Juul False Advertising Lawsuits Offer Lessons for Cannabis Companies

What Can Cannabis Companies Learn from Recent JUUL False Advertising Lawsuits?

E-cigarette maker Juul Labs is facing class-action lawsuits across the country, including in New Jersey. Among other claims, the suits allege that the company targeted young people with false advertising that made its Electronic Nicotine Delivery System (EDNS) seem like a healthy alternative to cigarettes.

Juul isn’t the only company facing legal scrutiny. The entire vaping industry is under fire for targeting young people and withholding critical health and safety data. According to the FDA, e-cigarette use by high school students increased 78 percent in 2018. It has also resulted in six vaping-related deaths and hundreds of illnesses. The FDA recently sent a warning letter to Juul alleging that it unlawfully marketed its e-cigarettes.

What Can Cannabis Companies Learn from Juul?

Juul’s legal troubles can offer valuable lessons for cannabis companies, particularly with respect to advertising. Before marketing your products, it is imperative to understand the advertising restrictions for cannabis products, which are significant and vary from state to state.

Common features of cannabis advertising regulations include buffers (often 500-1,000 feet) from schools, playgrounds, and places of worship, prohibition of false claims, requirement to exclusively target adults, and prohibition of medical claims. In many cases, states regulate cannabis products like they do alcohol and cigarettes. For instance, when Colorado legalized recreational marijuana, it prohibited advertising on television programs, radio stations, websites or print publications where the audience includes more than 30 percent people under age 21. In California, state regulations provide that cannabis advertisements “shall only be displayed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older, as determined by reliable, up-to-date audience composition data.”

Because cannabis is still illegal under federal law, most forms of digital advertising are prohibited. For instance, Facebook, Google, and Twitter all ban paid advertising for cannabis products on their sites. It is possible, however, to post about cannabis-related products organically in social media feeds. While this can be extremely successful, it is important to tread carefully. Juul’s use of influencers and brand ambassadors is one of its marketing tactics that has come under fire for allegedly targeting young people.

New Jersey’s Cannabis Marketing Laws

New Jersey has regulations in place to govern advertising in its medical cannabis industry. For instance, alternative treatment centers (ATCs) must use black text on a white background on external signage, labeling and brochures; they may not illuminate their signs; and marijuana and related paraphernalia may not be displayed or clearly visible to a person from outside the ATC.

Proposed legislation to legalize recreation cannabis also contains strict advertising regulations. Below are just a few of the restrictions required under New Jersey’s Cannabis Regulatory and Expungement Aid Modernization Act (Senate Bill 2703):

• Restrict advertising of cannabis items and cannabis paraphernalia in ways that target or are designed to appeal to individuals under the legal age to purchase cannabis items, including, but not limited to depictions of a person under 21 years of age consuming cannabis, or, includes objects, such as toys, characters, or cartoon characters suggesting the presence of a person under 21 years of age, or any other depiction designed in any manner to be especially appealing to a person under 21 years of age;
• Prohibit advertising of any cannabis items or cannabis paraphernalia on television, or on radio between the hours of 6:00am and 10:00pm;
• Prohibit engaging in advertising unless the advertiser has reliable evidence that at least 71.6 percent of the audience for the advertisement is reasonably expected to be 21 years of age or older; and
• Prohibit engaging in advertising or marketing directed towards location-based devices, including but not limited to cellular phones, unless the marketing is a mobile device application installed on the device by the owner of the device who is 21 years of age or older and includes a permanent and easy opt-out feature and warnings that the use of cannabis items is restricted to persons 21 years of age or older.

Key Takeaway

Given the restrictions under state and federal law, advertising a cannabis business can be difficult. While it often requires creativity, failing to work within the legal framework can lead to significant liability. Cannabis advertising regulations are also likely to change and evolve as the industry grows, so it is also important to stay on top of legal developments.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.