Walk into a convenience store in Colorado and you might encounter Toast — the new face of marijuana marketing. It’s smokeable cannabis in the form of machine-rolled cigarettes, each tipped with a royal-purple filter embossed with a gold-foil butterfly. The package is jet black, with the label embossed in gold, deco-style type.
The effect is one of sophisticated, rakish elegance — a cocktail-chic approach to a drug typically sold in plastic baggies in city parks. Marijuana is legal for recreational sale and consumption in Colorado. Toast’s makers are pursuing an upscale demographic: well-heeled users who smoke socially and can afford a premium product.
It’s the kind of thing Canadian cannabis producers would very much like to do with their own product once the legal recreational market is in place here. They’re probably going to be disappointed.
Bill C-45, the Trudeau government’s marijuana legalization bill, includes a long section on branding, packaging and promotion of recreational cannabis. The limits set in the bill are broad brushstrokes — details will have to wait until the bill is passed and regulations are introduced — but they’re built around the government’s primary source of political anxiety: the risk that the legal, licensed product might fall into the hands of minors.
So producers are forbidden under the bill from promoting or packaging a cannabis product in any way that might appeal to young people. Testimonials are out (don’t expect to see a Snoop Dogg-branded product anytime soon), as are depictions of “a person, character or animal, whether real or fictional.” The ban on promotions that “evoke a positive or negative emotion” broadly forbids the kind of lifestyle marketing familiar from the golden age of cigarette ads — the kind that showed people riding horses or hang-gliding, which seemed to have nothing at all to do with smoking.
Cannabis producers, according to the legislation, will be allowed to engage in marketing of basic product and branding information to customers age 18 and over — either through direct communication (email, mailouts) or through marketing in places where minors can’t go (posters in bars and nightclubs). They’ll be able to market basic product information such as availability and price at point of sale. They’ll be allowed to use their brands on a limited range of promotional materials — again, as long as those promotional materials can’t be seen as appealing to young people, or as part of a lifestyle marketing campaign. (Lighters might be OK. Frisbees? Probably not.)
Displays of sponsorship — of events, individuals or facilities like sports arenas — are verboten; the Red Bull people have nothing to worry about. There’s a ban on inducements — offering cannabis or cannabis-related products for free, or through a contest or lottery, as part of a marketing push. And, just in case anyone was wondering, the act prohibits “dispensing devices” — no marijuana vending machines.
Overall, the legislation hews closely to current restrictions on tobacco marketing. “The wording is almost a direct cut-and-paste from the Tobacco Act,” says Hugo Alves, a partner at Bennett Jones in Toronto who works with clients in the medical marijuana sector. “The bill does give a toehold to producers to brand themselves distinctively … subject to the regulations that have to be drafted.”
It’s those regulations that will determine how much leeway producers have to brand and promote their products. One lawyer specializing in intellectual property law says now is the time for producers to get their trademarks nailed down — even if they don’t yet know precisely how they’ll be able to use them.
“There are no restrictions right now on filing for such trademarks, and they’re going to help determine who comes out on top in the legal market,” says Ashley Dumouchel of Shapiro Cohen LLP in Ottawa. “This is what we’ve seen in the past with a new industry basically emerging overnight — like ISPs in the early days of the internet. Those who have the early rights are going to benefit.”
But notwithstanding the bill’s wording, the federal government is leaving itself the option to crack down on branding in the regulations — even to impose plain packaging.
For producers, the question of branding is emerging as a source of tension over the bill. The federal government has said the elimination of the black market in cannabis is its primary policy goal: Legalization, it claims, is a tool to fight crime, not feed it. Legal producers see three factors affecting their ability to compete with their criminal rivals: price (taxation, in other words), availability (where the legal product can be sold) and branding.
“And you have to get all three factors right for this to work,” says Jordan Sinclair, director of communications for Canopy Growth Corp., the company behind the Tweed brand. Legal producers already face a disadvantage: unlike those in the black market, they have to pay taxes and the costs of obeying regulations. Branding, they say, is a key tool for differentiating the legal from the illegal – for getting customers to choose their product over Brand X’s baggie in the park.
“If we really want to eliminate the black market, we can’t package the legal product as if it’s nuclear waste,” says Sinclair.
If the feds impose plain packaging, a Charter challenge is pretty much assured. In 2007 the Supreme Court ruled that while forcing tobacco companies to cover half of the surface of cigarette packages with health warnings does infringe the Charter’s guarantee of freedom of expression, the infringement is “justified” by Parliament’s aim of reducing smoking deaths, while the “detriments to the manufacturers’ expressive interest” are minor. Banning branding entirely from cannabis packaging would go further than those health warnings did, which might strengthen a Charter argument.
But there’s an important legal difference between the tobacco industry and the recreational cannabis market Ottawa is creating now, says Teresa Scassa, Canada Research Chair in Information Law at the University of Ottawa. Tobacco, she says, was an established legal product in 2007, while recreational cannabis is starting from zero. Tobacco had market share and branding to defend. Cannabis doesn’t.
“The tobacco companies were defending their market positions, the goodwill they’d established with their customers,” she says. “The recreational cannabis market is going to be brand new, so there’s no market position to protect, nothing to lose.”
Doug Beazley is a frequent contributor to CBA PracticeLink.