNE MUSCHI/Reuters

Canada’s newly legalized recreational-cannabis sector is grappling with strict rules that limit companies' ability to use advertising to build their brands. On Tuesday, the Canadian Marketing Association will release a guide designed to address questions about the proper interpretation of those rules.

“The legislation itself isn’t completely clear in some areas,” said Sara Clodman, the CMA’s vice-president of public affairs and thought leadership. “We are providing as much guidance as we can.”

In discussions with its industry players − including cannabis producers, the advertising agencies that work with them and others − it became clear that not everyone understands how the marketing rules under the Cannabis Act differ from legislation on tobacco; what types of promotional items are permitted; and other considerations, Ms. Clodman added.

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Since the Act went into force on Oct. 17, Health Canada has provided notice to seven companies that their promotional activities are not complying with the rules. “All regulated parties contacted have addressed, or are in the process of, addressing the issues raised by Health Canada,” spokesperson Eric Morrissette said in a statement. He added that Health Canada generally does not identify companies that take “the necessary corrective measures to bring their activities into compliance.” Mr. Morrissette did not respond to questions about the types of promotions that had caused concern in these seven instances. The companies involved are “regulated parties,” he said, which could refer to licensed cannabis producers or other businesses including cultivators, processors and retailers.

As the CMA becomes aware of precedents set by Health Canada’s enforcement of the rules, it will continue to amend the guide to reflect that information and any other type of guidance that emerges, Ms. Clodman said. The guide was produced by a CMA working group led by Rick Moscone, a partner at Fogler, Rubinoff LLP, and Chris Bolivar, vice-president of brand and marketing with cannabis retailer Fire and Flower. The group included marketers from companies such as BBDO Canada, Torstar Corp., and Pattison Outdoor, among others. The group has not yet been in consultation with Health Canada, Ms. Clodman said, but will consider changes on a continuing basis to what is intended to be a “living document.”

The restrictions on cannabis marketing are comprehensive. The act’s prohibitions include TV and radio advertising; naming a sports or cultural facility; promoting a brand through sponsorship; advertising the price of a product other than at the point of sale; testimonials or endorsements; evoking emotional associations or linking the product to a “way of life," such as suggestions of glamour or excitement, or through sports marketing; using promotional characters; and, of course, appealing to people under the legal age of consumption − which varies from province to province.

“The Government has been clear about the Cannabis Act’s aim to protect public health and public safety. This includes protecting young persons and others from inducements to use cannabis. That is why the Cannabis Act prohibits promotion, advertising, sponsorships, endorsements or other forms of promotion that might encourage young people to use cannabis,” Mr. Morrissette said in a statement.

The CMA guide provides direction on what is permissible, as well as outlining the rules that remain unclear – in which case it encourages companies to consult with lawyers before proceeding. For example, information is permitted on websites, as is some digital advertising, provided it does not contain prohibited content and that “reasonable steps” are taken to ensure minors cannot access that website or access the content in an ad. But a definition of what constitutes “reasonable steps” is not yet clear, the guide says, so companies need to rely on legal counsel when making those decisions.

Similarly, the confusion over “reasonable steps” complicates how companies can use social media, according to the guide: It’s unclear whether it is enough to request that followers of a social-media page are adults. If “reasonable steps” are not taken, only a “brand element” (such as a brand name, logo or other graphic, design or slogan) is allowed to be shown; if steps are taken, then the content can also include promotion of the brand characteristics of cannabis, a cannabis accessory or a service related to cannabis, or factual information about such products or their characteristics. But companies need guidance on what those steps include.

The guide also lays out rules for e-mail marketing and promotions sent through the mail, such as postcards and brochures; promotional items such as T-shirts and key-chains; advertising in adult-only venues; marketing at adult-only events; magazine and newspaper ads; and other methods.

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The guide also recommends that companies document their marketing decisions, in case they have to respond to questions from the regulator after the fact.

“Our goal is to help educate marketers on what the act says. That’s as far as we go,” Ms. Clodman said. “It’s up to companies to speak to lawyers to get advice in terms of how they proceed.”

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