If you’ve driven down Interstate 10 in recent years, you’ve seen many billboards advertising various retail cannabis businesses and brands.
But have you looked lately? Those billboards are all gone, save one or two, due to a legal battle that rages on regarding cannabis advertising.
Adult-use cannabis was approved by voters via Proposition 64 in 2016. The state then created regulations—which have been continuously interpreted and re-interpreted by the three state agencies that issue cannabis licenses. The California Bureau of Cannabis Control (BCC), in charge of retail licensure, made a determination early on that billboard advertising was allowed everywhere except within 15 miles of state borders, based on language set forth in Prop 64.
However, everything changed on Jan. 11, 2021. In the case of Farmer v. Bureau of Cannabis Control and Lori Ajax, the San Luis Obispo County Superior Court entered a formal judgement that the BCC’s interpretation of the law was invalid. This ruling means that a licensee may not currently place advertising on a billboard anywhere along a state or interstate highway that crosses the California border—some 4,315 miles of highways in the state.
The lawsuit was filed by Matthew Farmer, a construction contractor who is the father of a 15-year-old daughter and a 12-year-old son. Farmer said that he was concerned that the billboards exposed his children to cannabis advertising.
Why is this ruling such a big deal? Because it took away one of the relatively few advertising venues cannabis businesses currently have.
State law allows cannabis ads on billboards or bus stops along city streets—but not within 1,000 feet of daycare centers, K-12 schools or playgrounds. However, localities can choose to ban such advertising. You can get a sense of which cities allow it in the Coachella Valley by simply driving down Highway 111.
Further, state law limits physical and digital cannabis advertisements to places where at least 71.6 percent of the audience is reasonably expected to be 21 or older. This standard is applied to all ads, in physical or digital form. Yes, that is a weird standard, but it offers a sense of the intended purpose of these prohibitions.
As for other traditional advertising and marketing options? Television and radio outlets generally prohibit ads, since those media outlets are regulated by the Federal Communications Commission, and they are afraid they will lose their licenses, because cannabis remains an illegal Schedule 1 drug under federal law. In addition, newer marketing platforms—including Facebook, Instagram, YouTube and TikTok—do not allow mentions of cannabis sales, prices, discounts, store locations or links. Some print-media publishers allow cannabis ads, but it is hit and miss. Because of all these limitations, billboard advertising is extremely important to the industry right now.
According to Pedro Fonseca, the director of retail at Harborside—which operates the drive-through cannabis retail store in Desert Hot Springs—between 60 and 75 percent of customers surveyed over a recent two-month period visited the store based on seeing a highway billboard. Another 17 percent used Weedmaps, a tech platform created to serve the cannabis community. Fonseca said customers at the DHS store came from 919 different cities across the U.S.—the majority from the bordering states of Arizona and Nevada—meaning billboards are a vital pipeline for Harborside’s existence.
In an attempt to respond to concerns on both sides of the argument, two state legislators have rolled out competing bills that are moving through the legislative process. Assembly Bill 273, proposed by Assemblymember Jacqui Irwin (D-Thousand Oaks), would create an outright ban on pot billboards on all interstate and state highways. Alternatively, Assembly Bill 1302, introduced by Assemblymember Bill Quirk (D-Hayward), would change the law so it matches the BCC’s initial interpretation of Prop 64, again allowing cannabis billboards along highways unless those billboards are within 15 miles of a state border.
Whatever happens will have a major impact on California’s legal cannabis industry. The legal, licensed market heavily relies on outdoor advertising to drive consumer demand and purchases.
The black market for marijuana is thriving, with some estimates saying that more than half of the cannabis sold in the state by 2024 will be done so illegally.
Meanwhile, legal cannabis businesses follow the rules. Companies comply with “age-gating” on websites; target adult consumers in the small number of media sources that allow cannabis advertising; and continue to push against incredible amounts of fear and historical stigma. The advertisement and marketing of a legal consumer commodity is vital—and should be protected as commercial speech.
Agree or disagree? Educated feedback is more than welcome.