Reefer Madness, Redux

Last fall it seemed that the big, new advertising issue confronting broadcasters was how to deal with the emerging legalization of medicinal cannabis and the emerging acceptance of recreational marijuana, also trending toward legalization. In an October article last fall I discussed the trend and the legal issues, including the revised policy of the U.S. Department of Justice.

Despite the trend toward legalization at the state level and the attempt to moderate the impact of federal law, represented by the Department of Justice's Cole Memorandum, a reasonable analysis still required the conclusion that accepting cannabis advertising in any form, for medicinal or recreational purposes, remained a dangerous proposition. Even where state law permits use and possession, the Cole Memo standards would still require an extensive case-by-case analysis of the state regulatory scheme and each advertiser's commercial policies to determine that the accepted advertising could be defended under the relevant state's specific "strong and effective" regulatory scheme.

In the six months since that article, the trend toward legalization has gathered even more momentum. Maryland, the state where many U.S. DoJ officials live, recently decriminalized possession of small amounts of marijuana and will allow dispensaries and cultivators to provide medical marijuana directly to patients whose physicians proscribe medical marijuana.

A recent poll there found that a majority also think it's time to legalize, regulate and tax marijuana. That is the trend nationally. A March Pew Research Poll reports that a majority of Americans now favor legalizing the use of marijuana and that 65% of Millennials – born since 1980 and now between 18 and 32 – now favor fully legalizing the use of marijuana, up from just 36% in 2008. An NBC News/Wall Street Journal Poll found similar results and NBC reported approving statements from such diverse major national political figures as President Obama, New York's Senator Chuck Schumer and stalwart conservative Texas Gov. Rick Perry.

So, with all this momentum for acceptance and favoring legalization, is it safer to accept cannabis advertising? Some seem to think so. Trade journals are reporting that radio stations in Boston and Colorado have taken cannabis advertising, although some of it, such as Boston's Greater Media, is targeting education, such as the many ways medical marijuana can be consumed and used effectively as part of a healthy lifestyle. As reported in Marijuana Business Daily , the advertiser claimed that, although Massachusetts' medical marijuana law strictly limits what can be promoted, it does not apply to its messages since it is an "institute," and not a dispensary.

In addition, competitive online, Internet-based listing services such as Yelp are taking listings from medical dispensaries. So, does all this "smoke in the air" present a business situation that warrants another look at the issue? Might the legal analysis be tempered with the practical realities of what is actually occurring in state legislatures, public opinion and the marketplace?

Responsibility of the Media

It can be observed that different legal standards are typically applied to the advertising media used than the advertiser itself. Except in cases involving sponsorship identification rules of the FCC and federal laws applying to some tobacco advertising, there are few if any reported instances where the advertising media has been prosecuted for publishing the advertising of a product because it might reach persons not lawfully able to use it. Moreover, while the DoJ has taken a position that marijuana is still illegal, the Cole memo indicates that they will not prosecute when sold or used in a limited manner consistent with state law. However, while it has not happened before and First Amendment concerns are clearly at play, the media does not enjoy immunity and it does not mean that it cannot happen. Indeed, there seems to be a growing movement to control cannabis advertising.

A few years ago, a U.S. Attorney reportedly was going to clamp down on the proliferation of pot ads in California by targeting newspapers, radio stations and other media organizations. See Next Target of Federal Pot Backlash in California: Marijuana Ads, Marijuana Business Daily , Oct. 12, 2011 and Huffington Post . Over a year ago, the Denver Post reported that the City of Denver banned outdoor medical marijuana ads.

Therefore, if a broadcaster is interested in exploring the issue further, it is useful to analyze the protections afforded media.

The courts have frequently held that"[t]he First Amendment ... protects commercial speech from unwarranted governmental regulation." The test for determining unwarranted governmental regulation was set out in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 561-62, 100 S.Ct. 2343, 2349, 65 L.Ed.2d 341 (1980) which established a four-part test to analyze the constitutionality of government regulations limiting commercial speech and whether it is protected by the First Amendment.

For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

In the case of medicinal marijuana, the Central Hudson test would require analysis of the laws and regulations of each state and local jurisdiction. Simple listings for medicinal marijuana dispensaries that are in full compliance with state and local law might be presumed to be legal. Content complying with state guides might also not be considered misleading. Therefore, the analysis would shift to the remaining three prongs of Central Hudson. However, in doing so, as the 9th Circuit in the Valley Broadcasting case found in analyzing FCC rules relating to gambling, the government's burden "is not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real... ."

Therefore, it would be necessary for any station seeking to accept dispensary advertising to establish clear guidelines for "lawful" messages, i.e., allowing only advertisers who can demonstrate they fully comply with all state and local laws in a fashion that would meet the Central Hudson test for lawfulness and demonstrable lack of harm. Perhaps that explains the very limited ways in which many Internet and newspaper competitors have accepted marijuana advertising. For example, Google will not allow ads to be linked to certain suggestive search terms, such as "cannabis" or "marijuana". Its marijuana advertisers are limited to such terms as "chemotherapy nausea," without any images of marijuana, and even those may be delivered only in states that allow medical marijuana.

Risk Assessment

With such a heavy burden, the advice has been; don't do it. It was recently reported that the Colorado Broadcasters Association advises that, since their licenses are controlled by the FCC, and since marijuana is still a controlled substance under federal law, broadcasters should not take such advertising.

Yet, it seems that some stations may be determined to give it a go, and join its print and Internet competitors by accepting advertisements for marijuana dispensaries. If so, they should at least ask these questions in evaluating the business risk; and I do not suggest these are the only criteria to examine:

1. Has marijuana use or possession been legalized in the state of the business and publication?
2. Is the ad for a business in, and to be placed in a state where the specific marijuana activity or related transaction is legal?
3. Does the ad truthfully represent legal activity in the state of publication and not misrepresent the product or service?
4. Are there state regulations on advertising marijuana or marijuana-related products or services and will the message fully and completely comply with the regulations?

Among many other considerations, a generic policy should also ban any messages that:

• Appeal to underage use,
• Promote Marijuana tourism
• Promote the purchase for non-medical use where restricted to medicinal therapy, or
• Promote the purchase or possession of unlawful quantities.

Furthermore, any advertising agreements should include a representation and warranty of lawfulness of the message and an indemnity and hold harmless as well as a disclosure identifying the risks of this advertising category over media that cannot absolutely control its reach and that the advertiser accepts and assumes all risk arising from the placement.

After considering all these qualifications, it would not be surprising that few if any broadcasters are ready to accept these risks. Please also pay special attention to my normal disclaimer below. If you're thinking of taking any of this advertising, be sure to engage and consult with legal counsel of your choosing.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.