Perhaps some of the most controversial areas in broadcast advertising are those surrounding the advertising of cannabis products. While many states claim to have legalized marijuana, either for medical or recreational purposes, the Federal government still considers its possession and distribution a felony, and has specific laws that criminalize the use of radio frequencies, the Internet, and publications to promote its use. At the same time, the Federal government has recently decriminalized the possession of various hemp-based products with less than .3% THC (the psychoactive ingredient in marijuana) in the 2018 Farm Act. This has led to an explosion in the sale of CBD products – even though the production of such products is, for the most part, to only be conducted after either the adoption of state laws approved by the US Department of Agriculture or under Federal rules that the USDA is supposed to approve – none of which has happened yet. With all these issues outstanding, I was recently asked to talk about the advertising issues surrounding these products before a continuing legal education seminar sponsored by the New York State Bar Association. The slides from my presentation are available here.
As we have advised broadcasters before, because they are Federal licensees, and marijuana is still a federally prohibited substance, there is substantial risk in running any advertising for products supposedly “legal” in the state in which they are being used. These ads are particularly of concern during the license renewal cycle that begins next month, as objections from anti-marijuana activists could put this issue directly before the FCC. Even though states may have adopted rules governing advertising for these products, the federal law still poses great risks for broadcast licensees – just as it does for other federally-regulated entities. That is one of the reasons that federally-chartered and insured banks have stayed away from taking deposits from marijuana-related businesses (a bill is presently pending in Congress to allow banks to take deposits, but its prospects are uncertain).
We also wrote extensively about broadcast advertising for CBD products, and how those are in even a greyer area – as there is no blanket federal prohibition against possession of CBD containing less than .3% THC, and there is potentially some legally produced CBD that was grown for experimental and research purposes under the 2014 Farm Act. So, theoretically, some CBD may have been legally produced though such production was not expected to be for widespread commercial exploitation, but even if a CBD product was legally produced, it is subject to substantial promotional restrictions under FDA and FTC rules (see our article here). With these concerns, and rules to come from both the USDA and the FDA on these products, ads remain risky and must be scrutinized on many levels – including under state law where, in many states, the rules governing these products are murky at best and potentially ban their sale (see this recent NY Times article about local prosecutions of CBD sellers).
This makes advertising – especially on broadcast stations – a matter that needs close scrutiny. As we always advise on this kind of controversial issue, talk to your own counsel about these issues and be sure that you are fully informed about the risks of any such advertising. The money from the ads may be enticing, but the risks could easily outweigh those short-term benefits.