Earlier this year, Twitter became the first social media company to allow cannabis companies to market their brands/products to customers in the U.S. Prior to that, the company had allowed advertising for hemp-derived CBD products – and only topical ones at that.

Now, Meta, the parent company of Instagram and Facebook, as well as new social networking platform Threads, announced it will allow cannabis advertising – but only for non-ingestible CBD products. Restrictions on hemp advertisements on these platforms are also easing. In a written statement announcing the new approach, the company said so long as the CBD products contain no more than 0.3 percent THC per the federal standard, it can be advertised – subject to certain rules.

Among the Meta rules for CBD and related products advertising for CBD companies:

• No targeted marketing of CBD products to people under 18.
• Be in full compliance with all local laws and regulations, as well as industry guidelines.
• Products are certified with Legitscript, a company that oversees/approves lab testing by third parties.
• Meta has given its written approval for such advertisement.
• Avoid claims – express or implied -that CBD products can cure, treat, prevent, lessen, or diagnose any medical condition or disease in people or animals.

As for non-ingestible hemp products, such as fiber and seeds, businesses will no longer need to obtain written approval to run marketing campaigns of their products in the U.S., Mexico, or Canada.

The company is also no longer requiring that CBD ads serve the purpose of educating, advocating, or giving public service announcements, as was the previous policy, so long as they aren’t selling any illegal CBD products.

As for cannabis, Meta is still currently prohibiting any promotions that advertise cannabis products containing more than 0.3 percent THC or any related psychoactive elements.

Google, meanwhile, has also relaxed its cannabis marketing rules – at least as it relates to FDA-approved CBD pharmaceuticals and hemp-derived topical CBD with less than 0.3 percent THC content. Legitscript certification is also required for Google Ads, and if you mention words like “cannabis,” “weed,” “marijuana,” and a few others, you can be penalized by the algorithm.

This move aligns Meta more closely with the policies of other social media platforms, with one big exception: TikTok. While there are some cannabis retailers who promote their products on the platform, they’ve gotten fairly creative about it, using clever euphemisms and symbols and focusing on education rather than sales. Using the word “cannabis” or showing clear cannabis imagery is strictly prohibited by the platform. And if you do decide to chance it, there’s always a risk, however, that the platform will identify your content as a violation of their terms and services and have you banned. Sometimes even if accounts aren’t outright banned, they may be “shadow-banned,” which is when the algorithm makes it so your content is only visible to those who seek it out directly.

If you have any uncertainty about whether your ads – or ideas for ads – will hold up to all relevant laws, industry regulations, and platform policies, run them by a Los Angeles cannabis business lawyer first.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

CBD and Related Products, Meta

Introduction to the Advertising Standards, Meta

More Blog Entries:

Twitter Marijuana Advertising Rules Still Restrictive, April 5, 2023, Los Angeles CBD Advertising Lawyer Blog

As our Los Angeles cannabis business lawyers can explain, when the state rolled out regulations for cannabis license requirements, one of those was the mandate to sign a labor peace agreement with a a bona fide labor union.

For those who may not be familiar with labor peace agreements, they are contractual agreements between employers and labor unions. The union agrees it won’t picket, stop work, boycott, or interfere with employer operations, and in exchange, the employer promises not to try to interfere with the union’s ability to organize the workers. The purpose is to lay the foundation of a relationship of collaboration between workers and their employers, with the ultimate goal of boosting stability, safety, productivity, and company longevity. It can also help lower the potential for employee abuse and/or exploitation – which was a major concern of state regulators when they were drafting cannabis company rules.

So what happened here?

According to the ALRB panel findings, a number of California marijuana businesses signed off with an organization dubbed the Professional Technical Union Local 33, or ProTech for short. Problem was it appears to have been a “labor union” in name only. It had few members, made no intent to organize workers, and failed to respond to basic inquiries from the ALRB about its membership and organizational structure.

This is part of a pattern we’ve seen crop up in other regions of the country as well. But why would these companies take the risk of losing their license by signing off with a sketchy labor union? Regulators suspect the motivation for these companies was to sidestep worker protection laws and lower labor costs by signing off with a “labor union” that wasn’t actually a labor union.

As for what constitutes a “bona fide labor union,” the ALRB broadly defined it as one that shows sincere good faith with regard to organizing workers, representing them in collective bargaining negotiations, and has the capacity and resources to effectively carry out these tasks.

The fact that the union in this case spotlight did not respond to basic questions from the board led to the panel’s conclusion of impropriety. For that reason, the board ruled that any cannabis company labor union deals inked with ProTech were immediately void. Because a labor union deal is required for state-issued cannabis business licenses, all of those companies are at risk of having their license revoked – unless they scramble to sign off on new deals with recognized labor unions.

