Sunday, November 18, 2018
Commercialization of Legalized Cannabis: A Synopsis
Recreational cannabis hasn’t been legal for long, but a lot of ink has already been spilled about it. While the media have given extensive coverage to its potential health effects and to the impacts and ramifications of cannabis use for employers, little has been said regarding the commercialization and marketing of this new product and its accessories1 by businesses.
Yet the legalization of cannabis comes with a whole series of rules closely regulating all aspects of its commercialization and marketing. In this article we provide a summary of the rules currently applicable in Quebec on the advertising, promotion, packaging and labeling of such products.
Advertising and promotion
First of all, it appears that the governments of the provinces, particularly Quebec and Ontario, have elected to subject the recreational cannabis industry to rules analogous to those governing businesses in the tobacco industry.
By way of example, the brand elements for cannabis-related products cannot be aimed at attracting youth, or include depictions of celebrities, characters or animals, or associate the use of cannabis with a particular lifestyle or with a positive or negative emotion.
More importantly, the Quebec legislation prohibits the sale or promotion by any merchant or producer of an object that is not cannabis but on which appears a name, logo, slogan, etc. that is directly associated with cannabis. This means, for example, that it is now illegal to sell a T-shirt featuring an illustration of a cannabis leaf. This rule however raises issues regarding its constitutionality, particularly where freedom of expression is concerned. It will be interesting to see how it is applied, and whether it will be challenged in court.
Where promotion is concerned, no person or enterprise may use in their promotional materials any cannabis brand element, make a gift of cannabis for promotional purposes, or associate a name, logo or distinguishing guise associated with cannabis with a sports or cultural facility. Moreover, no licensed retailer of cannabis can offer rebates in the form of cannabis, or rebates or incentives on cannabis-related products.
Packaging and labelling
While most of the rules governing commercialization and marketing apply only to the Société québécoise du cannabis (SQDC) and authorized producers to sell cannabis, businesses selling accessories must comply with strict rules analogous to those governing the tobacco industry when it comes to packaging and labelling their products, and to in-store signage and displays. In particular, cannabis accessories may not be displayed in public and they may not have any flavour or aroma.
In addition, logos, colours and brand images on products are highly standardized. Cannabis products must bear labels containing health warnings and other mandatory information, as well as the standard symbol for THC when the product contains a certain amount of this compound2.
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Since the legalized cannabis market is only in its infancy, it’s a safe bet that these rules will change over time. And if the leader of Quebec’s recently elected new government is to be believed, they will become stricter still. Although it will be several weeks before any legislative amendments are made, cannabis distributors should pay particular attention to their choice of branding components and to their inventories of branded products. Finally, since many sales will be made online and the rules vary considerably from one province to the next, a vigilant compliance analysis will be required depending on the product’s final destination.
Please note that certain exceptions may apply and that the applicable laws include requirements other than those mentioned above. We therefore recommend that your consult a legal advisor if you are planning to market cannabis, cannabis accessories or any other directly or indirectly related item. The Langlois lawyers team will be pleased to provide you with any assistance or guidance you may require in connection with your current or prospective operations.