Cannabis leaves

The ‘Dark Reality’ of Sponsorship and Cannabis in Canada

June 13, 2018 2:17 pm Published by Leave your thoughts

As we approach the pending legalization of Cannabis (a.k.a., “pot”) in Canada, I have been part of many conversations, digital chats and deep discussions about what it might mean for the country and its health, economy and reputation. Views include many divergent opinions ranging from passionate to mildly interested to afraid to bullish.

 

Yes, the Trudeau government is following through on this campaign promise, although the exact date is not known; now delayed from the original goal of Canada Day (July 1st) 2018.

 

Now, there are many debates raging about Cannabis and its future impact on Canadian society, with many points of view.  This paper, however, follows up on just one of those views; that view being that many are excited about the potential sponsorship and marketing opportunities that Cannabis may bring to our industry. And that view has been feverish in some corners.

 

Brands thinking about the possible associations to images that they could leverage.

 

Agencies dreaming of business opportunities for their clients.

 

Properties whose followers include users or potential users considering how they could integrate cannabis into offerings for potential sponsors.

 

Well, and this may be surprising to some, the point of this white paper is to suggest that this excitement is misplaced.

 

Yes, quite simply, it is likely that sponsorship in any form related to Cannabis will be prohibited and that external marketing will also be disallowed.

 

If you knew this already, no need to read further. But, if you are somewhat surprised, please read on to learn why this outcome is likely.

 

First, and most importantly, the language coming out of Health Canada and Justice Canada is that Cannabis will be considered like tobacco[1]. Yes, and it makes sense if you really think about it, the language around the proposed Bill C45 changes align the rules around the promotion of Cannabis to be much like tobacco. A read into the documents surrounding the proposed Bill C45 find words like “controlling”, “prohibiting”, and “protecting [youth]”. A specific passage from a May 2017 Department of Justice backgrounder on C45 outlines the specific link to tobacco legislation as follows:

The proposed promotional restrictions are similar to the existing scheme for tobacco products, where promotional activities are prohibited except in limited circumstances. The proposed promotional offences and exceptions are intended to reduce incentives to use cannabis, in particular by those most at risk such as young persons. They are also designed to ensure that sufficient information is available for adult users to make informed decisions regarding consumption[2].(page 22)

 

A review of the published works since the bill was introduced in April 2017 to legalize the sale and possession of cannabis in Canada finds that all language related to marketing or promotion is similar to this statement. All wording is very clearly that packaging will be plain (i.e., unmarked), marketing to youth will be strictly prohibited and the association of products with real persons or fictional creatures will not be allowed. Further, ‘lifestyle advertising’ is particularly noted as prohibited. Any kind of deceptive marketing (or tricking) is also explicitly noted as being illegal, as drawn from the Government of Canada’s Competition Act[3], with additional limitations around claims related to “health”, “safety”, and a variety of other related terms. In television, video or films, product placement (i.e., the use of cannabis) is allowed but no product placement or marketing is allowed around that use.

 

From a sponsorship perspective, we would call this a ‘dark market’, in that there is very little that a brand can do to attach themselves to the product (Cannabis) or the lifestyle images around its use. It is just like tobacco today, where sponsorship no longer happens and marketing is based on pricing and experiential activities in very ‘hidden’ environments to adhere to the legal barriers. For example, many tobacco companies run special, unpublicized events for their customers in private venues.

 

Yes, the only imagery allowed on packaging will be the Health Canada warning and a logo.

 

Now, if you took the time to google Bill C45 and do some reading, you may have noted a few exceptions to the marketing limitations that the bill outlines. These limitations, however, are more than enough to make sponsorship inappropriate in this context since any use of any imagery cannot include an association to youth, lifestyle, or any environment where youth may be present. The resulting options for any kind of activation would be very limited and highly ineffective, very much like what tobacco deals with.

 

Yes, nothing there.

 

If you did go out and read the bill, you would also have noticed that there are further limitations that brands, properties and agencies need to be aware of.

 

First, Section 20 of the legislation clearly limits marketing (or any related imagery or elements) outside of the Canadian borders about cannabis (to be) sold in Canada. Thus, any organization in Canada or with connection with Canada could (or should) not undertake marketing efforts outside of the country.

 

Next, and this may be the most detrimental part to any sponsorship efforts, are Sections 21 and 22 which specifically prohibit a number of sponsorship related activities.  The Department of Justice release (page 23)[4] is quite clear in this as follows:

There would be further restrictions on sponsorship, set out in clause 21, including a prohibition of the display of a cannabis brand element or the name of a person who produces, sells or distributes cannabis as part of a sponsorship of a person, entity, event, activity or facility. It would also be prohibited to display a cannabis brand element, or the name of a person who produces, sells, or distributes cannabis, on a facility used for a sporting or cultural event (clause 22).

 

That pretty much closes the door on any activity.  It is very similar to the Tobacco Act[5].  So, outside of communications about the product and its availability in the prescribed places and carefully away from youth, marketing will be limited. Notably, point of sale promotion is possible as long as the language is limited to details on product availability and pricing.

 

Now, although this may be viewed as disappointing from a sponsorship perspective, if you think about it, it makes perfect sense from a society perspective.

 

What do I mean?

 

Well, if you are going to legalize the right to sell cannabis (as those in favor say) or pot (as those less in favor might say!), you need to do so in a reasonable way. Many argue (and others, of course, disagree) that tobacco has a lot of similarities in terms of health risks, potential for abuse, addiction possibility, youth overdoses, etc. that need to be addressed. There are also issues such as preventing driving after smoking large doses of cannabis that must be worked out as well. I am no expert on any of these health-related topics but clearly there are issues that need to be controlled and that are trying to be addressed in Bill C45.

 

Of course, all of this is still in draft format pending approvals and some of the sections of the bill have been left open to increase limitations or enhance regulations on marketing (Section 19), displays (Section 29), the use of particularly words (Section 28), and packaging (Section 25).

 

One final thought is that it there is likely less stigma around cannabis/marijuana than tobacco, which is something to watch closely as time goes and its use goes mainstream. Might a groundswell of advocates emerge that leads to a revisiting of the law down the road? Perhaps, but for now the intent of the legislation is clear though – it will be just like tobacco, with the marketing window mostly, if not completely, closed.


[1] http://www.justice.gc.ca/eng/cj-jp/marijuana/c45/c45.pdf

[2] http://www.justice.gc.ca/eng/cj-jp/marijuana/c45/c45.pdf

[3] https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-34/115841/rsc-1985-c-c-34.html

[4] http://www.justice.gc.ca/eng/cj-jp/marijuana/c45/c45.pdf

[5] https://www.canlii.org/en/ca/laws/stat/sc-1997-c-13/latest/sc-1997-c-13.html

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This post was written by Dr. Norm O'Reilly, Partner Consultant

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