The Office of Cannabis Management (“OCM”) announced at the March 2, 2023 Cannabis Control Board (“CCB”) meeting that it is doubling the size of the Conditional Adult-Use Retail Dispensary (“CAURD”) program from 150 to 300 licensees, underscoring its commitment to rolling out the retail sector of the Empire State’s adult-use cannabis industry. It is no coincidence that at this same meeting the CCB finalized its marketing and advertising regulations (the “Marketing Regulations”), which define the limits for how adult-use brands can market their companies and their products.
These new Marketing Regulations, combined with Twitter’s recent announcement that it will allow licensed cannabis companies to advertise on its platform marks a critical time for cannabis entrepreneurs seeking to successfully launch their brands in New York State. Below we survey three key markers from the Marketing Regulations, as well as the landscape facing cannabis companies who seek to promote their brands on social media.
Advertising under New York’s Final Adult-Use Marketing & Advertising Regulations
The most notable of the Marketing Regulations, codified at 9 N.Y.C.R.R. § 129, explicitly prohibits marketing and advertising materials that are “attractive to individuals under twenty-one.” § 129.2(b). This prohibition is broad-ranging, as it bans, among other things, the use of (1) cartoons, (2) bubble-type font, (3) neon colors, (4) imitation of food, candy, soda, drinks, cookies or cereal, and (5) symbols, images, characters, public figures, phrases, toys, or games that are commonly used to market products to individuals under the age of 21. § 128.1(c).
Additionally, any advertising through TV, radio, internet, mobile applications, and social media, is only permissible where the licensee “has reliable evidence that at least 90% . . . of the audience is reasonably expected to be twenty-one years old or older.” § 129.2(g). As a result, licensees could be required to supply substantiating evidence to state regulators justifying that its advertisements meet this 90% threshold. It is imperative, therefore, that licensees maintain sufficient records and documentation showing that their advertisements comply with the requirements set forth in the Marketing Regulations.
Finally, any advertisements through a website or digital application must include an age gate mechanism that prevents individuals under the age of twenty-one from viewing the material. § 129.2(l).
No False Health Claims
Since the Marijuana Regulation and Taxation Act (“MRTA”) was passed in March of 2021, state regulators have held firm to their commitment to the safety and health of New Yorkers. To that end, the Marketing Regulations prohibit any advertisements that are “false or misleading, including making health claims or a representation that use of cannabis has curative or therapeutic effects,” “assert that cannabis or cannabis products are safe because they are regulated” by the CCB or the OCM, or improperly use the terms “organic”, “craft,” “gluten-free”, “vegan”, or “kosher.” § 129.3(a). Consistent with the MRTA, the Marketing Regulations also ban marketing that promotes overconsumption or rapid consumption, as well as product potency or THC concentration.
An additional challenge posed by the Marketing Regulations is that advertisements or marketing materials may not “promote price, price reductions, or any other discount, customer loyalty program, or coupon, except as part of an environmental sustainability program.” § 129.3(a)(9). Accordingly, licensees will need to look for other creative ways to build customer loyalty through marketing and advertising in the early days of retail sales.
Social Media Advertising
Social media sites are increasingly popular marketing tools for business owners and the cannabis industry is no different. We surveyed the current social media advertising landscape for popular platforms and provided our results below.
On February 15, 2023, Twitter became the first social media platform to permit cannabis advertising. Twitter did so by adjusting its “Drugs and drug paraphernalia” policy which previously prohibited “the promotion of drugs and drug paraphernalia.”
The policy now permits targeted advertising in the United States by approved cannabis advertisers. To get approved, advertisers must be licensed to sell cannabis in their jurisdiction and must seek authorization by Twitter. Authorized cannabis advertisers will be subject to certain restrictions including: (1) they may only target jurisdictions where they are licensed to advertise cannabis products online, (2) they cannot promote or offer to sell cannabis, (3) they may not target individuals who are under the age of twenty-one, and (4) they must comply with all laws, rules, regulations, and advertising guidelines applicable to their products and advertisements.
Consistent with the Marketing Regulations, any cannabis advertisements through Twitter cannot appeal to minors, landing pages must contain a 21+ age gate, and any sales must be age-verified. Advertisements also cannot use minors themselves, characters, and/or celebrities that are appealing to minors. Furthermore, advertisements cannot use pregnant women, make false or misleading claims, make claims for health benefits, show the cannabis product being used, show individuals under the influence of cannabis, or encourage the transportation of cannabis products across state lines.
Facebook, Instagram & TikTok
As of the date of publication, no other major social media platforms have followed Twitter’s lead. Facebook’s advertising policy reads, “[w]e don’t allow ads that promote the sale of . . . THC products or cannabis products that contain related psychoactive components.” Likewise, Instagram categorizes cannabis products as “prohibited content” and TikTok’s policies bar the advertisement of drugs and drug paraphernalia, which includes cannabis, at this time.
Although cannabis companies cannot advertise or promote the sale of their products on these platforms, they are not banned from having a presence. Indeed, these three platforms offer cannabis companies, new and pre-existing, the opportunity to showcase what their brands strive for and how they plan to move cannabis culture forward. To that end, companies can emphasize their brands’ mission statements and speak to their goals and dreams for their respective businesses in order to build and retain followers (i.e. prospective customers). That said, because these three platforms are conservative in their policies concerning cannabis, companies must take care to stay within the bounds of permitted content to avoid suspension of accounts.
It is essential that New York adult-use licensees remain in compliance with the Marketing Regulations to mitigate any potential business risks, including loss or suspension of their license. It is equally crucial that New York Adult-Use Cannabis licensees familiarize themselves with social media platform policies on cannabis-related advertising to both take advantage of this marketing tool and avoid a longstanding account being suspended or deleted, which is happening to more and more industry operators.
The Lippes Mathias Cannabis Practice Team will continue to monitor developments in New York’s burgeoning cannabis industry, including any developments or changes to the Marketing Regulations and social media platforms’ policies related to cannabis companies and their products. If you have any questions, please contact one of our attorneys.