Alexander Nieves, Politico
Recreational cannabis may be legal in California, but debate rages on over how visible the once-taboo plant should be in daily life — namely, along the state's roadways.
A fight is brewing in the state Legislature over cannabis-related billboards that have sprung up around the state, advertising tools the industry says are necessary to support the struggling legal market but that opponents argue expose children to a potentially harmful substance.
A pair of competing bills introduced by Assembly Democrats take vastly different approaches to where licensed marijuana operations can market their businesses and products in public, with one proposing a ban on any cannabis-related billboard that can be seen from a highway.
“This is a very new industry and I don't think that we should let the advertising get out of hand," said Assemblymember Jacqui Irwin (D-Thousand Oaks), the author of the more restrictive CA AB 273 (21R).
Assemblymember Bill Quirk (D-Hayward) is taking a more industry-friendly approach with his proposal, which would prohibit cannabis advertising within 15-miles of a border along highways that exit the state. CA AB 1302 (21R) would permit billboards along most thoroughfares while discouraging interstate sales, which are still federally illegal.
This seemingly narrow debate could have a major impact on California's legal cannabis market. The industry relies on outdoor advertising because major tech companies like Google, YouTube and Facebook largely bar them from marketing to consumers online. Industry leaders say a long-term billboard ban could further hinder their ability to compete against an expansive network of unlicensed businesses that don’t pay taxes or regulatory fees and therefore can sell cheaper products.
Nearly 80 percent of all California cannabis sales, valued at more than $8 billion, occur on the illicit market, according to cannabis analytics firm New Frontier Data.
“The legal industry is in trouble because they have to compete with this low-overhead illegal market,” Quirk said. “That's the problem and there's no guarantee that the legal market survives, frankly, at this point unless they can out-compete the illegal market.”
When voters approved Proposition 64’s legalization of adult-use marijuana in 2016, they put into place language on cannabis billboards that left significant gray area around the true intent of the measure. Under the plain text of the proposition, cannabis billboards are banned along highways that cross the border.
The Bureau of Cannabis Control in January 2019 issued regulations that limited the ad prohibition to within 15 miles of the border, maintaining that it interpreted the law as aimed at discouraging interstate commerce. However, a resident challenged those regulations in San Luis Obispo Superior Court, arguing the billboards inappropriately subjected his children to cannabis.
A judge ruled in November that the cannabis agency's regulations didn’t adhere to the language of Prop. 64, a decision that forced companies to begin removing billboards that had proliferated across the state. But the ruling didn’t address whether the ballot measure language was meant to discourage interstate commerce or prevent minors from seeing cannabis marketing.
Irwin said she believes Prop. 64’s writers didn’t want cannabis billboards on highways at all, based on the measure's outdoor advertising restrictions along with other provisions designed to limit advertising exposure to children.
She noted that state law limits physical and digital cannabis advertisements to places where at least 71.6 percent of the audience is reasonably expected to be over 21 years old. Outdoor advertising companies argue that cannabis billboards on highways meet this threshold, but Irwin raised doubts about how this can be proven.
Prop. 64 also prohibits cannabis advertising on city streets within 1,000 feet of daycare centers, K-12 schools and playgrounds and includes stringent parameters on what images can appear in ads or on cannabis packaging.
Irwin said she worries that cannabis advertising could lead to increased use among minors, who are shown in some studies to suffer from more adverse health effects than adults, including declined performance in school and a higher likelihood of developing substance use disorder.
“We could argue about the rights of the billboard people and how they need to make money,” Irwin said. “We could argue about the rights of the cannabis companies and how they need to make money, but this was the proposition that the people of California voted for.”
Dr. Marvin Seppala, chief medical officer for the Hazelden Betty Ford Foundation and an expert on addiction treatment, said he worries that public displays like billboards could lead youth to believe cannabis products are safe to use. He cited annual survey data from the federal Substance Abuse and Mental Health Services Administration which found that drug use rates increase among minors as the perception of risk declines.
"That's to me the crux of the issue,” he said.
The cannabis industry has pushed back against Irwin’s interpretation of Prop. 64 and the idea that advertising could lead to increased youth use, arguing that without a strong legal market, California will continue to be dominated by unlicensed businesses that have no safeguards to prevent sales to minors.
“The very people that this harms are the folks who said, you're right, we want to operate and sell and live in a world where children are protected, and you don't have shops that minors can wander into and buy products that could negatively impact them,” said Elizabeth Ashford, senior director for corporate communications at cannabis delivery company Eaze.
Ashford also pointed to recent studies published by the American Medical Association and Centers for Disease Control and Prevention that have found little change in youth cannabis use rates in states that have legalized it.
Some around the industry have also started to level criticism at Irwin for a bill she introduced last month that would allow alcohol companies to give up to 12 advertising umbrellas to businesses licensed to sell alcohol, like restaurants, a move they called out as hypocritical in light of her opposition to cannabis marketing.
Quirk said any effort to protect children from exposure that doesn't address the unlicensed market is bound to fail and called his bill the “best way to protect children, period.”
“This is not enticing children, it's just giving a chance for the legal industry to outperform the illegal industry, which has lower prices and convenient delivery to middle schoolers,” he continued. “We’re much better off with the legal industry and if you want to hobble the industry some more that's not fine with me.”
Pamela Epstein, general counsel and chief regulatory officer for cannabis company Eden Enterprises, said the billboard fight represents growing pains that are “indicative of the normalization process.”
“I think that cannabis is to those who work in the industry as normal as going and buying an apple at the store,” she said. “But it is a reflection that as a larger society we are still moving through the educational process and there's still a good amount of miseducation and fear of the unknown.”