May 3, 2023
Written by Highlyte
Content is king for advertisers in any industry. It’s the backbone of PR, marketing and online discourse that builds consumer trust and loyalty. It’s also highly regulated by federal and state agencies that want to ensure brand messaging and marketing tactics don’t come at the expense of public health and safety.
There are extra levels of scrutiny and risk for companies operating in highly regulated fields like healthcare, alcohol, gambling, transportation, finance and—of course—the cannabis industry.
Cannabis compliance comes down to more than OSHA regulations, pesticide and fertilizer use or ID checks at dispensaries. The way cannabis companies market themselves online, and off, is also subject to stringent state and federal regulations. And unlike what’s happening behind closed doors at a cultivation or retail operation, marketing content is some of the most visible work a cannabis company can produce. The stakes are high—make a misstep and a company could lose its hard-won license.
Beyond that are the legal risks. For example, a record of unproven health claims made on a brand’s website or social media platforms could encourage investigations brought by the government, customers, competitors, and private “bounty hunter” attorneys who seek relief that includes monetary damages, restitution, punitive damages, attorneys’ fees and statutory penalties.
But creating compliant content doesn’t have to come at the expense of enriching, informative and creative collateral that wows audiences and builds a brand’s reputation. Nor does it require expensive staffing or the implementation of onerous managerial processes. It’s about making a serious commitment to risk assessment and understanding that cannabis content moderation is as essential as passing a safety inspection. Here’s how you can get this often-overlooked aspect of cannabis operations right from the get-go.
Simply put, content compliance is adherence to the state regulations for cannabis marketing and advertising. The state laws governing medical and adult-use markets go beyond stipulating how many licenses a company can hold, the number of ounces a budtender can sell per retail transaction, and lab safety testing. They also apply to advertising and marketing restrictions that strictly control what cannabis companies can and cannot say in their content, and where that content can be published or transmitted.
For example, most legal states have rules forbidding cannabis advertisements within 1,000 feet of a public or private school, playground, public park or library. Another common restriction bans cannabis ads on public transit vehicles or transit stops and shelters. In California, all marketing content must include the company’s license number. Most regulatory agencies agree that cannabis product packaging must state the amount of THC per container and per serving. And so on.
In addition to the regulations set by individual states, cannabis content compliance also means adhering to established federal laws. As long as federal prohibition is in place, cannabis products cannot be regulated or approved by the U.S. Food and Drug Administration (“FDA”). That means many of the health claims cannabis producers would like to make—such as asserting that formulas high in CBN work as a sleep aid or that CBD can be used to treat anxiety disorders—aren’t allowed under current FDA regulations.
Because television and radio networks are regulated by the Federal Communications Commission (“FCC”), and because most broadcast audiences cannot be guaranteed to be at least 70% over the age of 21, cannabis companies typically cannot advertise on these channels. Nor can an Illinois cannabis retailer advertise California-grown weed the way a Chicago restaurant might promote its menu of Napa wines. That is, not until Congress revises the Controlled Substances Act and allows for interstate commerce of cannabis containing more than 0.3% THC, which is the legal limit of hemp. Even then, states that have set their own laws concerning the import and export of cannabis have shaped those regulations according to the limitations and guidelines set by federal agencies.
Other examples of non-compliant cannabis marketing content that go against the laws in at least one legal state:
Some examples of information that cannabis packaging and marketing materials must include, according to laws in at least one legal state:
Because there are so many different rules dictating how cannabis companies can communicate and through which channels, it’s well worth investing in content moderation to ensure all messaging is compliant. That can take the form of editing and fact-checking to ensure accuracy, that all required inputs are included, and that nothing slips through that might jeopardize a company’s license. Like so much of digital life and business, however, content moderation for both earned and owned media is increasingly managed with the support of automation tools.
Content marketing usually falls into two categories: earned media and owned media. A comprehensive advertising campaign will include a mixture of content in each category. Together, earned and owned media are used strategically to raise a brand’s profile, reaching both its established audience and new leads.
Earned media includes any references to a brand made “in the wild.” Examples include:
Owned media is content published and controlled by the brand. Examples include:
The key difference between earned and owned media in terms of content compliance is that, while earned media and word of mouth are invaluable, a brand cannot fully control what that coverage includes. Owned media, however, is entirely under the purview brand stakeholders. It is a brand’s responsibility to only publish compliant content on the platforms over which it has control.
A brand cannot control, for example, if customers post on their Instagram accounts that a particular THC-infused gummy help them sleep. But a brand may very well be penalized for making the same claim on its own Instagram account, on its website, or on a leaflet handed out to dispensary customers. Moderating all owned media to ensure compliance prior to publication is necessary to protect from both legal and financial jeopardy.
