Online Advertising and the Cannabis Industry

By: Fabiola Jimenez, Strategic Legal Counsel at Cultiva Law

Advertising in the cannabis industry is inherently difficult. Traditional practices, such as newspaper ad placement, press releases, and radio/tv ads, not only fail to serve cannabis businesses, but also advertising and marketing activities, which now heavily (if not exclusively) rely on online platforms that are actually currently built to block cannabis industry brands. For example, while Washington state law allows marijuana companies to advertise on GoogleAd Words, it is Google who prohibits any advertising or media relating to “recreational drugs.” Similarly, Facebook, who also pushes hard for ad sales, and as many of our clients have discovered, will also not approve even the most mundane of service or informational ads as a result of similar internal policies and functional prohibitions.

However, in this new era of online advertising, new work-arounds are discovered and implemented by industry professionals just as swiftly as the traditional online advertising industry develops and implements new algorithms and policies to stop them. This article explores some of these nuances and ways industry professionals have been able to exploit weaknesses in the system, allowing their brand to speak loud and clear to the marketplace.

But first things first: you cannot sell marijuana products online. Marijuana products, and many cannabis products, must only be sold (and purchased) at physical and licensed retail stores. (Note: Customers in many states are permitted to place a holding order online, but must complete the purchase in person.)

I. Hiring an Advertising or Media Buying Company

In many states – and in countries across the world – cannabis has gone mainstream. As companies develop and begin to capture more and more of this emerging market, ancillary businesses are putting in the work to make their own services available to, as well as productive and viable for, cannabis companies.

One of these such companies is an advertising or media buying company. An advertising or media buying company is a company that works for you and with your budget to negotiate and purchase ad space in the medium of your choosing. Whether its magazines, newspapers, billboards, radio or tv spots, the media buyer will work with you to design and execute an advertising marketing campaign. It is absolutely critical that cannabis companies do their diligence before engaging such an advertising or media buying company, as there are many laws and regulations applicable to the messages cannabis companies are permitted to make, and these rules vary widely from state to state, and from states to the applicable federal authorities. Cultiva Law attorneys are intimately knowledgeable about these issues, having developed these relationships between clients and media buyers throughout the past several years.

While it is important, for both cannabis businesses and media buyers, to understand the laws and regulations behind the industry before engaging a firm or pitching new clients, respectively, it is equally important for cannabis clients to understand the underlying analytics and, at a minimum, the overall ROI of the buyer’s advertising efforts.

II. Do It Yourself: Appealing Online Denials

Many cannabis companies are frustrated with these prohibitions, particularly hemp-exclusive businesses, especially since the passing of the 2018 Farm Bill, which essentially removed CBD from Schedule I of the Controlled Substances Act (where marijuana, and marijuana extracts, including marijuana-derived CBD, remain).

While several larger companies such as Walgreens, CVS and Amazon, recently began stocking their (online) shelves with CBD products – ahead of FDA approval and despite FDA warnings that it is improper to do so – unfortunately, many smaller companies feel powerless to act in defiance of the express policies of Facebook or Google, among others. But such companies should not give up simply because they do not have the resources or clout of these multinational retail giants – simply appeal!

In short: If your product gets flagged by Amazon, always appeal. It costs you nothing and Amazon, too, wants to be able to sell your product. Therefore, there are teams inside Amazon working hard to get your product approved for sale – not to deny it – but they cannot begin this second-level approval process until you submit the appeal. Therefore, as a rule, always appeal any rejections or denials your company may receive online. Many online companies are simply playing “catch-up” with new laws and policies, so if cannabis companies are persistent, they may be able to be one of the first brands to consistently offer products on those online platforms.

III. Third-Party Partnerships: Influencers

The cannabis industry is new, the internet is becoming more and more fundamental to our basic functioning as individuals and a society, and many advertising practices have been rendered outdated and ineffective. Enter: influencer marketing. Influencer marketing is when a company partners with an individual known as a brand ambassador, or “influencer,” who then promotes the brand through their own channels and networks.

While brand partnerships are not new to the digital era, brand partnerships and influencer marketing are some of the premiere methods of advertising utilized today, for both traditional and nontraditional industries, and may be cannabis companies’ best bet to obtaining the greatest brand exposure.

Influencer marketing plans can come in all shapes and sizes though, generally, the more brand ambassadors a company engages, the more reach that company will have. However, companies should not forget that quality is far more valuable than quality, and that they should have its own, single, and central social media site or landing page through which all followers should ultimately be funneled through the influencers’ activities in order to leverage the greatest ROI.

IV. A Final Reminder: Required Disclosures

Once a company determines through which channels it will advertise or otherwise market a cannabis or cannabis-related product, it is not free to create and publish any content that it wants. There are specific rules imposed at state and federal levels requiring certain content be included, and strictly prohibiting other content.

Cannabis companies should be sure to familiarize themselves with all of the additional applicable state and federal rules that apply to such activities. For example, in Washington, the Washington Administrative Code (“WAC”) section 314-55-155 requires certain disclosures for cannabis-related advertising. Companies in Washington, therefore, must include the following (or similar) language on all advertisements: 

Content is for adults 21+ and over. This product has intoxicating effects 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. Keep out of reach of children.

Since social media relies heavily upon aesthetics, cannabis companies have the option of adding this type of disclosure to the top of their webpages, in the caption of their post(s) or picture(s) on photo-based social media sites, or elsewhere where it is conspicuous to visitors to your site (and, also, to investigators). Regardless of where companies place these required disclosures, the language should be consistent and comply with all of the requirements of your state, and applicable federal authorities (the FDA, for example).

Finally, as both Cultiva Law attorneys in this blog and the FDA have repeatedly stated, cannabis companies (and companies in all other industries, for that matter) must never make medical claims. This is one of the major reasons why ads are rejected or denied, and arguably the only reason you will be targeted by federal authorities (with respect to the sale of CBD-products) to date.

Be creative, be engaging, but do not violate the law.

If you have any questions regarding your content, send us an email at Cultiva Law. We will gladly provide a website or social media audit to review your content, risks, and provide options for remedying any problematic content.

Cultiva Law

Disclaimer: The contents of this blog is considered an advertisement under CA law. The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Cultiva Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

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