Via JD Supra

Advertising cannabis products along California’s interstate highways, briefly lived, is now significantly restricted.

On January 21, 2021, the California Bureau of Cannabis Control (BCC) released a notice explaining that, due to a recent state court ruling, billboard and similar types of advertising of cannabis products was now prohibited on any interstate or state highway that crosses the California border. This is a change from BCC’s earlier guidance, which permitted billboard advertising on interstate or state highways crossing the California border, except for within a 15-mile radius of the border.

A Brief History

California legalized the sale and use of adult-use (i.e., nonmedical) cannabis in 2016, when California voters passed Proposition 64 (officially “The Control, Regulate and Tax Adult Use of Marijuana Act,” but more commonly referred to as Prop. 64). As we explained here, Prop. 64 established the BCC to regulate and license the state’s cannabis businesses. It also imposed specific operating requirements for licensed entities, including a prohibition on advertising cannabis products on billboards located along interstate highways and highways that cross the California border.

In 2019, the BCC promulgated regulations implementing Prop. 64’s requirements, which included a provision that allowed billboard advertising on interstate and state highways, unless they were located within 15 miles of the state border. The BCC reasoned that the 15-mile radius achieved the intent of Prop. 64 while still allowing the state’s nascent recreational cannabis industry the ability to advertise.

Local Man Challenges the California’s Cannabis Advertising Regulations

Shortly after the BCC promulgated its regulation allowing billboard advertising, the regulation was challenged by a San Luis Obispo County resident who claimed that BCC’s interpretation of Prop. 64 would unnecessarily expose him and his teenage children to cannabis advertising.

On January 11, 2021, the San Luis Obispo County Superior Court entered a judgment in his favor. In Farmer v. Bureau of Cannabis Control (BCC) & Lori Ajax, No. 19-CV-0597, the court held that BCC had exceeded its authority by promulgating regulations that were clearly inconsistent with Prop. 64’s advertising restrictions. In other words, the court concluded that BCC’s regulation allowing advertising along most of California’s state and interstate highways was invalid.

What This Means for Cannabis Advertising in California

Not long after the court entered its formal judgment, the BCC issued a notice explaining that billboards and similar advertisements for cannabis products on interstate highways and state highways that cross California state borders must be removed. However, it is important to note that the court’s ruling (and BCC’s notice) does not apply to highways that are fully located inside the state of California. Accordingly, billboard advertising may still be a viable option for advertising cannabis products in California, as long the billboards are placed along a highway that does not cross the state border. That said, cannabis licensees and marketers considering billboard advertisements should also consider potential local restrictions permitted under California’s Outdoor Advertising Act, which allows municipalities to impose additional restrictions on outdoor advertising within their boundaries.

This is one of only a few checks on BCC regulations that we have seen so far. The first involved a BCC regulation that preempted local bans and allowed licensed cannabis delivery companies to deliver anywhere in the State of California. Although BCC’s so-called “Delivery Regulations” were upheld following a challenge mounted by 25 local governments, in its holding, the court clarified that the regulation could not prevent cities and counties from restricting delivery services within their jurisdiction. While these are some of the first legal challenges that we’ve seen to BCC rulemaking, we suspect they won’t be the last as California legislators and regulators continue to revise and refine the state’s cannabis laws.

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