Will Vermont’s Restrictions on Weed Advertising Stunt the New Industry? | Business | Seven Days | Vermont's Independent Voice

News + Opinion » Business

Cannabis

Will Vermont’s Restrictions on Weed Advertising Stunt the New Industry?

By

Published November 16, 2022 at 10:00 a.m.
Updated December 6, 2022 at 1:28 p.m.


TIM NEWCOMB
  • Tim Newcomb

Vermont has adopted some of the most restrictive cannabis advertising rules in the country — regulations that some entrepreneurs say could stifle small businesses hoping to grow in the fledgling market.

Among the restrictions: All ads must be approved in advance by Vermont Cannabis Control Board staff; media outlets must prove that less than 15 percent of their audience is under 21; ads may not offer samples or prizes, or feature cartoon characters or toys that might appeal to children; and every ad must contain a readable 135-word health warning.

The regulations apply not only to advertising in traditional media and on websites but also to the social media accounts that many businesses use to reach potential customers.

The restrictive rules pose a challenge for cannabis businesses, which might find themselves forced to skip advertising altogether and rely on word of mouth; for the Cannabis Control Board, which is trying to create a market without losing businesses that might choose to skip the regulatory headaches and operate illegally; and for media outlets that don't want to miss out on a new source of ad revenue.

The regs also raise questions about enforcement, as the board will have its hands full reviewing the ads, in addition to the other state-mandated responsibilities assigned to its small staff. The board has vowed to approve, deny or ask for more information about each ad within 10 business days. But it's requesting that businesses file the advertisements 15 days before they run.

"It's very, very restrictive," said Dave Silberman, an attorney who advocated for Vermont's cannabis law and now co-owns FLŌRA Cannabis, a retail shop in Middlebury. "It's very difficult to advertise in any sort of traditional medium ... [We're] disappointed, but we're just gonna live with it."

Ahead of his October 1 grand opening, Silberman said, he tried to run an ad in his local newspaper, the Addison County Independent. But the weekly paper couldn't prove that less than 15 percent of its audience was under 21, according to Silberman, although it almost certainly is. (Angelo Lynn, the paper's editor and publisher, confirmed Silberman's account.)

"We went back and forth a couple times with the board, but the data [the newspaper] did have just wasn't enough," Silberman said. "And I don't blame the board for taking that position ... It's just difficult."

Jesse Harper, CEO and co-owner of Gram Central in Montpelier, said he's mostly relied on word of mouth in the weeks since he opened his store.

"Anytime we want to post on social media, we're paralyzed because we're worried we're going to do something wrong," he said "What can we say? 'Hi, we're Gram Central'? Can we say 'weed'?"

He thinks the rules for print ads are equally onerous.

"Have you ever met anyone who's under 21?" Harper asked. "They're not reading the fucking paper."

If state Rep. Anne Donahue (R-Northfield) had had her way, there would have been no cannabis advertising at all. In her view, the purpose of the cannabis legalization bill was to make the production and sale of cannabis safer for people who already consumed weed. Advertising, she argued, would entice new users. So, in February 2020, she proposed a near-total ban on advertising. 

Her amendment made it into the House version of the bill but was stripped out in final negotiations. The measure that Gov. Phil Scott let go into law without his signature in October 2020 allowed advertising, with restrictions.

Those restrictions are just another way the cannabis industry "is getting singled out and held to sort of unusual standards," said Noah Fishman, who recently opened a dispensary, Zenbarn Farms, on Route 100 in Waterbury Center. "It effectively makes everything more expensive and slower." 

"If we want to actually get this industry off the ground ... we've got to find some ways to support businesses, especially if we don't want it to just be in the hands of the largest companies or those with the deepest pockets," he continued. "For small businesses, we're the ones that get the most affected by this stuff. We can't weather all the storms of all the regulations and everything." 

The retail weed business is expected to be extremely competitive. As of last week, the board had received about 50 license applications — including seven in Burlington — and had approved about 25. When faced with such a proliferation, businesses typically use advertising to compete for customers.

"Everybody's like, 'Doesn't it sell itself?'" said JB Sugar, the director of digital sales at advertising firm WeedStreetNOW. "Well, what if someone opens across the street? How do you differentiate?"

Sugar is based in Burlington, but his company does business in half a dozen legal-weed states: California, Michigan, Oregon, Massachusetts, Maine and Illinois. While all of those states require some sort of health warning label, none of them requires preapproval to run advertisements, he said.

"We don't see this in other states, and I'm not sure, as the industry gets larger and the number of dispensaries increases, that it is a scalable model without full-time staff to check, correct and recheck ads," he said.

An example from the Vermont Cannabis Control Board's advertising guidelines - COURTESY
  • Courtesy
  • An example from the Vermont Cannabis Control Board's advertising guidelines

Vermont has emphasized creating a market of small businesses by capping the size of cannabis-growing operations and limiting the number of licenses people or corporations can acquire. The idea is to create a craft market, where quality is an attraction that makes Vermont stand out in an increasingly competitive regional and national sector.

But by implementing such restrictive ad regulations, Fishman said, the state has given up a golden opportunity to market Vermont as a cannabis mecca, a place where tourists should come to find the best weed. 

