May 2, 2023
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Written by Highlyte
Electronic cigarette company Juul recently settled thousands of lawsuits for a sum of $1.2 billion—that should sound an alarm bell for cannabis companies. Like the nicotine vape giant, cannabis companies are bound by strict marketing regulations, emphasizing protections for underage audiences.
Now is the time for cannabis producers and retailers to reevaluate just how compliant their branding and marketing collateral are—before individual states and / or the feds change regulations (or start taking cases to court).
Most of the time, when stakeholders in the cannabis industry bring up the end of federal cannabis prohibition, it’s in an anticipatory context. Many cannabis companies view federal legalization as an opportunity to grow and expand their corporate footprint and revenue.
But with the end of prohibition comes the chance that, as with Juul, cannabis companies could be retroactively penalized for appealing to teens, tweens and kids. Whether a brand was compliant with state regulations, ran afoul of the rules in a new market after an MSO expansion, or inspectors simply didn’t enforce a measure, risk is real. However, risk can be mitigated.
Juul started as a product of Pax Labs—which also makes cannabis consumption devices—before it was spun off as a standalone company in 2017. The following year, the U.S. Food and Drug Administration launched its first investigation into whether Juul was encouraging underage purchase and consumption of its nicotine products. In 2019, Juul faced a spate of investigations and suits not only from the FDA but also the U.S. Centers for Disease Control and Prevention concerning the safety of vape cartridges and unproven claims that vaping is safer than traditional tobacco products like cigarettes.
Over three years later, Juul has officially been penalized for marketing tactics that “appealed to young people by hiring young models, using social media to court teenagers and giving out free samples,” as The New York Times reported. As a consequence, Juul is no longer allowed to depict anyone under age 35 in its marketing images. The settlement also includes restrictions that will be familiar to many cannabis brands, like stipulating Juul cannot place billboards or ads within 1,000 feet of a school or public playground, or make health claims that vaping is safer than cigarettes.
That’s where cannabis stakeholders can start to see what shape future lawsuits affecting their businesses might take. While state cannabis inspectors might not be able to check every blog or every detail of your web copy, that doesn’t mean potential plaintiffs aren’t already taking notes and building their cases.
Federal regulatory changes are a risk down the road, but state regulatory shifts could be a preview of what’s to come. If states decide to enforce laws already on the books around cannabis content compliance, or if states change their regulations, it could be more than just a hassle for cannabis operators. It could result in, say, being forced to completely redesign logos, packaging, marketing copy and other brand collateral. It could even result in a company losing its license.
This is more than a matter of paranoia or speculation. Potential lawsuits pose a real existential threat to the industry. Prioritizing absolute cannabis content compliance now isn’t just a line item on the annual budget. It means heading off potential cease-and-desist orders, fines, class-action lawsuits, lost revenue, market share or even bankruptcy. It’s an investment in the future of the business and a way to protect against opportunity loss and legal exposure.
If there are two things that can be scarce in the cannabis industry, it’s time and money. But investing in content compliance verification doesn’t have to stretch either of these finite resources. Like so much else in both cannabis and marketing, automation can simplify checking everything for compliance—from short social media posts to long white papers.
Tools like Highlyte can be used to give your Instagram account a health check—and will let you know state by state where you have the green light or where your work needs revising. Not only will Highlyte check the verbiage in your web body copy, captions and other content, it can also detect if the imagery you used is a photograph or an illustration that might appeal to kids. Highlyte can do the same for text documents—noting where, for example, you might have made health claims that violate not only regulations in states like California, Washington, Colorado and Michigan, but also Meta’s terms of service for Facebook or Instagram.
In addition to flagging potentially problematic content, Highlyte will also let you know if required advertising disclaimers are missing, when you’ve neglected to include your company’s license number in the content, or if you’re running afoul of rules on paid advertising or marketing products improperly, like positioning infused gummies as candy. It even offers tips on best practices that will help your content better appeal to your target audience, such as not utilizing popup ads.
From a business standpoint, there’s no denying Juul achieved enormous success. The brand name became almost synonymous with vaping nicotine. It had an enormous impact on youth culture. But with that kind of visibility came scrutiny—and Juul has had to pay dearly for each youthful lifestyle photo displayed in social media and careless, misleading marketing copy. Cannabis companies can avoid making the same mistakes. But they must start today.
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