Ad Law Access https://www.kelleydrye.com/viewpoints/blogs/ad-law-access Updates on advertising law and privacy law trends, issues, and developments Tue, 26 Nov 2024 10:45:34 -0500 60 hourly 1 Lawmakers Reintroduce Key Federal Cannabis Legislation https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/lawmakers-reintroduce-key-federal-cannabis-legislation https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/lawmakers-reintroduce-key-federal-cannabis-legislation Sat, 22 Apr 2023 09:00:00 -0400 Two recently-introduced bills are sending a message in Washington D.C.: federal law should harmonize with states on marijuana issues.

The first, the Small Business Tax Equity Act, would upend a little-known section of the tax code and allow cannabis businesses to deduct ordinary expenses on their federal taxes. Currently, section 280E prohibits businesses from writing off expenses like rent and payroll because they are selling a federally illegal drug.

If passed, the law would allow companies in compliance with state law to access the deductions and credits other business are entitled to. Tax equity has become one of the most talked-about issues in the industry with many companies still losing money despite considerable growth in legal state cannabis markets.

The legislation was also introduced – and failed – in the last Congress with 13 House cosponsors and five Senate cosponsors. It is unlikely to face a different fate this year, particularly given that it would reduce federal tax revenue without providing a replacement.

The second, the Veterans Medical Marijuana Safe Harbor Act, was introduced in both the House and Senate with bipartisan support. This bill would allow VA doctors to officially recommend medical cannabis in states where it is legal and provide a five-year “safe harbor” where veterans could not be punished for state-legal cannabis use.

Currently, VA doctors are permitted to discuss cannabis with patients but cannot take the next step of providing the paperwork to actually authorize it. This means veterans are forced to seek care from out-of-network (and out-of-pocket) physicians.

This bill has also seen past legislative failure. In the last Congress, an amendment containing the provision was dropped from the annual budget bill during negotiations.

Despite their uphill political battles, these newly reintroduced bills and their supporters are continuing to push for federal cannabis law that is more aligned with state law and trends. Although unlikely to be passed in this session, these bills create a marker for future discussions, likely post-2024 election season.

]]>
New York’s Cannabis Market Sees New Advertising Rules https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/new-yorks-cannabis-market-sees-new-advertising-rules https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/new-yorks-cannabis-market-sees-new-advertising-rules Tue, 18 Apr 2023 14:34:40 -0400 New York’s legal cannabis market is growing up. And it with? More regulations.

The Cannabis Control Board, a subset of the Office of Cannabis Management charged with overseeing marijuana regulations statewide, approved a set of labeling, packaging, and advertising regulations. These new rules are part of a trend of more sophisticated enforcement and regulation in the cannabis industry, particularly for products that may appeal to minors.

What do the new advertising rules accomplish?

In short, the regulations are aimed at protecting public health and preventing advertising that may appeal to younger consumers. They were first issued in September, but took effect in late March. Key provisions on the public health side include:

  • Prohibiting advertising that makes certain health claims, including that the products are “curative” or “therapeutic,” or that cannabis can prevent or treat specific illnesses or diseases; and
  • Requiring certain health warnings, including that cannabis can be addictive, the potential negative health effects of smoking or vaping, and about certain state resources including its HOPEline.

The Board also took aim at marketing that may appeal to younger people. The legal age to consume cannabis in New York is 21, and regulators have signaled that products targeting children may be a priority for enforcement. Generally, the rules prohibit:

  • Cannabis advertising within 500 feet of a school or childcare center; and
  • Advertising that is “attractive to individuals under twenty-one” including the use of cartoons, games or toys, bubble-type font, bright or “neon” colors, and imitations of food, soda, drinks, cookies, cereal, and others.

Importantly, the regulations impose affirmative annual reporting and record keeping requirements, including regarding the types of products sold or distributed and documentation showing ongoing compliance. The full guidelines are available here.

What should we expect from regulators to come?

While New York legalized recreational marijuana back in 2021, it took nearly two years for state regulators to begin issuing business licenses. The first sanctioned shop opened early this year, after the OCB began its licensing process. Given that, it is likely the New York market will increase its legal presence and enforcers will continue developing the state’s regulatory scheme.

]]>
Twitter Is The First Major Social Media Platform to Expressly Allow Cannabis Advertising https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/twitter-is-the-first-major-social-media-platform-to-expressly-allow-cannabis-advertising https://www.kelleydrye.com/viewpoints/blogs/ad-law-access/twitter-is-the-first-major-social-media-platform-to-expressly-allow-cannabis-advertising Tue, 21 Feb 2023 09:58:15 -0500 Twitter became the first social media platform to expressly allow cannabis advertising. Effective last week, Twitter’s U.S. ad policy states as follows:

What's the policy?

Twitter prohibits the promotion of drugs and drug paraphernalia.

Examples of drugs and drug paraphernalia include:

  • Illegal drugs
  • Recreational and herbal drugs
  • Accessories associated with drug use
  • Drug dispensaries
  • Depictions of hard drug use

United States

We permit approved Cannabis (including CBD– cannabinoids) advertisers to target the United States, subject to the following restrictions:

  • Advertisers must be licensed by the appropriate authorities, and pre-authorized by Twitter.
  • Advertisers may only target jurisdictions in which they are licensed to promote these products or services online.
  • Advertisers may not promote or offer the sale of Cannabis (including CBD– cannabinoids)
    • Exception: Ads for topical (non-ingestible) hemp-derived CBD topical products containing equal to or less than the 0.3% THC government-set threshold.
  • Advertisers are responsible for complying with all applicable laws, rules, regulations, and advertising guidelines.
  • Advertisers may not target customers under the age of 21.

Any advertisement for Cannabis (including CBD– cannabinoids) content that is allowed, subject to the above restrictions, must in addition:

  • Not appeal to minors in the creative, and landing pages must be age gated and sales must be age verified.
  • Not use characters, sports-persons, celebrities, or images/icons appealing to minors.
  • Not use minors or pregnant women as models in advertising.
  • Not make claims of efficacy or health benefits.
  • Not make false/misleading claims.
  • Not show depiction of cannabis product use.
  • Not depict people using or under the influence.
  • Not encourage transport across state lines.

Contact Twitter if you are interested in this option.

**

As with so many issues in the cannabis space, this policy raises questions about federal law, which expressly prohibits advertising sale of a Schedule I narcotic. The federal Controlled Substances Act states: “It shall be unlawful for any person to place in any newspaper, magazine, handbill, or other publicatio[n], any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule I controlled substance.” The act goes on to state that it is also illegal to use the internet for such purposes.

Importantly, although the provision refers to “advertisement” in “its ordinary meaning” the prohibition on advertising includes an exception. The CSA states: “[t]he term “advertisement” does not include material which merely advocates the use of a similar material, which advocates a position or practice, and does not attempt to propose or facilitate an actual transaction in a Schedule [1] I controlled substance.” In addition, a separate exception states that Section A (the prohibition) does not apply to material that “merely advocates the use of a controlled substance or includes pricing information without attempting to facilitate an actual transaction involving a controlled substance.”

Based on the plain language, Twitter’s policies attempt to respect these limitations, which have not been the subject of federal enforcement despite the exponential growth in the cannabis industry in recent years. In addition, Twitter’s updated policies also convey general consistency with the patchwork of state cannabis advertising laws, to the extent they allow for digital advertising. Nevertheless, even if law enforcement and regulators do not raise an eyebrow, one must wonder whether blue chip companies will risk returning to Twitter if their logo may be featured next to a marijuana brand. The answer may depend on whether other social media platforms follow Twitter’s lead.

]]>