Digital Marketing Of Cannabis Products (including CBD) In The U.S. vs. Canada: Which Federal System Is More Restrictive? Is Any Sort Of Digital Marketing Permissible?

September 22, 2018

 

 Earlier in the week, I said that I would review the legal framework governing the digital marketing of cannabis (and related products, including CBD-based products) in Canada.  My intent was then (and still is now) to compare the two sets of federal laws (the U.S. and Canada) and to perform some sort of comparative analysis of the two to determine which, if either, was more or less restrictive.  

 

I must say that my expectation from the outset was that the laws would probably be the same--- permissive in nature with some restriction on targeting under aged or out-of-state users.  This would, in my opinion, represent a very sensible way of regulating what we in the U.S. call “commercial speech”; commercial speech being included in those bundle of rights embodied by the First Amendment to the U.S. Constitution. 

 

Discussion

 

As it turns out I was right, the laws are generally the same; but from the opposite end of the spectrum; that is, both federal systems are "somewhat restrictive", with Canada clearly leading the way by a long shot.  The main difference I found between the two policies centered on enforcement; and not the extent to which ads promoting cannabis were against the strict letter of the law in each case.   It should be noted that another key difference between the two systems is that Canada exerts broad content-based restrictions that make it virtually impossible to digitally market these products--- even to permitted users.  

 

As I mentioned above, the chief distinction between the two systems lies in the nature and extent of enforcement.  In the U.S., federal laws concerning digital marketing are not strictly enforced in deference to the states that permit some form of legalized cannabis sales.  In Canada, on the other hand, the policy is to enforce the strict letter of the law (which essentially precludes any form of digital marketing), and this strict enforcement policy is not expected to change even after passage of the Cannabis Act--- the law which will formally legalize recreational use of cannabis in Canada (expected to pass in October, 2018).   

 

Since most of the regulation relating to the digital marketing of cannabis in the U.S. occurs at the state level (which will be discussed in future posts), this article will be exclusively devoted and focused on a comparison of the two federal systems.

 

The U.S. Policy

 

In the U.S., the digital marketing of cannabis (as a matter of federal law) is governed by the Controlled Substances Act of 1970, as amended (the “CSA”).  Under The CSA:

 

“It shall be unlawful for any person to knowingly or

intentionally use the Internet, or cause the Internet

to be used, to advertise the sale of, or to offer to sell,

distribute, or dispense, a [Schedule One] controlled

substance where such sale, distribution, or dispensing

is not authorized by this subchapter or by the Controlled

Substances Import and Export Act.”

 

 Thus, under the CSA, there's no such thing as a legal cannabis advertisement.  Obviously, this blanket prohibition is not strictly enforced in the U.S., which is why cannabis websites are permitted; and social media pages and posts related to cannabis are permitted by most social media sites (Facebook, LinkedIn, YouTube, etc.).  It should be noted, however, that there appears to be a prohibition against sponsored and/or paid ads (i.e. Facebook and Google AdWords).  This gives us great insight into the workings of the U.S. federal policy from a practical standpoint.  Because banking law is dominated by federal law, none of the social media sites appear to be willing to accept money that could be considered proceeds from illegal drug trade (which is the current federal policy).  This would explain why free posts promoting cannabis are permitted and paid/or sponsored ads/posts are not permitted.   Of course, this is just speculation on my part.

 

Finally, it should be pointed out that most (if not all) states that permit cannabis (to some extent) have enacted laws that permit digital marketing of these products, subject to reasonable restrictions concerning targeting under-aged or out-of-state users.  To the extent there are any content-based restrictions at the state level, those regulations relate to content targeting under-aged or out-of-state users.    This is because in the U.S., "commercial speech" is afforded a high level of protection under the U.S. Constitution.   A discussion of the respective state laws will follow in future posts. 

 

The Canadian Policy

 

The Canadian policy is much stricter than the U.S. policy.  Canada’s Cannabis Act establishes very broad content-based prohibitions that would be unconstitutional in the U.S., in my opinion.  Specifically, the Cannabis Act prohibits any mention of cannabis in any digital content, including ads of any cannabis-related products (i.e. drug paraphernalia, pipes, vaporizers, etc.).  The content-based restrictions are quite extensive.  They essentially prohibit any form of marketing of the products that promotes cannabis in any way that  "could be appealing to young persons," or "in any way involving the use of testimonials or celebrity endorsements" or "mascots"--- even when these ads are targeted at permitted users.  Finally, any form of false advertising is forbidden, along with promotions that run in foreign media.  The law goes on to say that it is unlawful:

 

“to present a cannabis product — or even cannabis

"brand elements" like brand names, logos, or

slogans —in any way that "evokes a positive or

negative emotion about or image of, a way of life such

as one that includes glamour, recreation, excitement,

vitality, risk or daring."

 

I would say that this definition covers pretty much any and every form of creative digital marketing to which I am aware.  Moreover, this represents a level of regulation of commercial speech which would be unconstitutional, in my opinion, here in the U.S.  Therefore, to those digital marketers to the north that seem to be looking for some “loophole” to creatively market cannabis in Canada, I am sorry to say that… “there ain’t none” (as we say here in the U.S.).  And, what’s worse is that I don’t anticipate that there will be a change in Canadian federal policy any time soon.

 

Conclusion

 

So, to recap, the U.S. federal government prohibits digital marketing of cannabis under the CSA, but this policy is not strictly enforced in deference to the states permitting medicinal and/or recreational use of cannabis.  To the extent that Google and Facebook do not permit paid advertising of cannabis, this appears to be a matter of company policy in deference to U.S. federal banking laws.  This would account for the fact that cannabis companies can maintain a fairly large “free” or “organic” digital footprint promoting cannabis (and related products) consisting of a web site(s), social media pages (owned and managed by the cannabis company), including YouTube videos, subject to restrictions concerning targeting under-aged or out-of-state users. 

 

In Canada, if you so much as mention the word cannabis, or shape your lips as if you are going to say the word cannabis in a video (or some other form of digital communication), the Canadian federal government can (and probably will) slap some handcuffs on you, and throw you in jail, combined with a stiff fine.  Of course, I am being facetiously hyperbolic to some extent, but not by much.  Please don’t write any snarky replies to me because I am totally joking.

 

Parting Thoughts

 

What is interesting here is that the right to free speech in the U.S. is so essential to what it means to be American, the federal government never could enact the sort of content-based laws that are quite prevalent in Canada. 

 

Also, I would like to acknowledge Angela Smith, without whose contribution to this article, I would not have been able to adequately write it.

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