By: Andrew P. Cooper, Esq., LL.M., Michael A. Curatola, Esq. and Terran Cooper

At the start of this month, the Office of Cannabis Management (OCM) released draft regulations for the packaging, labeling, marketing, and advertising of cannabis products in New York State. While these are still subject to change before being adopted final, the draft regulations offer insight into the rules the cannabis industry will have to abide by. Many of the proposals focus on ensuring that cannabis products are not marketed toward, or made attractive to, anyone under the age of 21. Many aspects of these proposed regulations are derived or adapted from other states' regulations. Still, some of the proposed restrictions on cannabis marketing may come as a surprise to certain industry participants. Further, the OCM is seemingly trying to incorporate certain sustainability initiatives into the burgeoning industry. Below are some of the most noteworthy aspects of the draft regulations, but please note that this overview is not exhaustive and is subject to change.

Packaging, Labeling, Marketing, and Advertising

Not Attractive to Individuals Under 21

The draft regulations explicitly prohibit any of the following from cannabis labeling, packaging, and marketing: cartoons, bubble/cartoon-type font, bright neon colors, and images of anyone reasonably appearing younger than 21.

As per §128.1(b)(4), there is a prohibition on similarities to products, or words that refer to products, that are commonly associated with or marketed to be attractive to underage individuals, including any imitation of food, candy, soda, drinks, cookies, or cereal. Further, the words “candy” and “candies,” as well as any spelling variants are prohibited. These draft regulations notably target the commonality of (often illicit) cannabis products to knock off well-known characters and food brands to increase appeal.

Similar to the above provision, §128.1(b)(6) defines the disallowance of symbols, images, characters, public figures, phrases, toys, or games that are commonly used to market products to individuals under the age of 21. This provision seems intended to disallow further media usage that may appeal to underage individuals.

These labeling, packaging, advertising, and marketing restrictions are fairly standard in the industry to prevent underage consumption. However, what remains unclear is the threshold for “commonly associated with” and “commonly used,” as they relate to underage influence. That is, how much use or association is required in order to meet the above criteria. In the case of features that are not used to market products to underage individuals, but become associated with underage individuals through use, it is uncertain at what point would they be disallowed for cannabis product use.

Miscellaneous Restrictions

Under the proposed regulations, the following would be prohibited in cannabis packaging, labeling, marketing, and advertising:

• Use of the term “organic,” or incorrect use of “craft;”
• Use of mascots;
• Disparaging the products of another cannabis business;
• Use or display of “colloquial references to marijuana”, including but not limited to “’stoner’, ‘chronic’, ‘weed’, ‘pot’, or ‘sticky buds;’”
• Imagery or action of smoking or vaping;
• Causing a reasonable consumer confusion as to trademarking.

Marketing and Advertising

90% Audience Threshold

Under the proposed regulations, a cannabis licensee (i.e., business owner) can only advertise on social media, TV, print, etc., if “the licensee has reliable evidence that at least 90%, unless otherwise determined by the [OCM], of the audience is reasonably expected to be 21 or older.”

This threshold of 90% of the advertising audience being 21 or older also applies to a licensee who wishes to sponsor or advertise at a “charitable, sports, or similar event.” The burden of proof of audience composition lies with the licensee. It is not clear what such “reliable evidence” would be, but the draft regulations also require a licensee to maintain records and documentation that their marketing meets these requirements.

While meeting this 90% threshold for digital and virtual advertisements is highly feasible via age-gated sites, it will be quite difficult to meet in physical media. Nearly all charitable, sports, and other events allow for those under the age of 21. Even if an event rarely has upwards of 10% attendance by underage individuals, it may be difficult to obtain reliable evidence of this. Further, many adult-only events likely do not meet the 90% threshold due to possible viewers ages 18-21, and likely cannot be reliably expected to do so. This leaves applicable events almost exclusively as those tied to other substances (such as alcohol and tobacco) which require entrants to be 21 years of age. This 90% threshold is nearly identical to the Connecticut State Statute requiring the same percentage of viewers to be above 21 years of age. This audience-based threshold can be seen beyond the cannabis industry, with many companies in the alcohol industry utilizing similar (often self-imposed) thresholds on alcohol advertising.  In comparison, the proposed cannabis regulations notably require even less underage exposure, with most alcohol advertising thresholds only requiring 70-80% of the audience to be over 21. Advertisers will have to be creative in their marketing campaigns in order for their efforts to be fruitful and compliant.

