Canadian Cannabis Advertising Online via Google Pay Per Click (“PPC”) Pilot Program Backgrounder

Guidance and regulations for cannabis advertising are governed by the federal Cannabis Act (the “Act”). The Act specifies those activities that are prohibited and those activities that are excepted from the prohibitions with respect to the advertising/promotion of cannabis, cannabis accessories, and services related to cannabis by a person authorized to produce, sell or distribute cannabis.

Cannabis retailers licensed by a provincial government authorized to sell cannabis, therefore, fall under the Act with respect to the advertising and promotion of cannabis.

Under the Act, marketing, in respect of a product or service, means to make, for the purpose of selling a product or service, a representation — other than a representation on a product package or label — about the product or service by any means, whether directly or indirectly, that is likely to impact and shape attitudes, beliefs, and behaviors about the product or service.

Under Section 17 of the Act, unless authorized, a person is not permitted to market cannabis or cannabis accessory, or any service related to cannabis by

1. Communicating information about its price or distribution.
2. Using a process to promote in which there are reasonable grounds to believe could be appealing to young persons.
3. Any means of a testimonial or endorsement, however, displayed or communicated.
4. Use any means of the depiction of a person, character or animal, whether real or fictional.
5. Presenting it or any of its brand elements in a manner that correlates it or the brand element with, or evokes a positive or negative sentiment about or image of, a way of life such as one that includes glamour, recreation, enthusiasm, endurance, risk or daring.

There are forms of promotion that are permitted:

(1) brand-preference promotion, which means the promotion of cannabis by means of its brand characteristics, promotion of a cannabis accessory by means of its brand characteristics or promotion of a service related to cannabis by means of the brand characteristics of the service.

(2) informational promotion, which means a promotion by which factual information is provided to the consumer about

1. Cannabis or its characteristics.
2. A cannabis accessory or its characteristics.
3. Service related to cannabis
4. The availability or cost of cannabis, a cannabis accessory or service associated with cannabis. (promotion informative)

Current examples of informational promotion are provided by Tweed and Aurora billboard advertisements. Some Canadian Licensed Producers are taking advantage of the lack of clarity on promotion, for example, Namaste, Aurora, and Canopy, some of which may have been reprimanded by Health Canada for being offside of the Act and its prohibitions on promoting cannabis.

Two relevant exceptions to the prohibitions of Section 17 are the:

1. Informational promotion of cannabis (17(2)); and
2. Informational promotion of cannabis accessories and services (17(3)).

(i) A person that is authorized to produce, sell or distribute cannabis may promote cannabis by means of informational promotion or brand-preference promotion (17(2)), and (ii) a person may promote a cannabis accessory or a service related to cannabis by means of informational promotion or brand-preference promotion (17(3)) if the promotion is

1. In a communication that is addressed and sent to an individual who is 18 years of age or older and is identified by name.
2. In a place where young persons are not permitted by law.
3. Communicated by means of telecommunication, where the person responsible for the content of the promotion has taken reasonable steps to ensure that the promotion cannot be accessed by a young person.
4. In a prescribed place.
5. Done in a prescribed manner.

Step 1:

Applying the above exceptions to the Google Adwords pilot program, if the pilot program uses keywords from the topic of “California Cannabis Club” which directs an individual to the California Cannabis Club web page, there would need be to an age verification or filtering process confirming whether or not that individual accessing the webpage is the age of majority in that province, prior to permitting that individual access to that webpage. This would reasonably satisfy subsection 17(3)(c) above.

For example, see: https://www.tweed.com/en/vault

Currently, initial thoughts appear to be the California Cannabis Club web page, hosted on the OH website, would not feature OH brands but only the California Cannabis Club and Origin House Brands specifically. In order to be in compliance with the Act, the content of the California Cannabis Club web page will need to be an informational promotion or provide brand-preference promotion with respect to either cannabis or cannabis accessories or services under the above two exceptions in Sections 17(2) and 17(3). This does not rule out the initial objective of featuring the California Cannabis Club and OH brand discussion. Based on the initial discussion, it is understood the California Cannabis Club page would include some content about the availability of high-quality cannabis products in California that isn’t yet available in Canada which will need to be portrayed in a manner that will fit the information promotion or brand-preference promotion definitions and exceptions identified above. Once the content of the web page is determined we will need to ensure it falls under an informational promotion or brand-preference promotion.

