California Closer to Banning Branded Marijuana Merchandise

State legislators in California have taken another step toward banning legally licensed marijuana growers, producers and dispensaries from using promotional products to advertise their businesses. Senate Bill 162, authored by state Sen. Ben Allen, would prevent cannabis businesses from advertising “through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.”

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In a California State Assembly appropriations hearing on Wednesday, a committee voted to send the bill to the Appropriations Suspense file, where bills with an annual cost of more than $150,000 to any fund are placed and considered right before the deadline to be moved onto the floor of their respective chamber. At a prior hearing of the Business and Professions committee, there were 12 “yes” votes, four “abstentions” and zero “no” votes. If the bill passes, it will then go to a full vote in the House.

California law currently allows branded merchandise to be distributed at trade shows and similar events where attendees must be at least 21 years of age. If Senate Bill 162 becomes law, however, that merchandise would become illegal – a considerable blow to distributors looking to capitalize on an emerging market. North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion, according to Arcview Market Research. Industry sales are projected to top $20.2 billion by 2021.

Supporters of SB 162, such as the American Academy of Pediatrics, California, want to make marijuana less visible to kids. In a letter to Sen. Allen, the academy said that the bill would “ensure that children and youth are exposed to a minimal amount of marijuana advertising by assuring that no marijuana products could be marketed through branded merchandise. This would help protect children from the dangerous health effects of marijuana use in a manner consistent with tobacco regulations.”

Marijuana business representatives and trade groups fighting the bill argue that its provisions are an unfair attack on an already highly regulated industry. Their legal representatives say the bill’s vague language is problematic and offers legal loopholes. “We are in no way trying to facilitate the access of minors to marijuana,” Nicole Syzdek, an associate at the intellectual property firm Evoke Law, told The Recorder. “We would just like regulations that make sense. The way that they’ve done this doesn’t make any sense for the industry.”

California already has a range of restrictions on advertising legal marijuana. They include prohibitions on signage and barring any advertising or marketing in broadcast, cable, radio, print and digital communications where less than 71.6% of the audience can reasonably be expected to be 21 years of age or older. The Golden State also prohibits marijuana businesses from giving away “any amount of marijuana or marijuana products, or any marijuana accessories, as part of a business promotion or other commercial activity.”