We have been receiving an increasing number of inquiries relating to Canadian laws, regulations and regulatory guidelines for cannabis marketing and advertising. As such, we provided an overview of key advertising and marketing related requirements under the federal Cannabis Act and Ontario laws and rules (e.g., the Ontario Cannabis Licence Act and Registrar’s Standards for Cannabis Retail Stores).
OVERVIEW
In 2016, Canada’s federal government announced its plan to legalize recreational marijuana use. On October 17, 2018, the federal Cannabis Act came into force, which, subject to important restrictions, including provincial and territorial legislation, limits the consumption, possession, production, sale and promotion of cannabis in Canada. On October 17, 2019, the sale of cannabis edibles, extracts and topicals were also legalized under the Cannabis Regulations.
The legislation aims to accomplish three broad goals: (i) keep cannabis out of the hands of youth; (ii) keep profits out of the pockets of criminals; and (iii) protect public health and safety by allowing adults access to legal cannabis. Canada was the second country (after Uruguay) to legalize cannabis.
The marketing of cannabis in Canada, including promotions, displays, labelling and packaging of cannabis, cannabis accessories and related services, is heavily restricted. Unlike the advertising of tobacco and vaping products, there exists relatively little guidance from Health Canada and other regulators following the enactment of the Cannabis Act to help interpret cannabis laws. Health Canada has, however, provided some cannabis marketing guidance (e.g., The Cannabis Act and Cannabis Regulations – Promotion Prohibitions).
FEDERAL CANNABIS ACT
Purpose
The purpose of the Cannabis Act is to protect public health and safety by: (i) protecting the health of young persons by restricting their access to cannabis; (ii) protecting young persons and others from inducements to use cannabis; (iii) providing for the licit production of cannabis to reduce illicit activities in relation to cannabis; (iv) deterring illicit activities in relation to cannabis through appropriate sanctions and enforcement measures; (v) reducing the burden on the criminal justice system; (vi) controlling the quality of accessible cannabis; (vii) providing access to a quality-controlled supply of cannabis; and (viii) enhancing public awareness of the health risks of using cannabis.
Read collectively, the purpose of the Cannabis Act is similar to that of the federal Tobacco and Vaping Products Act insofar as it aims to protects the health of young persons, prevent false or misleading practices and enhance public awareness (as well as the Ontario Cannabis Control Act, which is to protect the health and safety, protect youth by restricting their access to cannabis and deter illicit cannabis related activities).
Promoting Cannabis In Canada
The federal Cannabis Act defines “promote” as a representation, other than on a package or label, about the thing or service by any means, whether directly or indirectly, that is likely to influence and shape attitudes, beliefs and behaviours about the thing or service.
The Cannabis Act contains a general prohibition against false, misleading or deceptive promotions in relation to cannabis, including its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks (or similar claims about cannabis accessories, including their design, construction, performance, intended use, characteristics, value, composition, merit, safety, health effects or health risks).
In addition to the above general promotion prohibitions, the Cannabis Act also specifically prohibits any person from promoting cannabis, cannabis accessories and related services, including: (i) information about its price or distribution; (ii) in a manner where there are reasonable grounds to believe could be appealing to young persons; (iii) by means of a testimonial or endorsement; (iv) real or fictional depictions of persons, characters or animals; and (v) lifestyle marketing (i.e., presenting a product or brand element to evoke a positive or negative emotion about a way of life, such as glamour, recreation, excitement, vitality, risk or daring).
The Cannabis Act, however, provides a number of exceptions to the above prohibitions for certain types of informational, point of sale and brand-preference promotions. Informational promotion means a promotion by which factual information is provided to consumers about: (i) cannabis or its characteristics; (ii) a cannabis accessory or its characteristics; (iii) a service related to cannabis; or (iv) the availability or price of cannabis, a cannabis accessory or related service.
Brand-preference promotion means a promotion of cannabis, cannabis accessories or a related service by means of its brand characteristics.
Permitted Cannabis Promotions
Subject to the federal Cannabis Regulations, authorized producers, sellers or distributors may promote cannabis if the promotion is: (i) addressed and sent to an individual who is 18 years of age or older and identified by name; (ii) in a place where young persons are not permitted by law; (iii) by means of telecommunication if reasonable steps have been taken to prevent access by a young person (e.g., an age-gated website); (iv) in a prescribed place; or (v) in other prescribed ways.
The Cannabis Regulations exempt license holders that use information or brand-preference to promote cannabis or cannabis accessories by means of telecommunication if they have taken reasonable steps to ensure that the promotion cannot be accessed by an unauthorized young person.
