advertising medical marijuana dispensaries

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).
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The developments surrounding the regulation of cannabis products, and the impact of that regulation on the ability of broadcasters and other media companies to run ads for these products, continue on an almost daily basis.  Of course, the developments don’t all point in a single direction.  As described below, at the same time as the FDA schedules a hearing to look at cannabis products and the rules that should apply to them, the FTC and FDA together have written warning letters to CBD marketers advising them to stay away from making specific health claims about their products and to avoid promoting edible products.  What does this mean for media companies that have been approached to advertise these products?

We very recently wrote about the murky state of the law on CBD advertising (mentioning our continuing concerns about marijuana advertising even in states where it has been “legalized”).  In that article, we warned that broadcasters should be particularly concerned about selling advertising that markets CBD products to be ingested, or advertising which makes unsupported health claims.  In a joint action announced last week, the FTC and the FDA wrote letters to three sellers of CBD products, warning those companies that their marketing raised legal issues.  In these letters, the FTC expressed concern that the marketing contained health claims that could not be substantiated, and the FDA was concerned about the marketing of supplements and other CDB products to be taken orally that had not been approved by the FDA as either foods or medicines.  At least one of the letters cited a “salve” that presumably was not to be ingested, so the concern there seemed to be solely the specific health claims made for the product.  These letters reinforce the concerns that we expressed about advertising that contains specific health claims or which deals with products to be taken by mouth (either as dietary supplements, medicines or in other foods) – so stations should be especially wary of such ads. 
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In the last few months, we probably have had more questions about advertising for CBD products than any other topic. At this point, CBD products seem to be sold in nearly every state in the country, and discussions about CBD’s effectiveness seem to be staples on national and local television talk programs. Broadcasters naturally ask whether they can advertise these seemingly ubiquitous products. Unfortunately, the state of the law on CBD at the current time is particularly confusing, as discussed in this article.

First, a primer on terminology. CBD, short for cannabidiol, is a derivative of the Cannabis sativa plant. Industrial hemp is produced from portions of a strain of the same plant containing low concentrations of the psychoactive chemical known as THC, or tetrahydrocannabinol, and hemp can also be used to produce CBD. In contrast, recreational and medical cannabis, derived from the dried flowers, leaves, and stems of the female Cannabis plant (which we’ll call marijuana to distinguish it from hemp), contains higher concentrations of THC and lower concentrations of CBD. Preliminary clinical research has shown the potential benefits of using CBD to treat anxiety, cognition, movement disorders, and pain, and certainly these properties are attributed to the substance in popular culture. But is it legal?
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Last week’s letter from the FDA detailing its position that there should be no change in marijuana being classified as a Schedule I drug under Federal law reinforces the fact that, under Federal law, the drug is still illegal – no matter what certain states may do to legalize or decriminalize its use. As the FDA’s decision emphasizes that the sale and distribution of the drug is still not permitted under Federal law, we thought that we would rerun the advice that we gave to broadcasters – Federal licensees – about running advertising for marijuana. As we said in February when we first ran this article, advertising for marijuana is still a concern.  Here is what we said in February:

Broadcasters, like other federally regulated industries, continue to be leery about advertising for marijuana, even in states where cannabis dispensaries have been legalized for medical or even recreational use.  This week, the NY Times ran an article about companies trying to provide ways for dispensaries to use electronic payment systems, as federally regulated banks and credit card companies often refuse to deal with these businesses.  This is despite guidance given by the Department of Justice to banks about how to handle funds coming from such organizations.  Where the federal regulator (the FCC) has provided no advice whatsoever, broadcasters as regulated entities need to be very restrained in their desires to run ads for these dispensaries that appear to be legal under state laws.
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The tenuous legal status of marijuana advertising on broadcast stations just got a little more tenuous as a Federal prosecutor in Southern California has reportedly indicated an intent to prosecute radio and TV stations, as well as newspapers and magazines, that advertise medical marijuana clinics.  As we have written before, advertising such clinics was

In March, we cautioned broadcasters against the airing of ads for medical marijuana.  Our concerns stemmed not only from a complaint pending at the FCC, but also because, despite the widespread belief that the Federal government no longer cared about medical marijuana use and sale, the Department of Justice had only said that prosecution was no longer a priority, not that it was no longer illegal.  In recent months, our concerns seem more and more justified.  We had worried about some local Federal prosecutor deciding that he or she had time to prosecute offenses, even though DOJ headquarters did not think it to be a priority.  But, based on press reports and DOJ’s own press releases, it looks like there has been at least some rethinking of the policies in Washington, DC as well.  The DOJ appears to be backtracking on medical marijuana, now saying only that it won’t prosecute individuals who use medical marijuana, but that dispensaries, even if set up under the color of state laws, are still illegal under Federal law and subject to Federal prosecution.  Thus, broadcasters, as Federal licensees, need to exercise extreme care in advertising such dispensaries.

In the last few days, NPR has broadcast stories about the Department of Justice writing letters to authorities in Rhode Island and Arizona, in both cases saying that the Federal government still considers the sale of marijuana, even medical marijuana, to be a Federal felony subject to prosecution.  Both states are now reconsidering their laws that would otherwise allow for the operation of medical marijuana dispensaries.  The DOJ, on its website, cites a US Attorney in Washington State who has written to the landlords of medical marijuana dispensaries, warning them of the penalties that they may face if they allow these dispensaries to continue to operate, going so far as to warn them that they may face the forfeiture of their property to the government as it is being used to distribute prohibited drugs.  As this letter states, “We intend to use the full extent of our legal remedies to enforce the law.”  This language should serve as a warning to broadcasters of the Federal government’s attitude toward marijuana dispensaries.


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