Social media has become essential for digital marketers, bridging the gap between earned and owned media. While social media platforms feel like owned media in that brands can self-publish promotional content, curate a variety of content, and share earned media wins at their own discretion, a company’s social media page is essentially just rented space controlled by a landlord, rather than fully controlled like a company website.
Social media for cannabis companies is especially loaded with risks because platforms like Meta’s Facebook and Instagram, Twitter, Tumblr, TikTok, LinkedIn, Mastodon and others not only have strict terms of service but also moderation teams and algorithms trained to spot posts about cannabis and other substances that are illegal at the federal level.
For a variety of reasons, most social media companies have specific restrictions on cannabis-related content. In part, these companies are following the lead of governments in the United States and other countries where cannabis is still illegal at the federal level. Many are also motivated by a desire to discourage unlicensed sales of cannabis products online, or to customers in prohibition states. There is also the problem of age verification—many social media platforms like Instagram, TikTok and BeReal tend to have a large percentage of their user base not yet over 21 years old.
For all these reasons and more, advertising cannabis brands on social media can easily result in a brand’s accounts becoming “shadowbanned” or outright deactivated. Shadowbanning is a relatively new phenomenon where an account still appears functional but is throttled by a platform’s algorithm to reach few to no other users—even if they have “opted in” to follow that brand’s account.
Using obvious hashtags like #weed and #marijuana is one way social media platform moderators are alerted to an errant brand violating the terms of service. But breaking other rules like depicting consumption or offering giveaways can also lead to account suspension or deactivation.
Losing access to thousands or even tens of thousands of followers on social media is just one example of how content compliance plays into a company’s ROI on marketing efforts.
Although content compliance has a relatively short history, it’s become important in a highly regulated media market and a post-Internet digital landscape. The federal government has only been regulating the information on pharmaceutical and over-the-counter product labels for a little over a century. In 1912, the Supreme Court ruled it was illegal to make false and misleading statements about drug ingredients and therapeutic claims. And in 1938 the Federal Trade Commission (“FTC”) began to oversee the regulation of “unfair or deceptive” advertising.
Such rulings and legislation in subsequent years were passed ostensibly to protect consumers from dangerous, misleading promises by unscrupulous companies that would rather gloss over harmful side effects of their products.
These measures also protect companies from being hoisted by their own petards, however. Whether a breach of compliance is a negligent blunder or stems from an intentional decision, it can threaten a brand’s bottom line and the well-being of customers and clients.
Any cannabis business needs to understand federal law as it relates to false advertising, deceptive trade practices, and the interplay with state regulations. Consider the multibillion dollar settlement in 2022 that e-cigarette giant Juul was ordered to pay out after facing thousands of lawsuits litigated from multiple states.
Juul was penalized after years of investigation by the FDA, state health departments and other entities, including Native American tribal organizations, for failing to comply with advertising restrictions that protect minors. Dozens of seemingly innocuous decisions over the years—from the use of youthful-looking models in visual advertisements to slack age verification online—added up to astronomic financial penalties that Juul may not survive despite its immense popularity, cultural cache and market share.
The lesson here is that content compliance is about more than following the rules. It’s one of the most significant ways that brands can protect cannabis marketing ROI—particularly in the highly regulated cannabis industry. Even major brands in less-scrutinized industries like the Kodak Imaging Network have run afoul of FTC rules to the tune of tens of thousands of dollars.
It’s of the utmost importance that cannabis companies are vigilant about every piece of content they publish on their owned media channels. After all, there are more rules at risk of being broken—and more scrutiny than businesses in other sectors face.
The degree of risk faced by cannabis brands varies, depending on the nature of the business in question, the state(s) where the business operates and the brand’s marketing strategy. It’s important to honestly evaluate the level of exposure your company faces in order to determine the level of moderation and vigilance it will take to protect your investments.
A multistate operator (“MSO”), for example, has a higher level of content compliance risk than a retail dispensary chain that operates in a single state market. An MSO must account for multiple states’ content compliance regulations and find ways to operate within sometimes quite different parameters. For example, an Arizona-based company that operates in a recreational market as well as a neighboring medical-only state like Utah that has unique stipulations such as referring to dispensaries as “medical cannabis pharmacies” may necessitate multiple versions of various marketing collateral and expertise in two sets of regulations—just for promoting their topical creams and 20:1 gummies.
This is another example, too, of why content moderation automation can be more efficient and cost-effective than analog methods. The Highlyte automated content moderation system is automatically updated as regulations change, allowing content marketing managers and creators to ensure both new and existing content adheres to state regulations. That means a content team can focus on producing inspiring, creative work that resonates with what the audience needs and wants, rather than trying to write as if regulators are the primary audience.
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