Tag Archives: proposal

Surprise! A Major Cannabis Stakeholder Pushes for Ethical Marketing Standards

By Jeff Baerwalde
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As more nations across the globe embrace the benefits of legal cannabis, to say the business is booming is an understatement. But with cannabis going corporate in a big way and marketing standards still hit or miss, the reality of unethical marketing practices that manipulate consumers and run roughshod over small businesses threatens to do harm if not brought under control.

Enter Cresco Labs, a major player in the international cannabis industry. Contrary to what you might expect, and bringing in a breath of fresh air, this giant is pushing to install marketing standards that protect the ethical interests of all cannabis businesses.

In this article, we will take a look at some key elements of ethical advertising in the cannabis industry and explore the Cresco Labs proposal.

This dispensary ad appeared on Variety.com

The Power of Advertising

Advertising is a powerful medium for rebranding and influencing public perception. The messages conveyed by ads reflect the changing moral, ethical, and consumer opinions of society – and often create them in the first place. For cannabis, an industry rife with stereotypes, ads present a strong opportunity to change the popular face and perception of cannabis as nothing more than a vehicle to get high.

Today’s numbers tell a different story with a full 19% using it for pain relief and another 37% to relax. Even one successful ad campaign can change the mind of a skeptical consumer. So how to ethically harness this power?

Cannabis rebranding generally works best when it draws on four main elements:

  • Emphasize health and wellness benefits. Most new customers who are interested in cannabis these days are attracted by the inspiring health and wellness possibilities that cannabis products present. By redefining cannabis as a medical product suitable for families, the elderly and patients suffering from various ailments, and not simply as a way to get high, cannabis companies can target the audiences that will most benefit from their products.
  • Replace typical “juvenile” imagery with sophisticated graphic design approaches. With so many options for how to use and consume cannabis these days, it is no wonder that brands are embracing trendy, sophisticated, contemporary design techniques. Logos featuring minimalist and elegant fonts more accurately express the narrative behind products such as cannabis teas, cannabis-infused oils and edibles.
  • Highlight the science behind the products. For those naysayers still determined to limit cannabis to its recreational usages only, to the exclusion of its many health benefits, exploring the science is vital. By citing legitimate research studies and findings, and explaining the scientific processes at play when using cannabis, ads can debunk false myths while educating the public.
  • Tell a compelling, relatable story. Like all good advertising, the narrative is key to engaging audiences. Framing cannabis within the powerful context of a compelling story is a strong approach to making a memorable impact on consumers.

Wild West Advertising

Because cannabis is such a new industry, only recently becoming legal in many states (and countries), advertising agencies have been reticent to sign on with these companies. The lack of regular advertising standards means that cannabis advertising has been compared to the “wild west,” where anything goes. While some companies struggle to promote a more wholesome, consumer-friendly image of cannabis, marketing to broad audiences, other companies embrace stoner stereotypes and industry myths, often resulting in ads that depict unethical content.

An example of a warning letter the FDA sent to a CBD company making health claims

Unofficial social media ads may target underage customers, with slogans featuring symbols like Santa Clause, or presenting underage people in their ads next to cannabis products, as in a recent Instagram ad from one brand, Dogwalkers. The ad shows a person holding a pre-rolled joint on the beach with a caption that reads “let the good times (pre) roll.” The image also features young-looking surfers in the background, an implied invitation to underage consumers to sample these products.

Without regulation, businesses are also free to create advertisements rife with false claims. Vulnerable people, patients with chronic illnesses, senior citizens and others may be susceptible to the claims presented in these ads. The FDA has recently begun to crack down on this spread of misinformation, but putting in place industry-wide advertising standards would also have a strong effect.

Cresco Standards

Operating in nine states in the U.S., Cresco Labs is a vertically integrated, publicly traded company that has recently released a proposal for establishing marketing rules for the cannabis industry. The proposal, entitled “Responsible Advertising and Marketing Standards for the U.S. Cannabis Industry” outlines a vision to hold the U.S. cannabis industry to a higher professional and ethical standard than is the current norm, thus legitimizing the industry.

Some specific rules in the proposal stipulate that ads depicting over-consumption as a fun or desirable outcome should violate industry standards. Additionally, the widespread adoption of this proposal would ban any marketing approaches that target underage consumers, ensuring that companies are better able to enforce legal age restrictions.

The company, alongside other large cannabis organizations, has released this proposal as part of an attempt to normalize the industry, allowing it to bring in top ad companies to help promote their brands. While cannabis retains the pop culture imagery of stoner culture and its associations with reckless behavior and teenage cannabis usage, regular advertising sources will remain skeptical about getting involved.

Changing Tides

As the industry continues to evolve and expand, more regulation will be useful in terms of establishing dominant narratives to help redefine how cannabis appears in the popular imagination and what kind of clientele is attracted to cannabis products. But by redefining the acceptable standards of advertising, there is also a risk that cannabis will lose some of the intrigue and novelty that currently makes it a popular, trending topic.

