Why you won't be seeing cannabis ads everywhere
Published Wednesday, October 17, 2018 1:14PM EDT
Adult consumption of recreational cannabis is now legal in Canada, but most forms of advertising and promoting cannabis products are not.
The federal Cannabis Act took effect Wednesday, which sharply restricts the packaging and advertising of pot. It requires the packaging of cannabis products to carry mandatory health warnings and prohibits any claim of health benefits or any images or graphics on packaging beyond a brand name.
Marijuana products must come in plain packaging with a uniform background and cannot contain brand elements that evoke “a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring."
“The rules are extremely restrictive and I think we can liken them most to cigarette manufacturing,” retail expert Doug Stephens told CTV’s Your Morning Wednesday. “The packaging has to be very, very non-descript.”
And just like rules for alcohol and tobacco, cannabis companies can’t take out print ads, broadcast commercials or use celebrity endorsements, contests or sponsorships to promote their products, or advertise price or distribution.
Stephens says Health Canada is focused on ensuring the packaging of cannabis products doesn’t influence minors.
“I think probably the single greatest risk, legally and in terms of optics here is that kids are perceived to be gravitating towards the use of cannabis as a consequence of the marketing.”
The advertising restrictions aren’t really new for the industry because advertising medical cannabis has been essentially prohibited, with some restrictions. But now that recreation use is legal, the marketing stakes are much higher. A leading Canadian economist, Avery Shenfeld at CIBC World Markets, projects Canadians could buy as much as $10 billion a year in cannabis products. That outstrips beer sales and some industry experts think the estimate is low.
Stephens says companies are figuring out some work-arounds to packaging and advertising rules, including using augmented reality to bring packaging to life on smartphones with animations, graphics and pop-up information. It’s also not illegal to market other products, such as alcohol, as “cannabis-inspired,” even if they don’t contain any cannabis at all. That’s a way to get a brand name into the market.
Social media companies also have very strict rules about showing cannabis plants or people smoking, says Stephens.
“Even in the U.S., where we’ve had states (with legalized cannabis) for some time, Facebook, Google, those sorts of companies have very strict regulations as it applies to the advertising of drugs or drug-related products.”
Lift & Co., which hosts cannabis industry events, had its YouTube and Facebook ad account suspended earlier this year, for instance.
Under federal rules, cannabis companies are allowed to use advertising to provide “factual, accurate information about cannabis products,” including levels of THC and CBD, along with information that “allows consumers to tell the difference between brands would also be permitted.”
Any promotion will only be permitted where it could not be seen by youth.
And cannabis companies can also sell swag. The Senate had proposed banning promotional products, such as T-shirts, hats and bags, depicting cannabis or cannabis brands but that was rejected by the federal government.
Canada is only the second country in the world, after Uruguay, to legalize recreational pot use. Stephens says it’s important to understand that the Canadian rules apply to license-holders that are advertising abroad, too.
He believes the marketing rules for cannabis will evolve and relax once the “novelty of legalization wears off.” But in the meantime, the penalties for violators are steep, including up to $5 million in fines and three years in jail.