This whole investigation kicked off after a number of other California cannabis labor unions filed complaints with the ALRB. One of those representatives expressed approval of the board’s ruling, saying that simply signing a deal isn’t enough to ensure employee protections. There has to be leadership guiding employee organization and sufficient representation to advocate for important workplace rights.

Cannabis labor unions across the country have been showing lately that they aren’t afraid to drive a hard bargain – including exercising their power to strike. For instance, employees of a handful of retail dispensary employees in Chicago were led in a two-week strike to compel company owners to guarantee worker raises.

One the flip side, many cannabis businesses are grappling with tightening profit margins, rising product costs, stagnation on federal reform promises, and heightened investor pressure. But workers say these difficulties aren’t an excuse to pay them a less-than-fair (or livable) wage.

Whether you’re a cannabis company with concerns about the labor union with which you are contracted OR an employee who finds your company’s current labor union to be substantially lacking, we can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Agricultural Labor Relations Board Makes First Finding of NonBona Fide Labor Organization for Cannabis Labor Peace, July 13, 2023, Agricultural Labor Relations Board

More Blog Entries:

Los Angeles Cannabis B2B Companies Must Establish Clear Pay Default Policies, June 16, 2023, Los Angeles Cannabis Business Lawyer Blog

Public acceptance of CBD and cannabis products has grown, use has expanded, and even the federal government has been steadily easing restrictions.

However, where companies are too often getting caught up in litigation and regulatory scrutiny is with respect to potency, mislabeling, and misbranding.

Let’s start with the risk of product liability claims. For those who are unfamiliar, product liability is when a consumer alleges that a product was defectively designed, defectively made, or the warning about the risks was inadequate. Claimants don’t need to prove negligence, but they do need to show the product was the cause or a major contributing factor to the plaintiff’s illness or injury.

The long-term adverse impacts of CBD (or lack thereof) aren’t really widely known because research on these products has been so restricted over the last several decades. The U.S. Food and Drug Administration has raised concern about the potential for CBD to interact negatively with certain medications, and that it might cause liver damage. But the extent to which this is true isn’t well-known because it hasn’t been thoroughly studied. These potential harms could end up being the subject of lawsuits in the future. President Joe Biden recently passed a law permitting advanced research on the risks and medical benefits of both cannabis and its derivatives – including hemp-derived CBD.

While CBD companies aren’t expected to have a crystal ball in knowing all the possible side effects, they would be wise to keep a close bead on emerging research, and ensure they’re both properly monitoring their product and any reported issues. They should also be communicating regularly with regulatory agencies.

The bigger issue in terms of product liability, at least in the short term, is labeling. Improper labeling – whether with respect to potency or mixed ingredients – has been the subject of major headaches for the cannabis and CBD industries the last few years. In 2022, the FDA handed out 33 warning letters to CBD companies for label issues like:

• Product potency didn’t match the numbers on the label. Sometimes these claims stem from lower potency than advertised. Other times, CBD companies have been called out for claims of containing “zero THC” when in fact, there was THC in the products.
• Misbranding, where the product labels provided inadequate instructions for consumer use.
• Making claims the product could be used medicinally for certain conditions when it legally couldn’t make such claims. Examples included promises to treat conditions ranging from diabetes to COVID-19. (Companies cannot make medical claims on non-FDA approved drug products.)
• Label mix-ups between THC and CBD products. (This is a major mistake that in several cases has resulted in big fines and a string of civil lawsuits and later settlements after a half a dozen people who were hospitalized for serious health issues when they consumed what they thought was CBD, but was actually THC. In one case, the family of an elderly man says he died as a result of such a mistake. In another, a Kentucky man drove into a bus after using a CBD vape that actually contained high quantities of THC.)

Product contamination is another legal issue to be wary of. A number of CBD product liability lawsuits have involved contamination of their products with pesticides. A Canadian company recently paid out $2.31 million in a class action lawsuit alleging just this.

Lastly, inaccurate spread of information through advertising – on websites, social media platforms, and more – can come with serious penalties. This includes fake celebrity CBD endorsements.

In general, CBD companies would do well to focus on quality control and pay close attention to the developing science. Also, contracting with a CBD lawyer is a smart, proactive way to ensure your operations stay above board and ahead of the curve on CBD litigation trends.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Warning Letters and Test Results for Cannabidiol-Related Products, February 2023, U.S. Food & Drug Administration

More Blog Entries:

Twitter Marijuana Advertising Rules Still Restrictive, April 5, 2023, CBD Product Liability Lawyer Blog

Certainly, this is big news. But our Los Angeles cannabis business consulting lawyers would urge caution before rushing to your marketing firm for content.

