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168 MARIJUANA VENTURE | JULY 2018

Barring any last-min-ute surprises, adults in Massachusetts will be able to purchase mari- juana in licensed retail establishments begin- ning July 1. The state’s Cannabis Control Com-

mission has been working overtime to final- ize regulations, including rules for advertising cannabis products.

After a series of public meetings and more than 500 public comments, the com- mission recently revised and approved reg- ulations first issued last year. This means that the rules for advertising by marijuana retailers in Massachusetts are now set.

However, the clarity at the state level is overshadowed by the continued pro- hibition of cannabis at the federal level. An advertiser could adhere strictly to the Massachusetts rules and still face potential criminal liability at the federal level. That dynamic poses challenges for marijuana retailers looking to advertise.

CLARITY AT THE STATE LEVEL The commission’s draft regulations gen-

erally allow marijuana retailers to advertise cannabis in Massachusetts provided that:

• The ads are true and do not mislead consumers;

• Steps are taken to ensure that the ads do not reach anyone under the age of 21 — including ensuring that at least 85% of the target audience is reasonably expected to be 21 or older (the “85% Rule”);

• The ads include several commis- sion-approved warnings; and

• The ads comply with specific provi- sions aimed at keeping cannabis promotion discreet.

The final regulations impose the same standards, with only a handful of minor changes to the original draft, specifically:

• Clarifying that a marijuana estab- lishment may post prices in the store and

may respond to questions about pricing on the phone;

• Clarifying that the “85% Rule” ap- plies to ads on mobile applications and so- cial media as well as other media; and

• Requiring the use of two specific symbols on product labels:

FEDERAL UNCERTAINTY While state regulations are in place

for cannabis advertisers in Massachusetts, they do nothing to address uncertainty at the federal level. The same federal law that makes it a crime to “manufacture, dis- tribute, [or] dispense” any controlled sub- stance, including marijuana, also makes it a crime to engage in certain types of mari- juana advertising.

The federal Controlled Substances Act includes several provisions of concern to potential cannabis advertisers. First, it makes it a felony to “place in any newspa- per, magazine, handbill, or other publica- tions, any written advertisement knowing that it has the purpose of seeking or offer- ing illegally to receive, buy, or distribute [marijuana].” Second, it outlaws “know- ingly or intentionally [using] the Internet, or [causing] the Internet to be used, to advertise the sale of, or offer to sell [mari- juana].” Third, it prohibits using any “com- munication facility” — including the mail, telephone wire, radio and “all other means of communication” — in committing or fa- cilitating the commission of any felony un- der the Controlled Substances Act. These provisions stand in stark contrast to those just published by the commission.

When recreational cannabis sales came to Oregon in 2015, newspapers began run- ning ads for retailers and manufacturers. This did not sit well with the U.S. Postal Service, which issued a memorandum to

newspaper publishers warning that any advertisement advocating the purchase of marijuana violates the Controlled Substanc- es Act. Although the Postal Service decreed that a mail piece containing a marijuana ad was “nonmailable,” it has not sought to pre- vent such items from being delivered.

At the time the Postal Service issued its memo in Oregon, the Department of Justice was taking a hands-off approach in states with medical or recreational cannabis indus- tries, acting in accordance with an August 2013 memorandum from Deputy Attorney General James Cole instructing U.S. attor- neys to rely on state and local law enforce- ment to address marijuana activity (except in certain types of priority cases, such as distribution to minors and distribution by gangs and cartels). Moreover, beginning in December 2014, a rider to a federal appro- priations bill (the Rohrabacher-Farr Amend- ment) prohibited the Department of Justice from using funds appropriated under the bill to interfere with implementation of state medical cannabis laws.

Between the Cole Memo and the Rohrabacher-Farr Amendment, the threat of federal intervention in state cannabis ad- vertising during the Obama administration was relatively low. But that changed in Jan- uary of this year when Attorney General Jeff Sessions rescinded the Cole Memo and an- nounced a “return to the rule of law.” There is now nothing to prohibit a federal prosecutor from targeting an advertiser for alleged viola- tions of the Controlled Substances Act.

Admittedly, the optics of pursu- ing a federal criminal case against state law-compliant cannabis advertisers are not great. But Sessions is clearly among the minority of Americans who believe that marijuana should continue to be pro- hibited, and a high-profile prosecution cannot be ruled out, particularly in a deep blue state like Massachusetts.

Neil Austin is a partner in Foley Hoag’s Boston office. He is the co-chairman of the firm’s advertising and marketing practice. His practice is built on a foundation of state and federal trial experience, with particular em- phasis on litigating and resolving business dis- putes, representing clients in government and internal investigations, and advising clients on infrastructure and construction matters.

Uncertainty surrounds new ad rules in Massachusetts Rescission of Cole Memo complicates the subject BY NEIL AUSTIN

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