The prohibition and the exceptions to the prohibition in the Act appear consistent with the restrictions of the Google Ads Policies, below, as the informational promotion and brand-preference promotion would not permit any advertising promoting cannabis use explicitly. In promoting the Google Ad Pilot Program, Google Rep 180 Smoke is coordinating with cited an example of “a prominent cannabis company who sponsored a concert. The business was able to promote the concert, given they did not promote the cannabis product in question.” Although the actual sponsorship may have been offside the Act, as the Act prohibits depictions of real or fictional people and characters, as well as promotion that “evokes a positive or negative emotion about, or image of, a way of life such as one that includes glamour, recreation, enthusiasm, endurance, risk or daring”, also referred to as “lifestyle advertising” under the Tobacco Act.

Step 2:

After verifying an individual requesting to access the California Cannabis Club web page is the age of majority in their province, the next step is to provide or entice those viewers/individuals of age with a simple form to sign up for updates on the California market/brands/products and Canadian regulation regarding their availability, at a minimum, including their email, name, and age. Once an individual’s email, name, and age have been provided by the web page, informational promotion about cannabis or cannabis accessories or services would be permitted to be directly communicated to those individuals, if they are identified by name and are of age, according to sections 17(2)(a) and 17(3)(a).

See an example of DOSIST provided by Google Rep.

Other exceptions to the general prohibition to promote cannabis or cannabis accessory or any service related to cannabis includes:

17(4) a person that is authorized to sell cannabis may promote it at the point of sale if the promotion indicates only its availability, its price, or its availability and price. (This exception potentially applies in a 420 Wellness or 360 Cannabis retail location at the checkout/point of sale).

17(5) A person that sells a cannabis accessory or provides a service related to cannabis may promote it at the point of sale if the promotion indicates only its availability, its price, or its availability and price.

17(6) a person may promote cannabis, a cannabis accessory, or a service related to cannabis by displaying a brand element of cannabis, of a cannabis accessory, or of a service related to cannabis on a thing that is not cannabis or cannabis accessory, other than

1. A thing that is associated with young people.
2. The thing that there are reasonable areas to believe could be appealing to young people.
3. A thing that is associated with a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring.

Generally, the prohibition on promotion under Act, does not apply if no consideration is given, directly or indirectly:

• To a musical, cinematographic, literary, scientific, educational, or creative work, production, or performance that uses or represents cannabis, a cannabis accessory or a service related to cannabis, or a brand element of any of those things, whatever the mode or form of its expression for that use or depiction in the work, production or performance (Section 16(a) of the Act).
• To a report, analysis, or judgment in respect of cannabis, a cannabis accessory or a service related to cannabis, or a brand element of any of those things for the reference to cannabis, cannabis accessory, service, or brand element in that report, analysis or judgment (Section 16(b) of the Act).
• To market, by a person that is permitted to produce, sell or distribute cannabis, that is directed at any person that is permitted to produce, sell or distribute cannabis, but not, either directly or indirectly, at consumers (Section 16(c) of the Act).
• To market, by a person that trades or distributes cannabis products and accessories or that provides a service related to cannabis, that is directed at any person that sells or distributes cannabis accessories, at any person that is permitted to produce, sell or distribute cannabis, but not, either directly or indirectly, at buyers.(Section 16(d)) of the Act).

Cannabis Act Prohibitions on Promotion

False or Misleading Promotion of Cannabis or Cannabis Accessories

Note: The Act prohibits the promotion of cannabis in a manner that is false, misleading or deceptive or that is likely to create an erroneous impression about its features, quantity, cost, composition, intensity, concentration, quality, merit, potency, safety, purity, health effects or health risks. (Section 18(1) of the Act).