Certain Promotions Restricted

Cannabis companies may not advertise through the use of free giveaways or promotional items such as T-shirts, nor are they allowed to advertise discounts, points-based reward systems, customer loyalty programs, coupons, or “free”/“donated” cannabis products.

Prohibited Ad Space

Advertising cannabis products or services is prohibited on signs in stadiums, arenas, shopping malls, video game arcades, and fairs that receive state allocations. Billboard advertising is not allowed. Retail dispensaries may not use neon signs.

Additionally, no marketing or advertising of cannabis products will be allowed within 500 feet of a school, playground, recreation center, childcare facility, public park, or library.

Packaging and Labeling

Packaging Minimum Standards

The proposed regulations detail minimum Cannabis Product Retail Standards, requiring packaging to be child-resistant (as per §128.1(f)), tamper-evident (as per §128.1(w)), fully enclose the produce, minimize oxygen exposure, prevent contamination and/or degradation of the cannabis product, and not impart toxins or deleterious substances onto the product. The licensee shall also maintain a copy of the certificate showing that each package complies with the applicable requirements under §128.2(b)

Packaging Prohibitions

§128.3 prohibits the following: pictures, images, or graphics beyond the required, features that emit scent or sound, features that change the appearance of a package through technology, attractiveness to underage individuals, single-use plastic unless containing at least 25% post-consumer recycle content, and more than one brand name and logo. The limiting of package graphics will likely make it difficult for brands to differentiate themselves, with many brands likely to employ an outer “marketing layer” to better distinguish themselves. Beyond the limiting of package graphics, these restrictions may make cross-brand products a difficult collaboration to navigate.

Sustainability Program

In addition to the restriction on single-use plastics, these regulations require the submission of an environmental sustainability program for cannabis product packaging for applicable licenses. Further details on potential sustainability programs are detailed in §128.4.

Labeling Minimum Standards

128.5 requires licensees to display the following in (at least 6-point size) black font on a white background:

• Milligrams (mg) per serving of total THC, total CBD, and any other marketed phytocannabinoids or terpene profiles;
• Milligrams (mg) per package of total THC;
• Amount of total THC and any other marketed phytocannabinoids as a percentage of volume, with the exception of edibles;
• Number of servings in total, with the exception of flower and forms of cannabis for vaporization;
• Weight of cannabis product; and
• Lot number.

Further, the package and any marketing layer shall include:

• List of all ingredients in descending order of predominance by weight in the cannabis product;
• A separate list in bold of any major allergens outlined in the Food Allergen Labeling and Consumer Protection Act of 2004, Title 21, as it relates to Food and Drugs, of the U.S. Code § 343 for misbranded food (with edible and beverage products containing a label pursuant to §101.9(c) for nutrition labeling of food);
• List of any solvent used to produce the product;
• Date of expiration of the unopened cannabis product;
• Use by date;
• The proper storage conditions;
• Name, address, license number, and contact info for the manufacturer or distributor;
• Total THC and CBD milligrams in bold;
• Clear usage instructions;
• Scannable bar code or QR code linked to a downloadable certificate of analysis (or a site containing such); and
• One of the following symbols printed to the standard set out by §128.5(b)(7);

Required Warnings

Additionally, the following warnings must be on the retail packaging or marketing layers (displayed as per §128.5(g)):

• This product contains cannabis and THC;
• In all capital letters as indicated: “KEEP OUT OF REACH OF CHILDREN AND PETS. For use only by persons 21 years and older”;
• Warning: Do not use if pregnant or nursing;
• National Poison Control Center 1-800-222-1222;
• For cannabis products intended to be smoked, inhaled, or vaporized: Warning: Smoking or vaping is hazardous to health;
• For cannabis products intended to be ingested orally: Warning: Effects of this product may be delayed by 4 or more hours; and
• For all topical products: Warning: For topical use only. Do not eat or smoke;

Enforcement

The OCM also indicated the actions to be taken against noncompliant licensees, which include the suspension or cancellation of a license and the imposition of fines or fees. If a third party uses a licensee’s brand, name, trademark, or other distinguishing characteristics in a noncompliant way, the licensee must immediately notify OCM, issue a cease-and-desist notification to the third party, and may pursue appropriate legal action.

Disclaimer: This summary is not legal advice and does not create any attorney-client relationship.  This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm.  Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law and certain proposed law at the time of publication.

Possessing, using, distributing and/or selling cannabis remains illegal under federal laws of the United States and nothing contained in this brief, on this website, nor in any of the services provided by FRB are intended to assist in any way with violation of applicable local, state, or federal laws.

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.