Previously, the company only permitted ads for hemp-derived CBD topical products. This was still more progressive than other social media firms. TikTok, Instagram, and Facebook have had (and maintain) a strict no cannabis advertising policy – so long as it remains illegal at the federal level. (This despite the fact that 21 states allow recreational use cannabis – and more are on the horizon.) It’s likely only a matter of time before these other social media platforms adopt policies similar to Twitter’s.

However, despite giving the green light to “approved cannabis advertisers to target the U.S.,” cannabis companies on Twitter still aren’t allowed to advertise their actual products for sale. The only exception is for topical, hemp-derived CBD products that contain less than 0.3 percent THC (which is the government’s threshold for being classified as a CBD product rather than a more heavily-restricted THC product). Undoubtedly, there’s a market for these types of products, but it doesn’t represent the full array of cannabis products and services.

Further, cannabis companies seeking to advertise on Twitter must:

• Have a proper license.
• Pass through Twitter’s ad approval process.
• Limit their target audience to jurisdictions wherein they are licensed to operate.
• Do not target youth under age 21.

Advertisers are NOT allowed to:

• Create ads that promote or depict people using cannabis.
• Display advertising that shows people under the influence of cannabis.
• Claim any sort of efficacy or health benefits.
• Use any celebrities, images, icons, characters, or athletes in their ads that might appeal to children or those under 21.

These are somewhat similar to Twitter’s restrictions on alcohol advertising, although alcohol products themselves can be marketed so long as companies don’t appeal to minors or imply that drinking alcohol to excess is good.

Los Angeles cannabis consulting lawyers recognize that vague language pertaining to celebrities might be especially tough, particularly given that a number of high-profile athletes and celebrities who have cannabis companies or have been vocal supporters of marijuana use might have broad appeal to both adults and minors. For example, few would dispute that Martha Stewart, who launched a line of CBD products in 2020, appeals to a more mature audience. But what about Sha’Carri Richardson, Kourtney Kardashian, or Wiz Khalifa? They’re all adults over 21 themselves, but does their celebrity appeal to people under 21? The answer of course is subjective, and therein lies the concern.

This is where seeking guidance from a cannabis law firm may be to your benefit.

The rules only apply to the U.S. and companies therein. (Other countries, like Canada, that have more cannabis freedoms have broader leeway to advertise the products on social media platforms.)

Meanwhile, Google has also revised its advertising policy for marijuana companies, allowing FDA-approved CBD drugs and topical CBD products with less than 0.3 percent THC to advertise their products. However, these ads are strictly confined to markets in California, Colorado, and Puerto Rico. (Twitter’s previous CBD product ad policy also limited markets to 7 states – including California – but that restriction has since been removed.)

If you are a Southern California cannabis company hoping to advertise on Twitter, our Los Angeles cannabis business lawyers provide consulting to help ensure your ads are aligned with the law as well as the policies of advertising platforms.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Drugs and Drug Paraphernalia, Ads Content Policies, Twitter

Over the last two decades, more 37 states have legalized medical marijuana and 19 allow adults to use recreationally. Yet sales across state borders are still aren’t happening, largely because the drug remains illegal at the federal level.

Cannabis has become a multibillion-dollar-a-year industry in California and across the U.S. But the federal government has pushed off regulation responsibility to the states – leaving a lot of open questions and hesitation on everything from security to labeling requirements to banking to insurance.

Ultimately, it may be the judicial branch of government that takes the reins on the issue. The problem with this is that the impact of the courts’ approach may be somewhat chaotic, potentially undermining efforts to protect public health and ensure industry diversity.

As our Orange County cannabis lawyers can explain, there are some states like California with cannabis programs that have been meticulously crafted to meet certain goals beyond merely legalization of adult recreational use. For instance, a top priority for some states has been ensuring that those awarded cannabis business licenses are either people of color and/or those who were somehow disproportionately affected by the failed war on drugs.

Now enter the courts. Those diversity programs typically require license recipients be state residents. But in a recent 2-1 federal opinion by the 1st Circuit Court of Appeals, justices ruled this was unconstitutional. That ruling likely means we’ll see some changes and shifts in state-level import and export bans. Some states are already positioning themselves to be able to hit the ground running with a national market for marijuana sales.

Recently, California’s governor, Gavin Newsom, signed into law a measure that imbues the state with the right to enter into agreements with other states regarding the regulation of cannabis imports and exports. A similar bill was passed a few years ago in Oregon, and New Jersey is considering something similar.

Still, the fact that court rulings could mean the whittling down of consumer protections and industry diversity efforts has many advocates calling for Congress to take charge and overhaul federal cannabis rules in a way that will realistically reflect what’s happening at the state level.

After all, the Commerce Clause portion of the U.S. Constitution entrusts Congress with the authority to regulate commerce at both the interstate and international levels. The flip side of that, the dormant Commerce Clause – the doctrine seized on the the 1st Circuit Court of Appeals – is that states aren’t allowed to discriminate against or burden interstate commerce. The case that gave rise to the appeal involved a medical marijuana law in Maine that required all officers or directors of a marijuana dispensary be residents of the state. One of those dispensaries with multi-state holdings sued over that residency provision. A coalition of smaller medical marijuana caregivers intervened, hoping to hang onto the 75 percent medical marijuana market share held by smaller operators. (Corporate domination in the market is an increasing concern.)

Meanwhile, other courts have ruled unfavorably against residency requirements as well. For instance, a federal trial court in Michigan ruled against a city government that was defending licensing rules that favored long-term residents. Also last year, a federal court in Missouri disavowed that state’s residency requirements for marijuana businesses. In both of those cases, the federal courts pointed to the dormant Commerce Clause.

While many marijuana legalization issues have put voters front and center, it appears the courts are taking a more prominent role in national marijuana policy. If the trend of federal courts continuing to weaken state power to dictate rules regarding import/export of cannabis over state lines, it won’t be long before companies are testing state power on issues like packaging and labeling. There’s concern that if the national market opens up without sufficient regulation that we’ll see cannabis purveyors setting up shop in less tightly-regulated states while selling across state lines.

Congress could intervene and ensure that a national market is enacted while still respecting state rules on things like product testing standards and diversity in licensing. The question of a national cannabis market in the U.S. demands not so much a “yes” or “no” answer, but a clear plan for interstate sales.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Courts could throw state marijuana markets into disarray, Oct. 2, 2022, By Mona Zhang, Politico.com

As our Los Angeles cannabis business lawyers can explain, while the state has clear guidelines in place mandating marijuana products be screened for contaminants and THC content by licensed testing facilities, what is lacking is any sort of uniform methodology to do so. The result of that is that two facilities may be using different processes, ultimately leading to a variation of findings.

Products with a greater THC concentration (which has the greatest potential for intoxication) are going to be in higher demand. The state’s problem is a pattern it has identified of marijuana growers shopping around for labs that employ testing methods that have a greater tendency to indicate a higher THC concentration.

In an effort to drill down on this matter, the state’s Department of Cannabis Control recently initiated the process of rulemaking that would ultimately lead to development of a standard test method that would need to be adopted by all licensed cannabis testing labs. The state agency’s director said this issue comes about partially as a result of regulating an industry that lacks federal recognition, and thus has no standard, validated testing methods. Licensed labs have reportedly issued THC concentration data that may be inconsistent – or possibly even inaccurate – according to the agency. Having a streamlined testing process, the agency said in a press release, will improve testing accuracy, stakeholder confidence, and market integrity.

Public comment on the proposed testing method rules is being accepted through July, with a public hearing scheduled for the first day of August.

Word of this proposal came just after the governor signed a state bill to restructure the adult use cannabis program through removal of the state’s cannabis cultivation tax – the end goal of that being to undercut illegal sales. That measure also includes a one-time, $20 million grant to support development of local retail licensing in areas where no cannabis licensees are allowed to operate. The state recently launched an interactive map that clearly shows where cannabis companies are allowed to operate – and where they are not. This helps to provide consumers with a clear idea of whether a shop or provider may be illicit or not.

Lab shopping for potency analysis isn’t a brand new issue, but officials believe it has become more pervasive as demand for high-potency flower has grown in recent years.

As cannabis growers and retailers, it’s important to convey the message to consumers that potency of THC isn’t the only factor that determines cannabis quality. Specific strains, growth methods, light intensity, and other properties can be important to buyers.

Marijuana testing laboratories that are dedicated to accurate analysis and quality control take their role as public safety agent seriously. All labs should have a dedicated marijuana business lawyer on retainer to ensure their policies and practices adhere to the latest state laws, rules, and guidelines. legal compliance must be a top priority.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

California Seeks To Standardize Marijuana Testing To Prevent THC ‘Laboratory Shopping’ , July 8, 2022, By Kyle Jaeger, Marijuana Moment

The case, Northeast Patients Group et al. v. Figueroa, involves a challenge to the law in Maine (existing in many other states) that contains an in-state residency requirement for license applicants and operators. California doesn’t have a residency requirement law, but operators here may be barred from expanding into other regions due to their state residency requirements. This ruling could impact that barrier.

