May 2, 2023
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Written by Highlyte
The list of states with legalized cannabis continues to expand, from early adopters like Alaska and California to newcomers like New York and the US Virgin Islands. But as long as federal cannabis reform remains a future possibility and not the law of the land, cannabis regulations remain a state-by-state regulatory patchwork that can prove challenging to navigate for any cannabis company looking to evolve into an MSO. The nuance between different states’ cannabis marketing regulations amplifies the risk of non-compliance.
It’s easy to focus on the logistics of moving into a new market such as licensing, securing operational facilities, labeling and packaging discrepancies, and building up staffing and inventory. But many companies forget—or ignore—that marketing regulations are also enforced. Indeed, as cannabis legalization expands and legal states generate more tax revenue from cannabis sales, regulatory bodies will be better funded and further authorized to inflict penalties. This financially and strategically emboldens to agencies charged with ensuring compliance not only of health and safety standards but marketing and advertising rules, too.
Future-proofing a cannabis brand as it moves into new markets means protecting the investment poured into that expansion. Ensuring from the outset that logos, packaging, branding materials and content marketing collateral are compatible with multiple states’ cannabis laws is the surest way to prevent unnecessary consequences or even legal action in the future.
There are a few ways to navigate audience metrics and content compliance on a state-by-state basis. First of all, it’s important to do due diligence on where the gaps between different regulatory guidelines and statutes exist. It is essential to have a firm grasp on the legislative intricacies that comprise each state, or more importantly, each potential market. Second, strategize which states might be part of your company’s future roadmap, and identify which have the most stringent and conservative guidelines. Following only the most lenient compliance metrics may be easier in the short-term, but can leave a brand open to longer-term liability.
For example, an emerging market like New York’s may not have settled on all the finer details of its regulatory framework. The regulatory history in highly regulated states like New York are bound to weave more detail and oversight into their regulation as the cannabis market expands. A company launching there in these early days will reasonably want to anticipate future revisions and added nuance, as New York regulators come to better understand what’s working and what isn’t. Meanwhile, a state like Oklahoma, which has taken a more libertarian approach to setting its cannabis regulations, leaves far more open to interpretation than one like Massachusetts, which has a far more granular approach to regulation and presents less ambiguity.
Furthermore, abiding by the more strict regulatory practices will shield liability in less regulated states. A business considering operations in these three states would do well to hold itself to Massachusetts’ standards even if moving into that market is years off. Launching a brand in Oklahoma with a neon-colored logo is all well and good until Massachusetts regulations require that company to create new branding that’s compliant in The Bay State, where neon hues are considered too appealing to minors.
A deep understanding of a brand’s target demographics is also key to avoiding regulatory bugaboos. A state with a significant population over 55 years of age, for example, like Florida, Arizona or Maine, may be more likely to identify and enforce non-compliant health benefit claims in cannabis marketing content than one with a relatively young population like Nevada or California.
A state with a significant birth rate or a large minor population like Utah or Missouri may be more eagle-eyed concerning cannabis marketing regulations designed to protect children. There may be stiffer, swifter consequences to, say, a celebrity endorsement, the use of a bubbly font or marketing collateral that uses classic stoner terms like “chronic” in these markets. Indeed, some states like Massachusetts have much more intense standards for where cannabis advertisements can be displayed, limiting these channels to where 70% or more of the viewers can be reasonably assumed to be over 21+.
Last but not least, it’s important to remember that these regulations are designed to help cannabis companies and the public at the same time. While the specificity of some compliance metrics may feel onerous, these rules are intended to be a pathway towards compliance, not a means of persecution.
One challenge for regulators in setting compliance standards is that legal cannabis is still a very new industry in terms legislative precedent. There are lessons to be learned from other highly regulated, highly taxed industries like gambling and tobacco, but those lessons do not always directly transfer to what is ultimately a much different sector. The same can be said for laws like the Communications Deceny Act of 1996, which shapes communications standards but was developed before the advent of widespread legal cannabis.
Regulators also don’t always understand the cannabis market from the perspective of business owners, advertising and PR professionals and other stakeholders. It can be frustrating for cannabis producers to see state regulators seem to misunderstand the value of, say, THC potency testing or limit the creative freedom of copywriters and graphic designers. But often extra-stringent standards are set not as a way to “gotcha” companies into failing, but rather to try and better understand the nascent market using the tools available.
While some cannabis companies have the opportunity to work directly with regulators to contribute their feedback and receive compliance recommendations in return, that option isn’t feasible for every brand. That’s where tools like Highlyte come into play. Not only can Highlyte flag compliance issues in a variety of marketing content, it also uses natural language processing to pick up on nuances that can help individual cannabis companies assess their own threshold of risk and understand regulations in situ.
Ready to learn more about how Highlyte can help cannabis companies avoid state-by-state content compliance risks? Book a demo with us today
