by: Jamie Rubin and Tatyana Ruderman

Last week the Illinois legislature passed a historic recreational cannabis law—House Bill 1438, the Cannabis Regulation and Tax Act (Cannabis Act). Governor J.B. Pritzker is expected to sign the Act into law and then, when effective on January 1, 2020, Illinois will allow the sale, possession, and use of recreational cannabis (with carefully crafted restrictions). At InfoLawGroup, we are exploring what this means for businesses in general, and also for businesses involved in the sale and marketing of alcohol beverages. We counsel clients in the alcohol beverage industry and it is no secret that the alcohol beverage industry is already investing resources in testing and producing cannabis infused drinks.

The Cannabis Act meticulously proscribes how cannabis businesses will be licensed, taxed, and otherwise overseen by various state agencies and sets forth a comprehensive framework for personal possession and use, enforcement, among many other regulations. For now, we focus on the Cannabis Act’s advertising and promotions rules. How can cannabis brands and others advertise and promote cannabis products in Illinois?

Section 55-20 of the Cannabis Act lays out rules that companies will need to follow in advertising and promoting cannabis products. (And to anyone familiar with the self-regulatory guidelines for the advertising and promotion of alcoholic beverages, like ourselves, some of these restrictions will sound awfully familiar.)

Advertising

The Cannabis Act governs advertising practices for recreational cannabis. The Act’s advertising restrictions apply broadly to any cannabis business establishments AND any other person or entity, and explicitly prohibits statements or illustrations that:

• are false or misleading;

• promote overconsumption of cannabis or cannabis products;

• depict actual consumption of cannabis;

• depict a person under 21 years of age consuming cannabis;

• make any health, medicinal, or therapeutic claims about cannabis or cannabis-infused products;

• include the image of a cannabis leaf or bud;

• include any imagine designed or likely to appear to minors (such as those including cartoons, toys, animals, or children, or any other images that are designed to appeal to or encourage consumption by persons under 21).

The Cannabis Act also proscribes where advertising can be placed or maintained, specifically prohibiting advertisements in any form or through any medium that:

• are within 1,000 feet of the perimeter of school grounds, a playground, a recreational center or facility, a child care center, a public park or public library, or a game arcade where admission is not restricted to persons over age 21;

• on public transit vehicles or public transit shelters (so, no CTA train or bus ads);

• on publicly owned or operated property; or that

• include information that is false or misleading; promotes excessive consumption; depicts a person under 21 years of age consuming cannabis; includes the image of a cannabis leaf; or includes any image designed to appeal to minors (such as including cartoons, toys, animals, or children) or any other likeness to images, characters, or phrases that are popularly used to advertise to children, or any imitation of candy packaging or labeling, or that promotes the consumption of cannabis.

(We note that the advertising restrictions do not apply to an “educational message”—which is not explicitly defined but should not be perceived as a safe harbor for commercial cannabis entities.)

Sales Promotions

The Cannabis Act also governs sales promotions, prohibiting a cannabis business establishment or any other person or entity from:

“encourag[ing] the sale of cannabis or cannabis products by giving away cannabis or cannabis products, by conducting games or competitions related to the consumption of cannabis or cannabis products, or by providing promotional materials or activities of a manner or type that would be appealing to children.”

While this would seem to clearly prohibit a cannabis brand from giving away cannabis products in connection with or in furtherance of a sale of cannabis, this may leave an open question as to how other entities (unrelated to the cannabis business), might be able to use cannabis products in connection with their contests, sweepstakes, or promotions. To draw a comparison, there are several creative ways in which alcohol beverages are given away in special events or in connection with non-profit organizations.

ILG Takeaway

With our background navigating alcoholic beverage advertising and marketing regulations, we know firsthand that while these rules may seem highly restrictive, there will certainly still be ways for companies to define their brand and stand apart from the competition.

Many of these restrictions are similar to those impacting the alcoholic beverage industry. For example, the alcohol beverage industry proscribes “responsible drinking statements” aimed to temper excessive consumption, avoids images or depictions of alcohol consumption, and avoids advertising to children.

Also like the alcohol beverage industry, there are and will be more self-regulatory schemes set up to address how to responsibly advertise cannabis products, such as the National Association of Cannabis Businesses.

Stayed tuned for our next post where we review the Cannabis Act’s product packaging and labeling requirements.

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i - With the potential for fierce competition in a mostly-open marketplace, in addition to navigating licensing and other administrative requirements, companies will need to establish a solid advertising strategy to attract and woo new Illinois consumers. This includes entities already licensed under the Compassionate Use of Medical Cannabis Pilot Program Act who are now working to expand their facilities to accommodate the anticipated influx of recreational consumers.

ii - “a cultivation center, craft grower, processing organization, dispensing organization, or transporting organization”