Contributors: Brad C. Deutsch, Principal, Garvey Schubert Barer, P.C. and Aaron S. Edelman, Attorney, Garvey Schubert Barer, P.C.
In our last blog, we addressed some risks associated with marijuana advertising that are unique to being the federal licensee of a radio station, impacting their broadcast activity. However, radio stations today have a presence on digital platforms – via web, smartphone or tablets. Therefore, in this post, we turn to digital media advertising.
Although the uncertainty of the legal status of marijuana remains the primary risk for digital media advertising, because there is no federal license associated with digital media, the risk assessment is substantially different. In fact, the FCC’s authority flows from your radio station license and the Commission generally will not go outside its jurisdiction to reach beyond issues directly associated with broadcast operations.
Instead, any decisions involving digital marijuana advertisements will require that you familiarize yourself with, and carefully consider, the intricacies of digital media marijuana advertisement law in any state that you might reach an audience.
More than a dozen states – including California, Colorado, and Washington – have imposed various specific restrictions and prohibitions on digital marijuana advertisements. And because there is no requirement for the states to harmonize their regulations with each other, the laws vary widely, often in ways that are not at first obvious. Despite their lack of consistency, however, the states that do have these laws generally address one or more of the following three concerns:
- Making sure that ads do not geographically target audiences that live outside the state in which marijuana is legal
- Making sure that ads are not targeted to anyone under 21
- Making sure that ads are not false or misleading
Washington State’s law is illustrative of geographic restrictions. Under the Washington statute, “advertising or marketing that specifically targets persons residing out of the state of Washington” is prohibited. Effectively, this eliminates national advertising based out of Washington State and requires digital platforms to consider how to limit the reach of ads to within the boundaries of the state. Geofencing provides one possible solution by creating virtual geographic boundaries to limit where certain digital advertising can be accessed. However, even if marijuana ads are geofenced within a particular state, there are still risks that a digital ad can be inadvertently accessed by someone in a neighboring state.
As for restrictions to ensure that ads don’t target anyone under 21, many states require digital platforms to assess what percentage of their audience is made up of minors and some states even require affirmative age confirmation by users. Other states restrict the content of the marijuana advertising to ensure that ads are not designed to appeal to people under the age of 21.
Finally, some states such as Hawaii, Maine, and Montana simply prohibit marijuana advertisements altogether. Maine, for instance, prohibits “unsolicited advertising” on the internet including banner advertisements on mass-market websites.
Something else to keep in mind is that compliance in some states is more complex than in other states. For example, Nevada actually requires proposed advertising to be submitted to a state regulatory agency for pre-approval. Nevada’s Department of Taxation has a “Marijuana Advertising Submittal Request” form so that the state can evaluate the advertising and approve or deny advertisements, packaging, names, and logos for marijuana products.
Additionally, something else to watch out for in some states is to make sure that your advertising revenue is not linked to the volume of marijuana sales generated in any way. A flat fee is the safest way to structure your ad revenue, but the key is to avoid anything that ties your platform too closely to the marijuana advertiser. A state might treat your business as having a direct financial interest in the marijuana business and could possibly subject your business to onerous disclosure and vetting required of licensed cannabis businesses. If you want to get more details about your specific state, you can check here and here.