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In the year since recreational cannabis was legalized, there is one question I’ve been asked more than any other when it comes to assessing the legal compliance of a proposed marketing activity: “Well, how come they get to do it?”

So here’s the answer: They can’t; Or maybe they can; Or, who in the heck knows?

The reality is that the (few) permissions and (many) prohibitions for promotions relating to cannabis products and services is a regulatory minefield, and there has not been enough interpretation and enforcement to reach any definitive conclusions.

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That is not a criticism of Health Canada, the federal government agency responsible for administering and enforcing the Cannabis Act. The creative minds in the cannabis industry know no bounds, so no new regulation could have anticipated every action that flowed from their imaginations. While some may object to a regulatory framework that restricts cannabis marketing as much as tobacco but with none of the permissiveness accorded to beverage alcohol, Health Canada has been measured in its enforcement activity to date.

Rather than impose fines or sanctions for conduct offside of the nascent laws, Health Canada has largely issued warning letters, which indicate a collaborative approach to enforcement. One could argue that the warnings are themselves based on overly narrow interpretations of the law, but the correspondence I have seen lead to three conclusions with respect to legally compliant cannabis marketing activities.

First, the aim of these prohibitions is what the aim of cannabis legalization has always been – keep it away from kids, and don’t encourage consumption or make it look enjoyable. Second, the bar for assessing that compliance is currently really low. Case in point: In the days immediately following legalization last October 2018, New Brunswick’s government-run online portal for cannabis sales was deemed non-compliant by Health Canada because it featured a picture of a woman in a yoga pose. This was considered to associate cannabis with “vitality”, which is a positive emotion, and therefore prohibited.

So, one year into legalization, where would a marketing team start in trying to develop content that is capable of complying with the law?

  • Always begin by asking whether the proposed idea is even promotional at all. The Cannabis Act defines a promotion as a representation about a thing or service that “is likely to influence and shape attitudes, beliefs and behaviours” about that thing or service. Not every single logo placement, social media post or mention online, in print or on air rise to that level.
  • If the brand placement is “promotional”, but is referred to in a literary, dramatic, musical, artistic, scientific or education work, production or performance or a report, commentary or opinion, and nobody paid for the reference to the cannabis brand, then it is not prohibited by law.
  • If the activity is promotional and does not meet an exemption, there are a host of restrictions to navigate. You can’t communicate information about price or distribution. You can’t use testimonials or endorsements (celebrity endorsements are out). You can’t promote the cannabis with depictions of a person, character or animal (mascots are out). You can’t present the cannabis brand in a way that evokes a positive or negative emotion about a way of life, such as glamour, recreation, excitement, vitality, risk or daring (fun is out). And you definitely cannot do anything that could be appealing to kids. The compliance of a strategic collaboration with a celebrity who has already developed a cannabis brand in the U.S. is a topic for another article.
  • In limited circumstances, cannabis “brand characteristics” and factual information about the product or service can be promoted. Communications that are addressed and sent to someone over 18 years old and who is identified by name are allowed (targeted e-mails). Promotions in places where young people are not permitted by law are allowed (don’t confuse an age-gating policy of a venue with an actual legal restriction on access). Telecommunications where you have taken reasonable steps to ensure young people cannot access the content are allowed, as well (think age-gated apps and websites, or digital marketing campaigns that target users who are verifiably over 18 years old). Point-of-sale communications about product price and availability are also permitted.
  • Consider the compliance of the promotion if a brand element is on a tangible item (like an apparel item, not like a website). One brand element of a cannabis product or service is allowed to be placed on a “thing”, provided that thing is not associated with or appealing to kids, or associated with one of the ways of life listed above. This permission in the legislation has led to some of the more visible activations and promotions of cannabis brands over the past year. If you saw a billboard, newspaper or poster promotion of a cannabis product over the past 12 months and wondered how it could be allowed, it was based on an interpretation that that physical media is a “thing”. Interestingly, when Health Canada released its edibles regulations several months ago, they amended this permission by imposing restrictions on the font size for promotions on “things”, all but eliminating billboard and similar forms of advertising.
  • The Cannabis Act does provide for certain permissions for business-to-business promotions of cannabis products and services, provided they are between businesses who legally produce, sell or distribute cannabis products, accessories and/or services.

But there is a third conclusion to draw based on events to-date. One objective of cannabis legalization was to eliminate the illicit market, and that objective will be a challenge as long as marketing activities are restricted, customer engagement is limited and brand loyalty undeveloped. A balance still needs to be struck between discouraging consumption while at the same time directing consumers toward a regulated marketplace.

One year into legalization, we have seen a broad range of marketing activities in the cannabis space. Some have used ingenuity to stay within the confines of the law, others have gone right up to the margins with defensible positions in the absence of regulatory certainty, and some have crossed the line. I hope that open consultation between government and industry continues to evolve before someone is unduly punished for a marketing activity that was reasonably and defensibly structured to be compliant, even if Health Canada takes a different view.

So when you see a competitor executing a marketing campaign that you want to emulate, do not assume that it has been cleared as being compliant. Instead, assume they completed their own risk assessment based on the roadmap laid out here and developed a reasonable, defensible position for that activity being compliant. Then consider your own comfort level with that position, and get the creative juices flowing.

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Chad Finkelstein is a partner at the law firm of Dale & Lessmann LLP (www.dalelessmann.com) in Toronto. He can be reached at cfinkelstein@dalelessmann.com or followed on Twitter at @ChadFinkelstein.

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