Cannabis retailers may be curious to know exactly what they can and can’t do in the realm of promotional activity.
Since cannabis still has stigma, traditional digital ad platforms including Google and Facebook do not allow cannabis ads, and a myriad of laws and regulations put limits on to the types of promotions legal stores can run, both in-store and out in the real world.
Fear not, because you can still promote your store in other ways, but you will need to be careful to make sure you stay on-side.
A Promotion Primer
First, let’s start with a primer on promotion and how it is handled under Canadian law.
Promotion of cannabis is generally prohibited in the Cannabis Act. It’s important to know that a promotion of cannabis is defined as a representation made for the purposes of selling cannabis, about the cannabis, whether directly or indirectly, that is “likely to influence and shape attitudes, beliefs and behaviours about it.”
There is an exception for what is called “informational promotion” and “brand preference” promotion. The former includes factual information about the product, while the latter includes the use of brand elements and colours.
What Promotions Are Allowed?
Informational and brand preference promotion can only happen in a few permitted scenarios:
1) Direct communications – Communications that are addressed and sent to individuals who are 18 years of age and older and are identified by name. As a best practice, cannabis companies should only target people who are legally permitted to purchase cannabis in their province/territory. This means that retailers cannot send out flyers about their store or cannabis, unless it is addressed to the person by name and they have indicated they are an adult.
2) In a place where youth are not permitted by law – There are only a few places where youth are not permitted by law. In most provinces, that includes R-rated cinema showings, tobacco shops, as well as certain bars and nightclubs that have such a condition on their liquor licence. The law prohibits youth from entering cannabis stores. Note that in Ontario, while many bars prohibit youth, they may not be mandated by law to do so by the conditions of their license.
3) Telecommunication-based promotion – Internet, cell phone, email, and social media-based promotions fall under this category. This type of promotion appears to allow more flexibility, and only requires that the person responsible for the promotion “has taken reasonable steps to ensure that the promotion cannot be accessed by a young person.” For websites themselves, Health Canada has indicated that a strong-age is required in which users must enter their exact birthdate. For promotional ads placed on other websites, or for ads on digital platforms such as Snapchat, advertisers should program ads so that they only show up for users that indicated they were of legal age.
Cannabis stores may put their brand element on promotional items, as long as the thing is not associated with young persons, there are no reasonable grounds to believe it could be appealing to youth, and there is no association “with a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.”
While a bottle opener, water bottle, or hat may be acceptable to put your brand element on, items that are associated with youth, such as knapsacks and guitars, are off limits.
Promotional items should only be given out or sold within the parameters of provincial and federal laws. For example, in Ontario, the only items one can sell in a store are cannabis and cannabis accessories. For apparel and other items, they can only be sold outside of the store, such as on-line or in other non-cannabis retail outlets.
In addition, make sure that if you are promoting your store by giving out promotional items, that you only do so in the context of a legal method of cannabis promotion: if sent via mail, make sure you only send it to people that have indicated they are adults. Similarly, if in-person, make sure you are only giving it out in a place where youth are prohibited by law.
Provincial Rules Vary
These are the rules stores must comply with at a minimum. Since each province regulates the adult-use stores within their boundaries, some of these rules may be even stricter where you are located, although most provinces follow the federal laws with respect to promotion.
In Ontario, for example, it is illegal for a person to “directly or indirectly offer or give a material inducement to the holder” of a cannabis retail licence, or an employee. As an example producers can’t give out complimentary sporting tickets to retailers in a bid to gain favour and obtain preferential shelf space.
Still, it’s unclear if the province would ever use this law to curb legitimate strategic partnerships. Cannabis retailer Spirit Leaf has teamed up with Up Cannabis to launch Tragically Hip-themed lounges in their stores across Canada. While this strategic partnership hasn’t triggered enforcement with respect to this provision, it is always something to be mindful of.
The federal law prohibits promotions that target minors, which is defined as anyone under 18 or 19, depending on the age of majority in your province.
If your province does not prohibit minors from entering the store by law, then at the store you are limited to promotions that communicate only the price and availability of your products.
SMS and Email Marketing
Two pieces of information that retail stores often ask their customers for are their phone number and email address. Some customers will undoubtedly by weary or stay clear of providing such personal information, but that doesn’t mean you shouldn’t collect and leverage that information through a campaign of regular texts. Collecting phone numbers can serve as the basis for a strong SMS campaign, in which occasional text messages about products can be sent to customers. The same goes for collecting email addresses, which can lead to vibrant, image-based communications.
Discounts – Tried and Tested
Everyone loves a discount!
One Canada-wide chain, Nova Cannabis, has a “Black Market Buster” where a specific strain (usually lower in THC count), is discounted to compete with black market prices.
Be sure to follow the inducement provisions in the Cannabis Act: for example, you can’t provide cannabis or an accessory if it is provided without monetary consideration or in consideration of the purchase “of any thing or service.”
To stay on the safe side of this federal law, retailers should steer clear of “Buy-One Get-One-Free” promotions or providing items or contest entries as inducements to buy cannabis at your store.
Check with your province to see if discounts are allowed.
Paid Digital Advertising and Search Engine Optimization
Digital advertising is becoming a big part of the marketing efforts of licensed cannabis producers, including programmatic advertising, ad-serving on cannabis-dedicated ad networks such as Mantis, and search engine optimization. That’s because the federal Cannabis Act gives more lee-way to “telecommunications” than it does to more traditional promotion methods.
Be aware that traditional mediums for digital advertising, such as Facebook and Google, technically do not allow the sale or promotion of cannabis, medical or otherwise.
Search Engine Optimization will also be key to obtaining new customers. However, due to the amount of resources illegal mail-order companies have put towards SEO, a comprehensive campaign will be required in order to target high-value keywords.
Ultimately, retail stores should have a comprehensive, digital strategy that targets all available modes and methods of promotion.
Do’s and Don’ts:
• Consult with a lawyer and review the provincial legislation, regulations, and rules that apply to your store
• Consult with the enforcement division / inspectorate of your provincial regulator, as their interpretations on matters may differ from Health Canada
• Put a strong age-gate on your website where users need to physically type in their exact birthdate
• Collect your customer’s phone number and email addresses where appropriate and leverage these contact points
• Place advertisements in any place where youth are permitted
• Send out flyers that are unaddressed or addressed to minors
• Put advertisements in physical places where youth are not permitted, unless that is a requirement by law
• Target youth with your promotions
NOTE: This article is for informational use only and is not intended as legal advice. Always obtain legal representation before conducting activities related to cannabis.