Still, if rebranding campaigns can shift the story so that cannabis appeals to the masses, then everyone in the cannabis industry ultimately benefits.

Introducing the Cannabis Quality Conference & Expo

By Aaron G. Biros
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An educational and networking event for cannabis safety and quality solutions: Innovative Publishing and Cannabis Industry Journal are pleased to present the first annual Cannabis Quality Conference & Expo (CQC). The conference will take place October 1-3, 2019, hosted at the Renaissance Schaumburg Convention Center in Schaumburg, Illinois.

The inaugural CQC will consist of two separate tracks: The Cannabis Labs track, focused on all things cannabis lab testing, and the Cannabis Quality track, focusing on quality in cannabis product manufacturing.

Sharing an exhibit hall and meeting spaces right alongside the Food Safety Consortium Conference & Expo, the CQC allows cannabis professionals to interact with senior level food quality and safety professionals, as well as regulators. Visit with exhibitors to learn about cutting-edge solutions, explore two high-level educational tracks for learning valuable industry trends, and network with industry executives to find solutions to improve quality, efficiency and cost effectiveness in a quickly evolving cannabis marketplace.

The CQC will be hosted at the Renaissance Schaumburg Convention Center in Illinois (just outside of Chicago)

With the cannabis industry in the Midwest growing at a rapid pace, the CQC offers attendees, exhibitors and sponsors unparalleled access to explore these emerging markets, their regulations, opportunities for business growth and best practices from the more established food industry.

For information on speaking opportunities and to submit an abstract, click here to view the Call for Proposals. The CQC will be accepting abstracts for consideration until June 3, 2019. For information on exhibiting, as well as additional sponsorship opportunities, contact RJ Palermo, Sales Director, rj@innovativepublishing.net, (203) 667-2212.

Take advantage of this chance to connect with cannabis industry and food safety professionals in the Greater Chicago Area. Don’t miss this opportunity to network with hundreds of industry stakeholders, get the latest on regulatory developments and see the newest technology disrupting the cannabis space.

What’s Happening on Capitol Hill? Part 4: Banking & Tax Reform

By Brian Blumenfeld, J.D., M.A.
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To round out our federal reform review, we look at the bills introduced into the 115th Congress that attempt to resolve the banking and taxation problems faced by state-legal cannabis businesses. As this is perhaps the biggest thorn in the side of the cannabis industry, any movement by the feds on these issues will be welcomed. As it turns out, there are four proposals currently pending for fixing the broken cannabis financial services system, with each proposal comprising a pair of House-Senate companion bills. We look at each pair in turn.

Group 1

S. 1156 – SAFE Act; or, Secure and Fair Enforcement Banking Act

HR. 2215 – SAFE Act; or, Secure and Fair Enforcement Banking Act

Policy: These SAFE Acts would prohibit federal prosecutors and federal regulators from preventing or disciplining in any way a depository institution simply because that depository institution serviced a cannabis-related business.

Impact: The impact of these bills would be widespread for both the cannabis industry and for financial service institutions looking to capitalize on the cannabis industry. For banks, the bills would remove all of the barrier-risks that are now keeping them out of the cannabis business. Currently, the feds have handed down policy guidance to banks stating that as long as they submit what are called “Suspicious Activity Reports, or “SARs” for cannabis-related accounts, and conduct their due diligence to ensure such accounts are complying with state law, then those banks will not be pursued by federal law enforcement. The problem with this guidance is that it is only policy, it is not law, and so it can change on as little as an administrative whim. The protection from cannabis business risk, most banks have determined, is therefore temporary at best and illusory at worst. Passage of the SAFE Act would instantly change all of that and initiate a banking bonanza. Banks will be racing to profit off of what is amounting to a newly minted billion dollar industry. Cannabis businesses will benefit greatly from all of this. Not only will they be able to stop operating strictly in cash and have access to all the traditional financial services that other businesses heavily rely on, but they will also be the beneficiaries of a highly competitive, and therefore affordable and efficient, cannabis banking market.

Procedural Status:

S. 1156

  • Introduced: May 17, 2017 by Senator Jeff Merkley (D-OR)

    Senator Jeff Merkley (D-OR)
    Image: Medill DC, Flickr
  • Cosponsors: 3 Republicans, 7 Democrats, 1 Independent
  • Referred to Senate Committee on:
    • Banking, Housing, and Urban Affairs

HR. 2215

  • Introduced: April 27, 2017 by Representative Ed Perlmutter (D-CO)
  • Cosponsors: 7 Republicans, 44 Democrats
  • Referred to House Committees on:
    • Judiciary
      • Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
    • Financial Services

Group 2

S777 – Small Business Tax Equity Act of 2017

HR 1810 – Small Business Tax Equity Act of 2017

Policy: These bills would carve out an exception to IRC 280E allowing cannabis businesses to deduct ordinary business expenses from their federally taxable revenues.

