Things To Consider Before Accepting Cannabis Advertising

Scott Flick

By: Scott R. Flick,
Pillsbury Winthrop Shaw Pittman

Editor’s note: Washington broadcast attorney Scott Flick has given us permission to reprint a recent post he shared with members of the National Alliance of State Broadcasters Association (NASBA). Here are Scott’s points:

1. Marijuana remains illegal at the federal level, and since broadcast stations rely on federal licenses to operate, the risk for running such ads is most significant for such stations. The government doesn’t even have to prove the station was an accessory to criminal activity; the FCC just needs to determine that airing such ads (along with any other issues) makes grant of such station’s license renewal application “not in the public interest.”
2. Further complicating matters, the Farm Act of 2018 legalized the growing of hemp, thereby legalizing the sale of CBD oil made from hemp as long as the farmer obtained the appropriate authorizations from the Department of Agriculture and followed its rules in growing the hemp. There is a well-reported case from the south where a farmer obtained the necessary approvals to grow 100 acres of hemp. Unfortunately, when planting time came, the proposed acreage was underwater from flooding. As a result, the farmer planted 100 acres of hemp on a piece of nearby land he owned. The feds raided his farm, destroyed the crop, and was contemplating legal action against him for not complying with the terms of his authorization to grow hemp. The lesson here is that not all CBD is legal, and that even CBD derived from hemp is not necessarily legal if it was not grown in accordance with the Farm Act and the Department of Agriculture’s regulations.
3. Assuming you have CBD that was grown from hemp by an authorized grower under the Farm Act, it might still be illegal because (1) its THC content is higher than the 0.3% allowed under the Farm Act, or (2) state/local laws prohibit the sale of CBD, or impose testing and labeling requirements that weren’t met. Also, some states limit the advertising of such products. While these restrictions are likely unconstitutional, most stations don’t want to be the test case. A typical restriction (from Colorado) prevents advertising where a certain percentage of the audience is expected to be minors.
4. If none of the above creates an obvious obstacle, the next issue is the ad copy. If the ad copy uses double entendres and the like to attempt to convey that while the ad is ostensibly about legal CBD, there are many “other” products also available there, a station could find itself in trouble. Words I’ve seen businesses try to slip into CBD ads include “rolling,” “joint,” “high,” and similar terms. It’s like when casino advertising was illegal and hotels with casinos would try to run ads saying “Bored sitting at home? Roll the dice and come visit the Orleans Hotel, where the steaks at your table in our world-class restaurant can’t be beat.”
5. Also be careful of a new trend of listing name brand products in the ad. As cannabis brands start to build brand awareness among consumers, marijuana stores are starting to mention those brands in their ads. This makes life more difficult for broadcasters since they may need to diligence these brands to see if (a) they are even brands of CBD as opposed to marijuana products, and (b) do they comply with the Farm Act requirements in sourcing their CBD? I recently researched 3 brands of CBD based on their websites, and based on those, it looked like one of the three was likely complying with the law, with the other two were misstating the law applicable to CBD sales. A station airing a CBD ad for a store with legal CBD will likely be fine even if that store also sells (federally) illegal content as long as the ad doesn’t make that obvious. But running an ad naming a specific brand that it turns out sells only illegal product deprives the station of plausible deniability if a question arises.
6. Lastly, even with legal CBD products, the FDA has made clear that all health claims made for CBD products are illegal, as they have not been vetted and approved by the FDA. So while that is likely a bigger problem for the advertiser, the FCC, FTC and DOJ have all taken the position in the past that broadcasters have an obligation to not run ads for products that are illegal or which contain deceptive claims (“lose 20 pound in one week”). While there have not been many prosecutions of media entities on that basis, every few years, the federal agencies make that threat, and cannabis might be the product that pushes them to start actually pursuing such advertising.