California Cannabis Companies Can Use Promotional Products

Legally licensed cannabis companies in California will be able to use branded merchandise to market their businesses – at least for the time being. The development is a win for marijuana businesses and promotional product firms eager to provide logoed items for what will be the most robust state-level legal cannabis market in the nation.

On Friday, the California Assembly’s Appropriations Committee placed on hold SB162, a proposed bill that would have banned California sellers and manufacturers of marijuana from advertising cannabis or cannabis products through the use of branded merchandise, including clothing, hats, sunglasses and other imprintable items. The committee, which reviews bills with a fiscal impact after passage by a policy committee, did not provide an explanation why the bill was placed on hold.

The action from the Appropriations Committee puts the brakes on a bill that had received a 40-0 vote of support in California’s Senate earlier this year. To become law, the Assembly – the lower house of California’s state legislature – would have also had to approve SB162. However, the Appropriations Committee’s hold prevents the bill from progressing to the Assembly floor for a vote. Whether or not a proposal to ban legal cannabis companies from using logoed merchandise reemerges remains to be seen, but for now tees, hats and other items are legal marketing vehicles for the firms, though other advertising restrictions apply.

Sen. Ben Allen, a Democrat from Santa Monica, spearheaded SB162. He believes that banning marijuana sellers and manufacturers from using branded merchandise is in the interest of public health, particularly adolescent health.

“The Legislature in the past has wisely prohibited advertising with branded merchandise by tobacco companies, expressly because items like hats and T-shirts are known to entice kids to smoke," Allen told the Los Angeles Times. “This was a commonsense measure to apply similar restrictions that would help prevent marijuana use by teens.”

Allen’s bill had supporters that ranged from the California Chapter of the American Academy of Pediatrics to the California Police Chiefs Association.

Still, cannabis industry groups, including the California Cannabis Manufacturers Association, said the ban on merchandise violates free speech rights, deprives legitimate cannabis companies of potential profits, and unfairly restricts marijuana firms’ ability to market themselves.

“To ban small businesses from advertising, marketing and branding is ridiculous,” Adam Spiker told LA Weekly earlier this summer. Spiker is executive director of the Southern California Coalition, the largest trade group of marijuana businesses in Los Angeles. He continued: “The bill would materially hamstring small-business owners’ ability to grow in the land of opportunity.”

Leaders in the promotional products industry spoke out against SB162 as well. “While we recognize the ongoing debate on this topic at the state and federal level, Promotional Products Association International (PPAI) supports the use of promotional products as one of the most effective forms of advertising, and PPAI opposes limitations on the use of promotional products or any advertising medium to market or promote any goods, services or other business activity that is not prohibited by law,” Tom Goos, immediate past chair of the PPAI board and president of Kirkland, WA-based promotional products agency Image Source (asi/230121), told Counselor.

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.

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.