Impact: If enacted these bills will dramatically ease the tax burden for cannabis businesses. Currently, even when they are in perfect compliance with state law, cannabis businesses are not permitted to deduct ordinary business expenses. This means that net taxable revenues are, and are going to continue to be, substantially higher than net taxable revenues for businesses in any other industry. If enacted, profit margins—and therefore product quality, operational efficiency and innovation—are going to uptick across all states that have legalized.

Procedural Status:

Senator Ron Wyden (D-OR)
Image: JD Lasica, Flickr

S. 777

  • Introduced: March 30, 2017 by Senator Ron Wyden (D-OR)
  • Cosponsors: 1 Republican, 4 Democrats
  • Referred to Senate Committee on:
    • Finance

HR. 1810

  • Introduced: March 30, 2017 by Representative Carlos Curbelo (R-FL)
  • Cosponsors: 10 Republicans, 24 Democrats
  • Referred to House Committee on:
    • Ways and Means

Group 3

S. 780 – Responsibly Addressing the Marijuana Policy Gap Act of 2017

HR. 1824  Responsibly Addressing the Marijuana Policy Gap Act of 2017

Policy: These bills combine to accomplish what each of the foregoing pairs accomplish separately. IRC 280E would no longer apply to state-legal cannabis businesses, and banking would become available for them as well. Additionally, advertising prohibitions in the CSA and the Communications act of 1934 would be removed, with the one exception that advertisements inducing travel from a state where cannabis is not legal to a legal cannabis state would be prohibited. Under Title II of the acts, barriers to federal bankruptcy proceedings would be removed. These bills would also reform the CSA as it relates to criminal liability for individuals, criminal record expungement and medical research for institutions, all of which are noteworthy but neither of which directly impact the legal cannabis industry.

Impact: For the impact of IRC reform, see “Impact” section under S.777/HR.180. For the impact of banking reform, see “Impact” section under S.1156/HR/2215.

By leaving advertising guidelines completely up to the states, we would probably witness the easing of advertising restrictions by the states. Currently, states have tight advertising rules because, after protecting consumers, they do not want their state’s legal cannabis industry to draw attention from the feds in any way. That concern would become moot and we could see more advertising in and across legalized states. This would drive competition across larger markets, in terms of both product and service quality and branding/marketing strategy.

Access to federal bankruptcy proceedings would clarify the landscape for all potential financial scenarios in the lifecycle of cannabis businesses, which in turn will ease uncertainty concerns of potential investors. The bankruptcy provision, combined with the banking provisions will undoubtedly open access to capital for cannabis businesses looking to grow operations and market presence.

Procedural Status:

S. 780

  • Introduced: March 30, 2017 by Senator Ron Wyden (D-OR)
  • Cosponsors: None
  • Referred to Senate Committee on:
    • Finance

HR. 1824

Representative Earl Blumenaur (D-OR)
Photo: Bridget Baker, 92bridges.com
  • Introduced: March 30, 2017 by Representative Earl Blumenaur (D-OR)
  • Cosponsors: 0 Republicans, 8 Democrats
  • Referred to House Committees on:
    • Judiciary
      • Crime, Terrorism, Homeland Security, and Investigations
      • Regulatory Reform, Commercial and Antitrust Law
      • Immigration and Border Security
    • Energy & Commerce
      • Health
    • Ways and Means
    • Financial Services
    • Natural Resources
      • Indian, Insular, and Alaskan Affairs
    • Education and the Workforce
    • Veterans’ Affairs
      • Health
    • Oversight and Government Reform

Group 4

S. 776 – Marijuana Revenue and Regulation Act

HR. 1823 – Marijuana Revenue and Regulation Act

Policy: Subchapters A and B of these bills would impose two additional federal tax requirements on cannabis businesses. The first would be an excise tax on all producers, beginning at a rate of 10%, and growing each year that a producer is in business to a cap of 25% at five years. The second tax would be an occupational tax of $1,000 per year, to be paid by the principals of any cannabis producer or warehouse proprietor. Significantly, these bills would also authorize the federal government to regulate operations in the industry.

Impact: The tax impact of these bills would be a straightforward additional tax that cannabis businesses would have to pay, on top of state and local taxes. The burden of additional taxes will inevitably impact profit margins, initial decisions on whether or not to enter the market and strategies for expansion and innovation. The impacts of federal authorization and regulatory requirements was discussed in the second article of the series, specifically under the “Impact” section of HR1841

Procedural Status:

S. 776

  • Introduced: March 30, 2017 by Senator Ron Wyden (D-OR)
  • Cosponsors: None
  • Referred to Senate Committee on:
    • Finance

HR. 1823

  • Introduced: March 30, 2017 by Representative Earl Blumenaur (D-OR)
  • Cosponsors: 0 Republicans, 8 Democrats
  • Referred to House Committee on:
    • Ways and Means