California’s Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which was passed in 2017, provided some regulatory guidance relating to how California cannabis businesses could legally market and advertise throughout the state. Over the last year California has made several legislative changes to their cannabis regulations that have changed the standards for how cannabis businesses are regulated. In September 2018 the State passed Assembly Bill 2899 (AB 2899) which amended and clarified guidelines for the marketing and advertising of cannabis goods and services.
Under the original regulations California cannabis advertisements were required to display the corresponding cannabis company’s license number which made it difficult for out-of-state/non-state licensed cannabis brands to advertise their brands in California. AB 2899 did not eliminate this requirement, but some have interpreted the Bill to allow in-state licensees to enter into marketing agreements with out-of-state producers, so long as the resultant advertisements do not “Advertise or market in a manner that is false or untrue in any material particular, or that, irrespective of falsity, directly, or by ambiguity, omission, or inference, or by the addition of irrelevant, scientific, or technical matter, tends to create a misleading impression.” (BPC §26152(a))
AB 2899 specifically amends Section 26152 of the California Business and Professions Code to prohibit licensed cannabis businesses from advertising while their license has been suspended. This new addition imposes a duty on businesses to keep their license status active, as well as to ensure that their advertising campaigns can be immediately ceased in the event that their license becomes inactive.
AB 2899 still defers to local law when advertisements are displayed outdoors, as local cities retain the authority to regulate outdoor advertisements. However, the state does impose minimum requirements on outdoor advertisements, including that they be over 1,000ft from any day care center, k-12 school, playground or youth center.
California’s cannabis marketing and advertisement requirements provide general safeguards to individuals under the age of 21 years by ensuring cannabis advertisements are posted a reasonable distance from areas in which children would typically play or socialize. Further, advertisements shall not be designed in a way that attracts individuals under the age of 21.
Finally, AB 2899 allows brands to advertise and market their appellation of origin, which gives certain brands a competitive marketing advantage similar to those seen in California’s wine industry. The Bill restricts appellation claims by prohibiting brands from advertising an appellation of origin if the product or brand does not originate from that region. We have already seen this impact one of California’s largest vape producers Hmbldt, now known as Dosist, as they were forced to rename the brand since the product and brand do not originate from Humboldt County.
Cannabis marketing and advertising will both be highly scrutinized for their content and it remains in the best interest of any cannabis business to seek outside compliance advisement to ensure their cannabis advertisements comply with California’s continually changing regulations.
California Cannabis Legislation Links:
AB 1793: Overturning Prior Cannabis Convictions
AB 2020: Cannabis Event Licensing
AB 2215: Cannabis for Pets
AB 2402: MJ Consumer Information
AB 2721: Cannabis Testing Laboratories
AB 2914: CBD & THC Infused Beverages
SB 1294: California’s Cannabis Equity Act
SB 1409: Commercial Hemp Cultivators
SB 1459: California Provisional Cannabis License