Although the state-legal cannabis industry is insanely lucrative, cannabis businesses have a lot stacked against them. From lack of access to banking services to being banned from advertising on most channels, companies in the cannabis space have to take great care not to run afoul of the countless laws that govern legal cannabis markets. In California, marijuana businesses were dealt a major blow last November after a court ruled that they weren’t allowed to advertise on billboards along all interstate and state highways crossing the state’s border.
Judge Ginger Garrett of the San Luis Obispo County Superior Court made the ruling, relying on language in Proposition 64, the 2016 ballot measure that asked Californians if the state should legalize recreational cannabis. The legislation also established a regulatory framework for the state’s recreational cannabis industry, including restrictions against advertising or marketing cannabis products.
For instance, recreational marijuana establishments cannot advertise within 1,000 feet of a school, playground or any other environment with children. In addition, they cannot use imagery such as toys or inflatables that appeal to children, and they aren’t allowed to use influencers who are younger than 21 to advertise and market their products.
In her ruling, Garrett said that the Bureau of Cannabis Control (“BCC”), which is in charge of regulating California’s cannabis market, did not have the authority to limit the advertising ban to only a 15-mile radius of the state’s borders. The agency should have instead prohibited cannabis businesses from placing any marijuana ads on all state and interstate highways that cross California’s border. In mid-January, Garrett ordered the BCC to notify all licensed cannabis businesses in the state about these advertising restrictions.
The Bureau of Cannabis Control has since then been working to rid the more than 4,300 miles of highways traversing the state’s 1,900-mile border of cannabis ads. According to the BCC’s spokesman Alex Traverso, the agency is currently working with cannabis operators to remove any and all billboards as fast as possible. Mike Berk, owner of Palm Royal Collective, says that although his South California cannabis company has been running ads on billboards for around 18 months, the company is planning to take all ads down.
Industry insider Rob Costello argues that outdoor marketing is crucial for cannabis businesses to capture the consumers’ attention. Costello, who is a chief growth strategist at 10K Advertising in Los Angeles, says outdoor marketing legitimizes the sector in the eyes of the public.
However, Assemblymember Jacqui Irwin, a Democrat who authored one of the most restrictive cannabis proposals in the country, says these cannabis billboards are “clearly advertising” to children and go against Proposition 64.
U.S.-based cannabis companies face many legal challenges. Other companies operate in less restrictive landscapes, such as that in Canada, where players like Pure Extracts Technologies Corp. (CSE: PULL) (OTC: PRXTF) can cross borders from one province or territory to another. In the United States, federal law prohibits cannabis from crossing state borders.
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