The Murky State of Rules on Broadcast Advertising of Marijuana Products in States Which Have Legalized its Sale or Use

Broadcasters, like other federally regulated industries, continue to be leery about advertising for marijuana, even in states where cannabis dispensaries have been legalized for medical or even recreational use.  This week, the NY Times ran an article about companies trying to provide ways for dispensaries to use electronic payment systems, as federally regulated banks and credit card companies often refuse to deal with these businesses.  This is despite guidance given by the Department of Justice to banks about how to handle funds coming from such organizations.  Where the federal regulator (the FCC) has provided no advice whatsoever, broadcasters as regulated entities need to be very restrained in their desires to run ads for these dispensaries that appear to be legal under state laws.

Broadcasters are of course Federal licensees, and marijuana is still a controlled substance, illegal for sale to the public under Federal law.  While the current administration in Washington has said that enforcing marijuana laws against those who comply with state law is not an enforcement priority, it gave that advice provided a cannabis business observes very strict guidelines.  Strict Federal laws against any sale of marijuana remain on the books, and any search of the DOJ website provides numerous examples of legal actions brought against companies and individuals that don’t fit within those guidelines.  Plus, all it takes is a change in enforcement priorities by the Federal government and even dispensaries that are legal under state law can be closed by Federal actions.  And even if the priorities don’t change, the Department of Justice suggestions to Federal prosecutors don’t stop individual prosecutors from taking actions, especially if the cannabis-related business is found to have violated some other law or if it is acting outside of the strict limits that the DOJ set out in suggesting prosecutorial restraint.  Promoting a business that is not legal under Federal law is dangerous. 

There are many FCC cases where stations got into trouble for advertising illegal activities.  If a complaint about a broadcaster airing advertising for cannabis dispensaries in a state where the sale has been legalized is filed with the FCC, remember that the current administration in Washington DC has less than a year left in office.  Any complaint that is filed with the FCC in the waning days of this administration may well be decided by a new administration at the FCC which could take its cues from a new President and a new Attorney General, and either could view marijuana in a wholly different way.  So, given the uncertainty with future Federal enforcement priorities, there are real risks in taking these ads.

A year ago, we saw many trade press announcements about a TV station in Colorado which was going to be the first to accept ads for a local dispensary.  They were planning to take all the cautions that one would expect about controversial ads – e.g. run them late at night and make sure that they were restrained and in good taste.  Nevertheless, on the eve of their scheduled air date, the ads were pulled, probably on the advice of counsel.  While we expect that some stations may be running some ads for legal dispensaries, we urge any station considering it to give great thought to the issue and the practices in other industries and make a legally-informed decision before proceeding.