Similarly, the Act prohibits the promotion of a cannabis accessory in a manner that is false, misleading, or deceptive or that is likely to create an erroneous impression about its design, construction, performance, intended use, characteristics, value, composition, merit, safety, health effects or health risks. (Section 18(2) of the Act).

Limits on Permitted Promotion.

When promoting cannabis or cannabis accessories or services related to cannabis, the promoter is prohibited to use any term, expression, logo, symbol, or illustration specified in regulations made under paragraph 139(1)(z.1) in the marketing of cannabis, a cannabis accessory or a service related to cannabis. (Section 19 of the Act).

Promotion using Foreign Media

It is forbidden to market, in a way that is forbidden by this Part of the Act, cannabis, a cannabis accessory, a cannabis service, or a brand element of any of those things in a publication that is published outside Canada, a broadcast that starts outside Canada or any other communication that starts outside Canada. (Section 20 of the Act).

Sponsorship

During the sponsorship of a person, object, event, facility, or activity, it is forbidden to display, refer to, or otherwise use any of the following, directly or indirectly in marketing:

1. A brand element of cannabis, of a cannabis accessory, or of a service related to cannabis; and
2. The name of a person that
   1. Produces, sells, or distributes cannabis.
   2. Sells or distributes a cannabis accessory.
   3. Provides a service related to cannabis

(Section 21 of the Act)

Name of facility

It is prohibited to display on a facility, as part of the name of the facility or otherwise if the facility is used for sports or cultural events or activities.

• (a) a brand element of cannabis, a cannabis accessory or a cannabis service; or
• (b) the name of a person that
  • (i) Produces, sells or distributes cannabis.
  • (ii) Sells or distributes a cannabis accessory.
  • (iii) provides a service related to cannabis.

(Section 22 of the Act)

Publication, etc. of prohibited promotions

1. It is prohibited to publish, broadcast or otherwise disseminate, on behalf of another person, with or without consideration, any promotion that is prohibited by any of sections 17 to 22.
2. Subsection (1) does not apply.

1. In respect of the distribution for the trade of an imported publication.
2. In respect of broadcasting, as defined in subsection 2(1) of the Broadcasting Act, by a distribution undertaking, as defined in that subsection 2(1), that is lawful under that Act, other than the broadcasting of a promotion that is inserted by the distribution undertaking.
3. In respect of a person that disseminates a promotion if they did not know, at the time of the dissemination, that it includes a promotion that is prohibited under any of sections 17 to 22.

(Section 23 of the Act)

Inducements

Unless authorized under this Act, it is prohibited for a person that sells cannabis or cannabis accessory:

To provide or offer to provide cannabis or cannabis accessory if it is provided or offered to be provided

• Without monetary consideration or
• In consideration of the purchase of anything or service or the provision of any service; (Section 24(1)(a)).

To provide or offer to provide anything that is not cannabis or cannabis accessory, including a right to participate in a game, draw, lottery or contest, if it is provided or offered to be provided as an inducement for the purchase of cannabis or cannabis accessory; (Section 24(1)(b)); or

To provide or offer to provide any service if it is provided or offered to be provided as an inducement for the purchase of cannabis or cannabis accessory. (Section 24(1)(c));

Exception — cannabis

(2) Subject to the regulations, subsection (1) does not apply to a person authorized to sell cannabis and who provides or offers to provide anything, including cannabis or cannabis accessory, or service referred to in any of paragraphs (1)(a) to (c) to a person that is authorized to produce, sell or distribute cannabis.

Exception — cannabis accessory

(3) Subject to the regulations, subsection (1) does not apply in respect of a person that sells cannabis accessory that provides or offers to provide anything, including cannabis or cannabis accessory, or service referred to in any of paragraphs (1)(a) to (c) to a person that is permitted to produce, sell or distribute cannabis.