What Happens When An LP Violates Health Canada's Marketing Regulations?
The Cannabis Act came into effect on October 17, 2018. Although the bill legalized the plant for recreational use among all adults in Canada, it also passed extremely strict regulations on marketing for licensed producers and cannabis companies. All forms of promotion are basically banned.
The good news is that when ads or other promotions violate the rules, Health Canada generally works with individuals or corporations and gives them “an opportunity to comply with their legal obligations,” said department spokesperson André Gagnon. Gagnon confirmed that since legalization, Health Canada “has undertaken 34 communications with various parties to identify possible promotions concerns”.
However, there have been no reported cases of a licensed producer or cannabis retailer losing there license or being financially penalized specifically because of marketing violations. Health Canada acknowledges that there is a fair amount of confusion surrounding cannabis marketing. Many activities fall into a grey area and some of the regulations set out under Bill C-45 are quite vague.
Some LPs are viewing this soft-handed approach to enforcement as an opportunity to experiment with different advertising techniques and channels. Since the regulations around promotion are so unclear, cannabis marketers will never know what they are allowed to do unless they push and test the limits. With so many brands being launched at once and struggling to gain awareness in the market, it is no wonder that some companies are attempting to find loopholes in the regulations to gain an advantage.
Other licensed producers are being much more conservative in their communications. Some cannabis businesses, especially the larger ones with big investors, believe that the risk of losing their license far outweighs the potential benefits that a promotional campaign could generate.
Since October 17th, we have seen large LPs like Aurora, Tweed and CannTrust dial back or completely remove their social media presence (on their corporate and main accounts, recreational brands are a different story). Billboards and OOH advertising for cannabis brands are now virtually non-existent (except for those advertising stocks, not products). You also won’t see weed brands outwardly sponsoring large concerts and festivals like they were in the summer leading up to legalization (although you may still find them inside age-gated venues and events). All of these changes are due to the strict new marketing regulations set out under The Cannabis Act, the bill legalizing the plant for recreational adult use.
It will be interesting to see if the enforcement around cannabis marketing changes. Industry experts and workers are predicting (and hoping) that Health Canada will loosen the restrictions on promoting marijuana products in the near future. Only time will tell.