"If you want to reach people that aren't your typical cannabis users, which is one of our goals, I don't know exactly how we're going to do that," Fishman said.

The rules are crafted to prevent businesses from appealing to kids, something all the retailers who spoke with Seven Days said they support. No one under 21 can be depicted in an ad, and ads cannot feature toys, inflatables or cartoons, including those with human features. (For years, Seven Days has used an anthropomorphic cannabis leaf, dubbed "Weed Guy," to illustrate dozens of stories on the topic — including this one. He's banned from cannabis advertisements under the state rules, but those rules don't govern the newspaper's editorial content.) Ads also cannot contain false, misleading or curative claims; offer samples or prizes; or promote excess consumption.

For now, the control board is notifying businesses of violations and asking that they be corrected; it has sent six warning letters thus far. Eventually the board could issue fines or demand that a business create a "corrective action plan." In the most extreme cases, a business could lose its license to operate.

Eli Harrington, a cannabis advocate and licensed grower in the Northeast Kingdom, worries about enforcement of the rules. Businesses often post to social media sites multiple times each day; who is watching to make sure they abide by state guidelines?

"You've got to compete with the legacy market," he said, referring to those who operated before cannabis legalization. "So the incentive for the industry to police itself, which could be well-meaning or could be jealous snitching, is very high. And how that application of 'justice' — with these ridiculous restrictions — is meted out by the powers that be remains to be seen." 

The advertising regulations do offer cannabis businesses an alternative way to make themselves known without board review: by publishing "educational material." The key in determining whether something is an ad or "educational material" is the phrase "induce sales of cannabis," said Julie Hulburd, a control board member. So something describing the characteristics of a product, or how it was made, would not count as an ad, she said; something that encourages someone to buy the product would.

Silberman, the Middlebury cannabis shop owner, has posted both educational materials and ads on his store's Facebook page. One educational post is a "Strain Spotlight." It features a picture of Gelato 33 — a purple, hairy, crystal-covered bud — and a description of its THC content, effects and namesake: "NBA legend Larry Bird," who wore No. 33. The post doesn't encourage anyone to buy Gelato 33 or even say that it's in stock at the store.

Silberman's advertisement, meanwhile, explains that the store has nine varieties of edibles available and encourages people to "check it out!" The post includes a link to the FLŌRA website.

To satisfy the board's requirement for a warning label, Silberman posted an image of one in the comments section of the post, a technique he said the board had approved.

"I would encourage any licensee who has questions about how to do things ... to reach out to the board and talk to them," Silberman said. "I've always found the board staff to be really proactive and helpful."

Responsibility for ad review currently falls to two staff members, though the number "will likely expand in the coming months," according to Nellie Marvel, the board's education and outreach manager. As of Monday, five ads — four print and one social media — had been submitted to the board; all were sent back for more information, and one was subsequently rejected.

The board must also investigate complaints, which can be made anonymously through its website. So far, three complaints have been filed about advertising, according to Hulburd.

"We did send out some letters of warning or have conversations with those folks to get them into compliance," Hulburd said. "And I think that those have been addressed at this point."

Several businesses that ran ads in Seven Days' Cannabis Issue on September 28 subsequently received warning letters, according to Andrew Subin, an attorney with Vermont Cannabis Solutions. He also co-owns a wholesale distribution business, Ojorojo Cannabis, which ran an ad and received a warning letter from the board. The November 5 letter, which cited guidance the state issued after the ad ran, said the company failed to submit the ad for review; to prove that less than 15 percent of the newspaper's audience is under 21; and to include the health warning label.

Subin said he disagrees with the board's assessment and argued that the ad presented educational material — it wasn't offering a cannabis product for sale.

Though the rules regulate commercial speech, he thinks they violate First Amendment rights.

"I believe that they're vastly mistaken about the extent of their authority to limit cannabis advertising," he said of the board. "They're clearly taking a zero-tolerance approach to this advertising thing, and I hope there's an opportunity to litigate this because I think they have overstepped."

Given its alt-media roots and consistent cannabis coverage, Seven Days would seem an obvious place for ads, and the free weekly has documentation asserting that less than 15 percent of its audience is under 21. Similar papers in legal-weed states contain cannabis advertisements. A recent issue of Westword in Denver, Colo., for example, included a full-page ad featuring weed prices and details about a raffle, with a short health warning label in small print along the bottom. Alt-weekly DigBoston's website displayed two cannabis advertisements on its home page this week.

"It's unfortunate that businesses that have finally gotten the green light to sell their products are now having trouble getting the word out to potential customers," Colby Roberts, an associate publisher and the director of sales at Seven Days, said in an email.

For Zenbarn's Fishman, who's been involved in the industry since the hemp days, the advertising regs are just another hurdle for cannabis entrepreneurs who have been weathering a risky nascent industry. While the state has legalized weed, the onerous regs could take a toll, he worried.

"We already have to deal with intense taxation, overregulation of the industry," he said. "Anything we can do to lessen that at this point is what the industry really needs."

The original print version of this article was headlined "Cannabis Censors"