For branded cannabis products entering the California market, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), passed on June 27, 2017, imposes restrictions on how and where cannabis products can be advertised. The main limitation mirrors many other jurisdictions by prohibiting advertising that could potentially target underage users. Reducing exposure and use among minors is the most significant basis for similar restrictions in other regulated cannabis states.
Recently however, the California Senate Committee on Business, Professions, and Economic Development moved forward with Senate Bill 162, which, if passed, would impose additional restrictions on cannabis advertising. The biggest change would include a prohibition on cannabis licensees from advertising medical or recreational cannabis or cannabis products "...through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product." Legislators argue that the use of merchandise creates an element of cultural acceptability and exposure that leaves underage people exposed to harmful influence, which studies show for alcohol and other substances lead to an increase in underage use.
The language of this bill is much broader than cannabis advertising restrictions in other states like Colorado and Washington. Colorado, which does not directly regulate merchandise, has a general regulation of any type of advertising that has a high likelihood of reaching minors. Washington is more restrictive, and even imposes limitations on cannabis merchandising, but they include additional language that make the restriction more narrow in scope and provide alternate channels for the sales of cannabis merchandise through non-licenses holding affiliates or third parties.
Opponents of SB 162 argue that the existing law already prohibits advertisements that may have the ability to impact underage consumers, and even limits where certain merchandise can be sold. Many businesses feel that these additional regulations amount to an unreasonable government restriction on the commercial speech of cannabis licensees. They also argue that the additional language is vague and overbroad, and would create uncertainty in the marketplace as to what type of advertising is acceptable. As an example of potential confusion, would a dispensary named “Green Wellness” be able to sell t-shirts with its business name because it is not a product? Would using the dispensary or company name be considered advertising recreational cannabis in a more broad sense? Questions also come up related to dispensary employees wearing branded apparel in the store. Would this be considered advertising using merchandise? These questions point to why many cannabis businesses feel that the wording of SB 162 is a problem and why many feel that this additional language is an unreasonable government restriction of their 1st Amendment rights.
The proposed bill is set for an assembly wide vote later this fall, and if passed, it is sure to bring with it legal challenges based speech protected by the 1st Amendment and California’s state free speech laws.