Authored By: Hugo Alves, Melissa Dimilta, Mike Lickver and Vladimir Klacar of  Bennett Jones

Contact
Michael D. Lickver Associate
Corporate Commercial, M&A, Securities and Corporate Finance Lawyer at Bennett Jones Toronto
T: 416.777.7454
https://www.bennettjones.com/LickverMichael

The Task Force recommends imposing strict tobacco-like limitations on the marketing and promotion of cannabis. If implemented these restrictions could have a profound impact on the ability of industry stakeholders to brand, market and brand differentiate.

Promotion and Labelling of Cannabis Recommendations

In the Report, the Task Force recommends that the federal government:

Apply comprehensive advertising restrictions that cover any medium, including print, broadcast, social media, branded merchandise, and all cannabis products, including related accessories, similar to the restrictions set out in the Tobacco Act;

Require plain packaging for cannabis products that only includes the following information: company name, price, strain name, and any applicable labelling requirements;

Require appropriate labelling on cannabis products, including:

Levels of THC and CBD

Text warning labels (e.g., “KEEP OUT OF REACH OF CHILDREN”)

For edibles, labelling requirements that apply to food and beverage products

Require that any therapeutic claims made in advertising conform to the legislation. For example, the Food and Drugs Act and its Regulations require that claims not be false, misleading or deceptive or likely to create an erroneous impression regarding the drug’s character, value, quantity, composition, merit or safety; and

Implement administrative penalties (with flexibility to enforce more serious penalties) for contraventions of promotion and labelling rules.

Tobacco Act Restrictions

Under the Tobacco Act, SC 1997, c 13, promotion is defined as “a representation about a product or service by any means, whether directly or indirectly, including any communication of information about a product or service and its price and distribution that is likely to influence and shape attitudes, beliefs and behaviours about the product or service”. This definition of promotion does not extend to the publishing of legitimate scientific research funded by tobacco manufacturers. Promotion is to be interpreted to mean “commercial promotion indirectly or directly targeted at consumers”.1

A person may advertise a tobacco product only in limited circumstances. A person may only promote by means of information advertising (factual information to the consumer about a product and its characteristics or the availability or price of a product or brand of product) or brand-preference advertising (promoting a product by means of brand characteristics) in the following two instances:

In a publication that is provided by mail and addressed to an adult who is identified by name; or

Signs in a place where young persons are not permitted by law.

Notably, tobacco companies are not permitted to engage in lifestyle advertising or advertising that could be construed on reasonable grounds to be appealing to young persons. Lifestyle advertising means advertising that associates a product with, or evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour,  recreation, excitement, vitality, risk or daring. In furtherance of the limits on lifestyle advertising, the Tobacco Act does not allow a tobacco product-related brand element or even the name of a tobacco manufacturer to be used in promoting sponsorship events.

Plain Packaging

The Report recommends that the federal government require plain packaging for cannabis products. Health Canada is currently considering plain packaging as a means of regulating the appearance, shape and size of tobacco packages in Canada but such a requirement has not yet been implemented.

The proposed plain packaging requirements for tobacco products include:

Standardized colour on outer and inner surfaces

Matte finish

No brand elements (other than the brand name)

The brand name shall have standardized font type and colour, a maximum font size, specified capitalization and a restricted placement on the package.

No promotional colours, images, graphics, patterns or other marks

Packaging to be limited to one of two specified types.

Warning labels

Application to Cannabis Industry

The Report recommends that the restrictions on cannabis promotion and packaging be similar to the restrictions set out above. However, the above restrictions are not easily translatable to the cannabis industry because of the dual purpose of cannabis as both a recreational drug and a medicinal cannabis product. The Report itself recommends a separate medical access framework to support patients and encourages further research into the health benefits of cannabis. It is unclear how these restrictions will apply in light of the dual system. For example, without branding it is unclear how medical cannabis products will be differentiated from recreational cannabis products and whether the restrictions on sponsorship will extend to restricting sponsorship of research-based events or fundraisers related to the medical use of cannabis.

In addition, if the recommendations of the Task Force are implemented, we expect to see branding and marketing restrictions being limited primarily to marketing collateral (e.g. branded displays) located within  physical retail outlets (i.e. where minors will, presumably, not be permitted by law) and publications mailed to a named adult, the latter being an exemption to the tobacco marketing restrictions which is routinely relied on by tobacco companies.

The above update provides a brief overview of the Task Force’s recommendation relating to advertising, packaging and labelling of cannabis. It is important to remember that cannabis law is complex and rapidly evolving. At Bennett Jones LLP, we have a team of industry-leading professional advisors that can provide legal and strategic guidance to all industry participants as the Canadian cannabis industry continues to advance.

1 Canada (Attorney General) v JTI-MacDonald, 2007 SCC 30 at para 57.