5 Legal Questions for Cannabis Packagers and Advertisers
With each passing year, the legalized cannabis industry grows as the stigma associated with it decreases. Ten states currently permit recreational marijuana, over 20 more permit medicinal use, and annual nationwide spending on legal cannabis is projected to reach nearly $50 billion in the next decade. Despite this, those seeking to partake in it still have to navigate both risk and regulatory inconsistency. Here are five questions to think about when considering marijuana packaging and advertising.
1. Are you criminally liable?
Even where cananbis is legal, it is still illegal. Marijuana and its psychoactive component, THC, remain Schedule I substances under the Controlled Substances Act (CSA). This means that it is still a violation of federal criminal law to participate in the manufacture, distribution or advertising of marijuana and drug paraphernalia. Does this directly endanger those who create the packaging? Probably not. Those who merely manufacture packaging components (e.g., glass vials, plastic bags) generally have not been found by courts to bear criminal liability under the CSA. Nevertheless, those who participate in creating the advertising on those packages could still be at risk.
The federal government is currently not enforcing the CSA in states where marijuana is legal, but that enforcement decision could change at any time, an uncertainty that creates a low-level peril undergirding the entire industry.
2. Did you leave enough room on the label?
In the absence of uniform federal rules, anyone thinking about marijuana labeling on a national level has to make it through a dizzying array of state regulations. Typically required label contents include the product’s generic name, the distributor’s contact information, state registration, production and expiration dates, ingredients, quantity, batch information, THC level, cannabinoid profile, a universal THC symbol, bar code tracking and, for medical marijuana, patient information.
State codes also mandate warnings that must be included somewhere on the packaging, often in all capitalized text. Alaska obliges retailers to add a separate label with five warnings on topics ranging from addiction to breast-feeding.
Arizona mandates additional language about the carcinogenic properties of marijuana smoke. Other required warnings may pertain to side effects, nut allergens and the operation of heavy machinery. For edible products, Oregon requires a “BE CAUTIOUS” warning and an explanation that the psychoactive effects may not manifest until two hours after consumption. For non-edible products, Oregon prescribes the sensible precaution: “DO NOT EAT.”
3. Does marijuana offer health benefits?
Recreational marijuana is sometimes touted as having health benefits related to a number of physical and psychological conditions, including depression, anxiety, arthritis, stomach pains and even cancer. Statutes and regulations enforced by the Federal Trade Commission and the Food and Drug Administration (FDA) require that an advertiser, before making such claims for any product, needs to have scientific evidence for the claim. Additionally, a marijuana advertiser must get FDA approval before it can make a claim about disease treatment or the therapeutic benefit of a product. Because no such approval has yet been given for products containing THC, most of the commercial health claims you see out there would likely be considered unsubstantiated, false and/or deceptive by the federal government.
So why are these claims being made? Ironically, because all marijuana advertising (true and false) is still criminal under the CSA. Federal agencies have not been terribly active when it comes to sorting out the false from the true. However, many states also have promulgated regulations prohibiting misleading marijuana advertising, and health claims other than those with specific state approval eventually may draw scrutiny from state attorneys general.
4. Can you protect your IP?
Most companies can use a valid federal trademark registration to prevent others from using the same or confusingly similar names, logos or distinctive trade dress. But there’s a catch in the cannabis industry. The U.S. Patent and Trademark Office only registers trademarks for use in “lawful commerce,” which it has determined does not include marijuana. State trademark protection may be available, but it likely will not have much efficacy outside the jurisdiction.
This doesn’t mean that nationwide IP (intellectual property) protection is completely foreclosed. If the contents of a packaging design have sufficient creativity, it may merit copyright protection. Additionally, a design patent may be available for new, original and ornamental designs on articles of manufacture, such as containers. But, admittedly, neither of these is a complete substitute for trademark protection because they will not help you protect a name, short slogan or simple logo, among other reasons.
5. What will kids think of the packaging?
If there is one thing on which all state regulatory schemes and the federal government agree, it is the desire to discourage and prevent under-age use. States generally demand that marijuana products be sold in child-resistant packaging that is compliant with the federal Poison Prevention Packaging Act, or that the packaging at least has certain child-resistant characteristics such as minimum package thickness (e.g., 4 mil plastic) and the absence of easy-open mechanisms. Other physical specifications that may prevent or discourage underage use include tamper-evident containers and the requirement that the outside of the package be opaque — not transparent.
State regulators are also on the lookout for advertising content aimed at children. Several states seek to limit the appeal of marijuana packaging by decreeing that it be “plain” or by prohibiting photographs or the use of color. Nevada bars product configurations resembling lollipops, ice cream, real and fictional persons, animals, fruits and cartoons.
Massachusetts’ new regulations include restrictions on endorsements, promotional goods, and advertising in media where at least 85 percent of the audience is not reasonably expected to be over 21 years old.