Barring any last-minute surprises, adults in Massachusetts will be able to purchase marijuana in licensed retail establishments beginning July 1. The state’s Cannabis Control Commission has been working overtime to finalize regulations, including rules for advertising cannabis products.
After a series of public meetings and more than 500 public comments, the commission recently revised and approved regulations first issued last year. This means that the rules for advertising by marijuana retailers in Massachusetts are now set.
However, the clarity at the state level is overshadowed by the continued prohibition of cannabis at the federal level. An advertiser could adhere strictly to the Massachusetts rules and still face potential criminal liability at the federal level. That dynamic poses challenges for marijuana retailers looking to advertise.
Clarity at the State Level
The commission’s draft regulations generally allow marijuana retailers to advertise cannabis in Massachusetts provided that:
– The ads are true and do not mislead consumers;
– Steps are taken to ensure that the ads do not reach anyone under the age of 21 — including ensuring that at least 85% of the target audience is reasonably expected to be 21 or older (the “85% Rule”);
– The ads include several commission-approved warnings; and
– The ads comply with specific provisions aimed at keeping cannabis promotion discreet.
The final regulations impose the same standards, with only a handful of minor changes to the original draft, specifically:
– Clarifying that a marijuana establishment may post prices in the store and may respond to questions about pricing on the phone;
– Clarifying that the “85% Rule” applies to ads on mobile applications and social media as well as other media; and
– Requiring the use of two specific symbols on product labels:
Federal Uncertainty
While state regulations are in place for cannabis advertisers in Massachusetts, they do nothing to address uncertainty at the federal level. The same federal law that makes it a crime to “manufacture, distribute, [or] dispense” any controlled substance, including marijuana, also makes it a crime to engage in certain types of marijuana advertising.
The federal Controlled Substances Act includes several provisions of concern to potential cannabis advertisers. First, it makes it a felony to “place in any newspaper, magazine, handbill, or other publications, any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute [marijuana].” Second, it outlaws “knowingly or intentionally [using] the Internet, or [causing] the Internet to be used, to advertise the sale of, or offer to sell [marijuana].” Third, it prohibits using any “communication facility” — including the mail, telephone wire, radio and “all other means of communication” — in committing or facilitating the commission of any felony under the Controlled Substances Act. These provisions stand in stark contrast to those just published by the commission.
When recreational cannabis sales came to Oregon in 2015, newspapers began running ads for retailers and manufacturers. This did not sit well with the U.S. Postal Service, which issued a memorandum to newspaper publishers warning that any advertisement advocating the purchase of marijuana violates the Controlled Substances Act. Although the Postal Service decreed that a mail piece containing a marijuana ad was “nonmailable,” it has not sought to prevent such items from being delivered.
At the time the Postal Service issued its memo in Oregon, the Department of Justice was taking a hands-off approach in states with medical or recreational cannabis industries, acting in accordance with an August 2013 memorandum from Deputy Attorney General James Cole instructing U.S. attorneys to rely on state and local law enforcement to address marijuana activity (except in certain types of priority cases, such as distribution to minors and distribution by gangs and cartels). Moreover, beginning in December 2014, a rider to a federal appropriations bill (the Rohrabacher-Farr Amendment) prohibited the Department of Justice from using funds appropriated under the bill to interfere with implementation of state medical cannabis laws.
Between the Cole Memo and the Rohrabacher-Farr Amendment, the threat of federal intervention in state cannabis advertising during the Obama administration was relatively low. But that changed in January of this year when Attorney General Jeff Sessions rescinded the Cole Memo and announced a “return to the rule of law.” There is now nothing to prohibit a federal prosecutor from targeting an advertiser for alleged violations of the Controlled Substances Act.
Admittedly, the optics of pursuing a federal criminal case against state law-compliant cannabis advertisers are not great. But Sessions is clearly among the minority of Americans who believe that marijuana should continue to be prohibited, and a high-profile prosecution cannot be ruled out, particularly in a deep blue state like Massachusetts.
Neil Austin is a partner in Foley Hoag’s Boston office. He is the co-chairman of the firm’s advertising and marketing practice. His practice is built on a foundation of state and federal trial experience, with particular emphasis on litigating and resolving business disputes, representing clients in government and internal investigations, and advising clients on infrastructure and construction matters.