Point of Sale Promotions
Point of sale promotion is permitted under the Cannabis Act if limited to its availability, price or both.
Brand Element Promotions
Cannabis, a cannabis accessory or related service may be promoted by displaying a brand element unless the promotion: (i) is associated with young persons; (ii) may reasonably appeal to young persons; or (iii) is associated with lifestyle advertising (e.g., glamour, recreation, excitement, vitality, risk or daring).
Displaying Cannabis
Unless authorized under the Cannabis Act, authorized sellers are prohibited from displaying cannabis or a cannabis accessory, or any package or label, in a manner that may be seen by a young person. The Cannabis Regulations provide an exemption for authorized sellers if they take reasonable steps to ensure that any young person is authorized to possess cannabis (e.g., as a registered sale licence holder, registered person or inpatient or outpatient of a hospital).
Other Restrictions on Promotion
Additional restrictions on promoting cannabis and cannabis accessories include: (i) using certain terms, expressions, logos, symbols or illustrations set out in the regulations; (ii) promotions in foreign media; (iii) sponsorships (i.e., a brand element or name of a cannabis, cannabis accessory or service provider in the sponsorship of a person, entity, event, activity or facility); (iv) displays on facilities used for sport or cultural events or activities; and (v) inducements or contests (or games, draws or lotteries) operated as an inducement to purchase cannabis or a cannabis accessory.
The Cannabis Regulations further limit the promotion of cannabis in relation to flavours, health and cosmetic benefits, energy value and nutrients, dietary requirements, associations with alcoholic beverages, associations with tobacco and vaping products, in a manner that the promotion may be audible or visible from outside a place where young persons are not permitted by law and public places frequented mainly by young persons (e.g., schools or playgrounds).
Federal Cannabis Act Penalties
The federal Criminal Code and Cannabis Act impose penalties for violations of the Cannabis Act and Cannabis Regulations. Under the Cannabis Act, potential penalties include a monetary penalty of up to $1 million. The Minister may also suspend a person’s licence if there are reasonable grounds to protect public health or safety, including to prevent cannabis from being diverted to an illicit market or activity.
Health Canada assesses compliance with the promotion related provisions of the federal Cannabis Act and regulations on a case-by-case basis. In this regard, Health Canada may consider the purpose, content and context of marketing communications and the intended audience in determining whether there has been a violation of the Cannabis Act.
CANNABIS PROMOTION IN ONTARIO
Overview
In addition to the federal Cannabis Act, provincial and territorial governments can adopt legislation in relation to, among other things, the promotion and enforcement of cannabis.
The Ontario government and Alcohol and Gaming Commission of Ontario (AGCO), which is responsible for regulating Ontario’s cannabis retail stores, have released legislation, regulations and guidelines relating to the promotion of cannabis in Ontario. These include the Cannabis Control Act, Cannabis Licence Act, 2018, Ontario Cannabis Retail Corporation Act, 2017 and Registrar’s Standards for Cannabis Retail Stores (Registrar’s Standards).
Cannabis Licence Act, 2018
Under the Cannabis Licence Act, 2018, the Registrar may establish standards and requirements for, among other things, advertising and promotional activities of licensees. The Cannabis Licence Act, 2018 also generally prohibits inducements (i.e., directly or indirectly offering or giving a material inducement to a licence holder to increase the sale of a particular type of cannabis).
Ontario Registrar’s Standards
In addition to the Cannabis Licence Act, 2018, the Registrar’s Standards contains specific advertising and promotion rules for cannabis retailers in Ontario. These include allowing exterior signage identifying the business but prohibiting, among other things, advertising appealing or targeting minors, promoting cannabis (or cannabis accessories) in a false, misleading or deceptive manner, certain types of endorsements and testimonials and marketing associated with medicine, health or pharmaceuticals.
The Registrar’s Standards also prohibit licensees from providing cannabis or cannabis accessories free of charge, providing any other thing or benefit, as an inducement for the purchase of cannabis or a cannabis accessory or accepting or requesting material inducements from licensed producers or suppliers of cannabis accessories.
Ontario Provincial Penalties
Under the Ontario Cannabis Licence Act, 2018, potential penalties include a fine of up to $250,000 (for corporations) and a fine of up to $100,000, imprisonment for up to one year, or both (for individuals).
The Registrar may also issue a proposal to revoke or suspend a license or authorization if they believe on reasonable grounds that the holder has contravened or failed to comply with the Act or regulations or may suspend a licence or authorization without issuing a proposal if necessary in the public interest. In certain cases, the Registrar is required to revoke a licence if, among other things, a licence holder is convicted of prescribed violations under the Cannabis Control Act or federal Cannabis Act.
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