It's rare for an entirely new market to open for business in Canada. So it's no surprise the government's plan for legalizing recreational cannabis has created a rush of businesses positioning themselves to claim a piece of this new, lucrative market.
Understanding the rules around the recreational cannabis industry will be imperative when making investment and marketing decisions. A detailed appreciation of the rules will also be necessary to ensure industry participants comply with the law.
Canada's proposed Cannabis Act — if enacted without change — will distinguish legal activity from actions that warrant a lengthy prison stay by a hair's width. For example, an individual will be permitted to grow up to four cannabis plants at home, provided they are no more than 100 cm in height. If they grow just one millimetre taller, the grower could face 14 years in prison.
The act may change before coming into force, given much of it is subject to regulations that have not yet been drafted. Based on the current wording, however, we can expect several significant restrictions on the promotion of cannabis, accessories and related services.
Blanket Prohibition
Unless otherwise stated, the act will prohibit:
(a) communicating information about its price or distribution;
(b) promotion that could reasonably be believed to be appealing to young persons;
(c) promotion that uses testimonial or endorsement, however displayed or communicated;
(d) promotion that depicts a person, character or animal, whether real or fictional; or
(e) presenting the product in a manner that associates it with a way of life that includes glamour, recreation, excitement, vitality, risk or daring.
Point of Sale
Authorized cannabis vendors and those selling marijuana accessories or related services will be allowed to promote the products at the point of sale if the information is limited to availability and price.
The act will prohibit authorized vendors from selling it in a package or with a label:
(a) if there are reasonable grounds to believe the package or label could be appealing to young persons;
(b) that sets out a testimonial or endorsement, however displayed or communicated;
(c) that includes a depiction of a person, character or animal, whether real or fictional;
(d) that associates the cannabis or one of its brand elements with a way of life that includes glamour, recreation, excitement, vitality, risk or daring; or
(e) that contains any information that is false, misleading or deceptive or that is likely to create an erroneous impression about the characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks of the cannabis. Similar restrictions apply to the sale of cannabis accessories.
Branding
Authorized marijuana producers, vendors and distributors may promote cannabis, accessories and related services by means of brand-preference promotion or informational promotion, but only if the promotion meets one of the following criteria:
(a) it must be made in a communication addressed and sent to an individual 18 years or older who is identified by name;
(b) it must be in a place where young persons are not permitted by law; or
(c) it must be communicated by means of a telecommunication, where the person responsible for the content of the promotion has taken reasonable steps to ensure that the message cannot be accessed by a young person.
Brand-preference promotion is defined as promotion of cannabis, a marijuana accessory or a related service by means of its brand characteristics.
A person will be permitted to promote marijuana — or related accessories or services — by displaying a brand element of something that is not cannabis or a cannabis accessory, other than:
(a) something associated with young people (under 18 years old
(b) something that could be appealing to young people; or
(c) something associated with a way of life that includes glamour, recreation, excitement, vitality, risk or daring.
The act specifically contemplates regulations that will prohibit the use of specified terms, expressions, logos, symbols or illustrations in the promotion of cannabis, or related accessories or services.
Celebrity and Event Promotions
The act will prohibit the display — in the sponsorship of a person, entity, event, activity or facility — of the following:
(a) a brand element of cannabis, of a cannabis accessory or of a service related to cannabis; or
(b) the name of a person that (i) produces, sells or distributes cannabis, (ii) sells or distributes a cannabis accessory, or (iii) provides a service related to cannabis.
The act will ban the following from being displayed at a facility used for a sports or a cultural event or activity:
(a) a brand element of cannabis, or a related accessories or services;
(b) the name of a person that (i) produces, sells or distributes cannabis, (ii) sells or distributes a cannabis accessory, or (iii) provides a service related to cannabis.
Giveaways and Inducements
The act will prohibit a person who sells cannabis or related accessories from doing so:
(a) without monetary consideration or in consideration of the purchase of any good or service;
(b) with any inducement for the purchase of cannabis or a cannabis accessory, including a right to participate in a game, draw, lottery or contest; or
(c) as an inducement for the purchase of cannabis or a cannabis accessory.
Misleading Advertising
The act will also prohibit the promotion of cannabis or related accessories in a false, misleading or deceptive manner that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks.