By Tony C. Dreibus
Advertising restrictions have long been a bane to the cannabis industry, forcing many businesses to focus on word of mouth, social media and non-traditional methods of marketing over television and radio.
But when a Denver TV station confirmed to a local media outlet last week that it planned to air commercials for a chain of cannabis stores and an extraction company that makes vape pens, it seemed as though the climate was changing.
Those hopes were dashed soon after, however, when the station decided not to air the advertisements due to legal concerns – well after the story garnered national media attention.
Colorado advertising laws prevent ads from running on televisions unless the marijuana company “has reliable evidence” that no more than 30% of viewers are under the age of 21, the same standard held for alcohol. A spokesperson for the extraction company – called Neos – said its ad fit into those parameters.
The TV station, however, ultimately decided not to air the commercials because its parent company, E.W. Scripps, is worried about potential fallout from the Federal Communications Commission.
Scripps spokeswoman Valerie Miller told Marijuana Business Daily that the local station considered running the ad for the marijuana companies, but eventually the top brass in New York decided against it due to a “lack of clarity” in the federal regulations.
“There were blurred lines,” Miller said. “The federal regulations don’t give us guidance one way or another, so it becomes questionable what steps a media company should take.”
This scenario is neither unique nor surprising, said attorney Matthew Abel, who likened the lack of television advertising options to the lack of banking in the industry.
“It’s very much like the banking problem for the exact same reason: (marijuana is) federally illegal,” said Abel, a Michigan lawyer who works with cannabis companies. “The FCC is quite powerful, and a broadcasting license is quite valuable, so these media companies are reticent to go very far into the risk category. It’s a huge penalty if they lose that argument, and for the small amount of advertising revenue they receive, it’s not worth it.”
The Denver television station’s unwillingness to air the advertisements underscores the issues marijuana businesses have when it comes to marketing their products. State laws vary, but most at the very least prohibit advertising where children may be present – or as in this case, may be watching.
A couple verifiable cases of marijuana advertisements running on television have been documented, including one in 2010 for a dispensary in California. In 2013, a commercial for a doctor’s office where patients could be certified ran on an Arizona station.
Some companies may be willing to try, but ultimately running the ads is up to the television stations themselves. The FCC still has regulatory authority over what stations run, and many aren’t willing to risk penalties for airing an ad for what is still a federally illegal substance.
Ean Seeb, the co-owner of Denver Relief, said when he and his partners opened the company’s first storefront dispensary about five years ago, they aired a 30-second commercial before R-rated movies at a local theater.
“We couldn’t mention marijuana, we could only talk about our wellness programs,” he said.
Seeb said he’s been approached by television stations selling ads to cannabis companies, but always refused, knowing the commercials would never be on the air. While he was hoping to see ads for marijuana businesses on the air after hearing about the commercials last week, he was skeptical that it would happen.
“I was certain there was going to be some kind of push-back,” he said.
It’s not that the FCC has strict regulations against airing advertisements for cannabis businesses, it’s that it offers no specific guidance whatsoever. It’s that lack of direction that makes media companies weak-kneed.
Until marijuana is reclassified as a lower-level drug, or descheduled altogether, it’s unlikely television advertisements for any cannabis business will been seen on broadcast television, other than on the odd late-night, small-market station that’s willing to take the risk, said Abel, the Michigan attorney. And even then, they’ll be extremely rare, he said.
Patricia Rosi, the chief executive officer of dispensary Wellness Connection of Maine and a former advertising and marketing executive, said media companies aren’t just risking their broadcast licenses and potential fines. They could also face a backlash from other business partners that find cannabis companies offensive for whatever reason, she said.
“They have to keep in mind what’s going to happen with their other advertisers – are they going to withdraw their money because they’re supporting (marijuana companies)?” Rosi said. “I’m sure there are a lot of interesting conversations going on behind the curtain right now on how to handle this. There’s a potential for huge revenues coming their way, but they’re probably asking themselves, ‘what are the consequences?'”
Tony C. Dreibus can be reached at [email protected]