Cannabis Retailers Violate Marketing Rules

It has been one week since recreational legalization in Canada and a few licensed cannabis retailers have received warnings from government regulators for violating the federal marketing regulations set out in The Cannabis Act.

It is important to note that in some cases the marketing regulations are vague and are subject to different interpretations. In this completely new industry, mistakes are going to be made. For this reason, we believe it is important to examine when cannabis companies are publicly reprimanded for violating advertising rules. Not to shame or ridicule those responsible for the violation, but to learn from their mistakes. This helps us cannabis marketers figure out where the “line” is - which campaigns, imagery and wording are permitted and which are not. Let’s explore how cannabis retailers in New Brunswick and Alberta have over-stepped and what we can learn from this.

CannabisNB’s three categories displayed on a poster in-store.

CannabisNB’s three categories displayed on a poster in-store.

CannabisNB is the government-owned sole retailer of recreational marijuana in the province of New Brunswick. The company says it will be changing its website after receiving a warning from Health Canada (the government’s public health department) for breaking the law by associating cannabis with a particular lifestyle.

CannabisNB has created three categories known as “Discover”, “Connect” and “Refresh” to guide customers through their online and physical stores. Connect uses an image of a group of friends taking a selfie while Refresh features a picture of woman practicing yoga.

These three distinctions are designed to give the consumer an idea of how they could potentially feel when consuming products from that category. Branding is extremely limited on packaging and consumers are not allowed to view or examine the actual cannabis product before purchasing. This makes it the responsibility of the retailer to communicate the main benefits of Licensed Producer’s products in-store.

After receiving this latest warning from Health Canada, the government-owned chain may have to change their marketing plan. Reportedly, Health Canada only mentioned CannabisNB’s website as a problem, not the actual branding in-store. We don’t know exactly what the warning stated, but we can examine the marketing rules in The Cannabis Act to figure out what violations may have been made.

Section 17(e) of Bill C-45 states that cannabis companies cannot use any type of communication that “evokes a positive or negative emotion about, or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.” Featuring a group of friends taking a selfie together may be evoking a positive emotion around “recreation” and “excitement”. Using a picture of a woman at a yoga class may be associating cannabis with “vitality”. These are both potential violations.

Thierry Bélair, press secretary for the Office of Minister of Health, said in an e-mail to Huddle.today that Health Canada also “prohibits promotions for cannabis that use a picture or image of any person, whether real or fictional.‎” Therefore, CannabisNB even using images of humans on their website may be a violation of marketing rules. If these rules are applied literally they don’t leave much leeway for licensed producers and retailers. Building a brand and marketing materials without featuring a real or fictional person is extremely difficult (but can be done).

Mark Barbour, the manager of communications and public relations for CannabisNB, said in a email to Huddle.today that discussions with Health Canada have been “amicable,” that no fines have been issued, and that Health Canada didn’t give specific direction for website changes, but rather a “broad perspective” on the site. The company has also “sought legal guidance” on how to read the Cannabis Act. “As is the case in many instances, legislation is subject to interpretation which can vary,” added Barbour. It is reassuring to see that Health Canada isn’t issuing penalties straight away and are willing to work with cannabis companies to craft compliant marketing messages.

We will be paying close attention to the changes that CannabisNB makes to its website and social media.

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The second case involves the Alberta Gaming, Liquor and Cannabis (otherwise known as the AGLC, the entity responsible for licensing cannabis businesses in the province) and the new legal retailers in Calgary. Several retailers were found to be in violation of the marketing rules and were contacted by the AGLC. Operators of these businesses have been warned that they could face serious fines if they continue to break these advertising codes. It is good to know that cannabis companies are being issued warnings before legitimate legal action is taken. Regulators understand that the rules around marijuana marketing remain hazy. The AGLC has committed to working with these retailers to help them understand the regulations and how to remain compliant.

Specifics around these violations and which businesses were contacted were not released. A spokeswoman from the AGLC only confirmed that “The AGLC has been made aware of various stores who are advertising in some fashion” and that the complaints “centre around billboards spotted in Calgary, social media promotions and mailed flyers”.

Out Of Home advertising like billboards and public transit advertisements are banned under The Cannabis Act. However, several cannabis companies and Licensed Producers utilized these tactics in the weeks leading up to legalization. It is evident that Health Canada and other government regulators like the AGLC are watching more closely now that the bill has actually passed. Mailed flyers and other advertisements that can be seen by the general public (not age-gated) are also not allowed under the new regulations.

It is especially interesting for marketers that the spokeswoman mentioned social media promotions. This is because social media has been seen as a safe haven for some cannabis businesses to communicate with their current and potential customers. However, certain promotions (such as those based on price) are not permitted in any marketing channel, including social media.

Although promotions and traditional marketing messages are prohibited for cannabis companies on social media, these businesses can still utilize social platforms for branding and long-term customer retention. Licensed Producers and cannabis retailers alike should focus on creating helpful informative content and community engagement with their current customer base on social. Creating true connections with these consumers will encourage them to spread the word of mouth to their friends and family, with no need for pushy and non-compliant sales promotions.

Cannabis companies, including these new licensed retailers, need to deeply understand the marketing regulations set out under The Cannabis Act. There are still many effective ways for these businesses to build their brands while remaining compliant. Those who can push the limits without breaking the rules will be successful in the long-term.

Below is a map of all the cannabis retail licenses issued by the AGLC courtesy of calgaryherald.com

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