California Cannabis Industry: Advertising Restrictions

In California, where both medical and recreational use of cannabis is permitted under state law, licensed retailers and dispensaries must comply with a range of strict regulations in advertising their products. These regulations and laws impact most types of advertising, including traditional print, billboard, television and radio ad spots.

Some of these legal restrictions and prohibitions place the obligation on the advertising company, while others create a duty for the publisher or broadcaster of the advertisement. In addition, digital advertising may be restricted or wholly unavailable, depending on the advertising platform or publishing site. Finally, federal law still treats cannabis as an illicit drug and prohibits advertising, although prosecutions for violations of this law based on advertising legal cannabis products in California have not yet taken place.

One major restriction placed on cannabis advertisements is the prohibition in the California Business and Professions Code, Chapter 15, Section 26152, against including any false or untrue material claims in the advertisement’s content. This includes any ambiguity or inference that might arise by omission as well as by inclusion of misstatements, as well as any overall misleading impressions.

For example, a cannabis product advertisement may not specifically state that the product was made solely with cannabis grown by a small-scale organic family farm, but could nevertheless give that overall impression through a combination of creative ad copy and images. Such an advertisement would likely violate this provision if the cannabis in question was in fact grown by a large corporate farming operation.

A separate provision regulates claims as to a specific origin or source for the advertised product. Any advertisement or marketing material that either explicitly states or creates an implication that the product in question is made with cannabis grown in an identifiable region or place of origin must meet specific label requirements.

Under California Code sections 26152(a) and 26154, California cannabis advertisers must be vigilant against making any unsupported claims about the impact of their products on a consumer's health. This is a broad-based restriction that not only prohibits explicit statements, such as "cannabis cures cancer," but also extends to more indirect claims. Cannabis labels and accompanying advertising content may not by express or implied assertion even "suggest a relationship" between the use of cannabis products and any health benefits if the end result is to "create a misleading impression" on the viewing public.

However, labeling and advertising claims that are backed by reliable scientific evidence that is publicly available and for which scientific consensus may be established among experts may appear in these contexts. For example, the use of cannabis and cannabis-related products in the management of cancer and other conditions that produce chronic and long-term pain is well established in the scientific community. A statement to that effect in an advertisement, or on a product label, would not be likely to run afoul of this prohibition.

California law restricts cannabis advertising on the basis of the age of the audience, among other aspects of the ad content. Section 26151 of the Code permits advertisements for cannabis products only on websites, networks, platforms and channels where at least 71.6 percent of the audience members have reached the age of 21.

The obligation to ensure compliance with this provision rests solely with the advertising business. Consequently, it is imperative that cannabis industry businesses ensure they have access to the most current audience composition data before signing any enforceable contracts for the display of advertisements with television, radio, print or digital stations or publications.

California law also prohibits any marketing that is designed or intended to encourage children under the age of 21 to consume marijuana or any cannabis-related products. Ads that feature cartoons or whimsically drawn figures, spokespeople (or animals) or any other design element that is attractive to children will likely violate this provision. Sign and billboard advertisements for cannabis products are also prohibited when placed within 1,000 feet of a school, playground, youth center or daycare provider.

California's age restrictions also apply to any advertising or marketing material that use direct mail or other specific, individualized transmission method. Any advertiser who is using direct-mail methods must take steps to verify that any recipient is at least 21 years of age or older.

Initially, the laws that were proposed to restrict advertisements for cannabis products to of-age audiences did not specify digital advertisements. This loophole was closed with the passage of AB 3067, a bill proposed by Assemblyman Ed Chau that went into effect on January 1, 2019. The provision added cannabis and related products (including paraphernalia and instruments for its consumption) to the products already covered by previously passed legislation. These provisions place the obligation on the publisher or broadcaster of such advertisements, as opposed to the advertising cannabis business itself.

California laws also restrict or prohibit cannabis advertisements from being positioned along interstate highways within the borders of the state. Advertisements are likewise prohibited on signs and billboards placed beside any state highway that crosses any of the state's borders.

Additionally, no cannabis company may publish, disseminate or promote any kind of marketing or advertising material while the company's license is suspended. All advertisements, whether placed on websites, in print or on billboards, must accurately identify the licensee and its license number.

Under federal law, marijuana is classified as a Schedule I controlled substance which is prohibited from being purchased or offered for sale for any individual or consumer purpose. This remains the case, even though many states have legalized the controlled sale and purchase of cannabis for medical or recreational use (or both). Despite the decriminalization movement, cannabis products may not be advertised or marketed through any type of written or print advertisement sent through the U.S. Postal Service.

Additionally, a federal law known as the Controlled Substances Act, currently codified at 21 U.S.C. §843(c), forbids placing any written ad “in any newspaper, magazine, handbill, or other publications … knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule I controlled substance.” Violations of this provision carry penalties including prison sentences of up to four years.

To date, the federal government has declined to prosecute cannabis advertisers under this law, at least when the ad is published in a state that has legalized the sale, purchase and use of cannabis-related products. However, the law does not exclude those states from its provisions, and so prosecution does remain at least a technical possibility.

In addition to the existing regulations contained in California statutory laws and regulations, state and local legislators are exploring further ways to restrict and regulate advertising in the cannabis industry. For example, San Diego proposals being debated include additional restrictions on billboard advertising, among other provisions that would regulate the placement and content of cannabis promotion and marketing materials.

Moreover, the regulatory schemes that have been enacted will probably be expanded and refined as the state gains more experience with a developing legalized industry. As companies develop additional products and services, and as the industry expands to new markets, legislators will likely propose new advertising regulations to meet those new circumstances.