Last year, the District Court of Maine struck down the state’s residency requirement, finding that it was a violation of the U.S. Constitution’s Dormant Commerce Clause, a measure intended to block discrimination against interstate commerce. However, attorneys for the State of Maine appealed that decision, finding the federal law isn’t applicable to the cannabis industry, as trade remains technically unlawful under U.S. law.

Similar challenges have been brought before in other courts, but as our Los Angeles marijuana business lawyers can explain, this is the first to reach a federal appellate court. A ruling by the First Circuit could have a substantial impact for the cannabis industry throughout the country.

As it now stands, the cannabis industry in the U.S. is mostly governed by a ramshackle patchwork of state laws cobbled together with little federal direction or assistance.

The Dormant Commerce Clause was used in Tennessee a few years back to overturn the state’s residency requirement for liquor stores, the state supreme court in that case holding that the state had no compelling interest in preventing folks who didn’t live there from holding liquor licenses and operating alcohol-related businesses.

Yet when it comes to cannabis, dozens of states and cities have passed – and enforced – requirements of residency that prohibit outsiders from holding licenses or portions of licenses. In some cases, non-residents are prohibited from investing at all in local cannabis businesses. These statutes were primarily intended to boost local ownership, with the hope of also mitigating the potential for interference from the federal government in state-run cannabis programs.

For the most part, these laws have gone unchallenged. Even where it has been raised, some courts have seemingly been reticent to weigh in. For example, a federal court in Oklahoma recently granted a request from the state to dismiss a residency requirement challenge – ignoring the question of the dormant commerce clause altogether.

There have been a few examples, though, where such challenges have prevailed. For example, a federal court in Missouri stopped the state from enforcing the prohibition on non-residents serving as directors, officers, or owners of dispensaries. A federal court in Michigan stopped the City of Detroit from giving preferential treatments to residents in issuing cannabis licenses.

What makes the Figueroa case so noteworthy is that it’s the first time such a matter has made it to a federal appellate court.

It’s one our Los Angeles cannabis business lawyers will be carefully watching.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

NORTHEAST PATIENTS GROUP et al v. MAINE DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES et al, U.S. District Court for the District of Maine

The California Cannabis Reform Project and Weed for Warriors organizations are working together to hammer out a ballot initiative that would, among other things, deprive local governments of the power to approve or deny licenses for cannabis business operators. They allege local governments have failed to wield that power effectively, in turn causing more harm than good, giving illegal operators a leg-up while making it harder for many law-abiding consumers in massive swaths of the state to obtain safe, legal cannabis.

As noted by analysis in the New York Times, roughly 8 in 10 of the state’s local governments have outlawed the sale of marijuana within their borders, effectively creating marijuana retail deserts. Local governments’ loss of control is effectively evidenced by the huge – and growing – illicit marijuana market.

Whether the ballot initiative has any hope of passing is questionable. As a Los Angeles attorney practicing cannabis law, I think it’s a fair assumption that local governments aren’t likely to cede any of the control they currently hold. A big part of the battle to pass Proposition 64 was gaining local government buy-in. Assurance of local control, while controversial, made it more digestible and was one of the only reasons some cities didn’t fight it harder.

However, five years in, it’s become clear that reform is necessary if we want to wrest control from the black market. Addressing issues of taxes and local control is going to be critical.

Organizations that represent cities so far haven’t commented on the effort, saying they don’t offer opinions on proposed ballot measures that have not officially qualified. Still, blanket statements were issued to the effect that local control of cannabis issues is something they still staunchly support.

Another element to the proposed ballot measure would be to restructure California cannabis taxes. The proposal would eliminate the cultivation tax, which is $9.65 per ounce of dry cannabis flower, $2.87 per ounce of dry cannabis leaves and $1.35 per ounce of dry weight for fresh cannabis plants. Further, it would reduce the existing excise tax, currently 15 percent of the average market price, to 5 percent. Further, it would bar local government entities from imposing any cannabis taxes. To compensate municipalities, it would grant local governments 1/5 of the total revenue of state excise taxes.

The effort of the cannabis activists is still in the early stages. Just getting the question in front of voters is estimated to cost $6 million on the low-side. The current planning phase involves discussions with lawmakers, lawyers and industry insiders and weighing whether such a measure would be best suited for presentation next year or in 2024.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Should California reform its marijuana laws? Why advocates want cannabis back on the ballot, April 20, 2021, By Andrew Sheeler, Sacramento Bee

More Blog Entries:

California Cannabis Companies Should Expect More Audits, Taxes, March 30, 2021, Los Angeles Cannabis Lawyer Blog