Is recently passed cannabis law unconstitutional? It’s possible.

SB 5131  was signed by the governor on May 16, 2017, and it officially went into effect yesterday (July 23). It contains a myriad of different regulations, but perhaps the one that will affect cannabis businesses the most are the heavy restrictions being placed on advertising, or what we lawyers sometimes call commercial speech (being speech made for the profit of a company, which is less protected than regular free speech by an individual).

The new law contains language prohibiting any advertising within 1000 feet of schools and other public property, and prevents advertising likely to be attractive to children through the use of toys, inflatables, cartoon characters, and other mechanisms. Fair enough. Cannabis should be kept away from kids (except when medically necessary) after all, and I doubt a court would elevate a company’s free speech rights over concern for children’s exposure to
cannabis. But the law goes much farther than that.

The law states, “All outdoor advertising signs, including billboards, are limited to text that identifies the retail outlet by the licensee’s business or trade name, states the location of the business, and identifies the type or nature of the business. Such signs may not contain any depictions of marijuana plants, marijuana products, or images that might be appealing to children.” Now that is language that is far more restrictive than merely keeping cannabis ads from kids. So all outdoor advertising is restricted solely to text identifying the retail outlet’s name, location, and “nature of the business,” and no depiction of marijuana plants or products are allowed. This leads to a number of issues:

-  Since the language here states “the retail outlet,” cannabis producers and processors are apparently exempt.  Why would lawmakers make that distinction, and isn’t the intent behind this law easily undercut if growers start throwing up ads of cannabis leaves and products?
- The language states “advertising signs.” Is that meant to distinguish from other kinds of signs? Say a retailer posted a sign entirely unrelated to cannabis that said “Reelect Inslee for Governor.” That’s not identifying the company, but it’s also not exactly advertising the company either. Allowable or not?

- And further on this, one retailer recently had a sign that said, “Smoking marijuana makes you
gay.” Is that an advertisement, a statement of scientific fact, or merely a joke? Would that retailer get a violation notice from the Washington State Liquor and Cannabis Board (LCB)?

- No depiction of marijuana plants or products are allowed, but some kinds of maple leaves look an awful lot like cannabis. Taking the law at its plain meaning, the LCB couldn’t ding a retailer for depicting a Japanese maple leaf, could it?

Those are just a few potential issues and vagaries left with this new law passed. A number of our clients are concerned about it, and for good reason. A first violation on advertising involves a $1000 fine or a 5-day suspension of their license. A third violation would be a 30-day suspension. That would cost Uncle Ike’s nearly $1 million, and a majority of retailers over $100,000. So this is no laughing matter.

Finally, retailers can also arguably further circumvent these laws through unlicensed related businesses, also known as “ancillary” businesses. Recall that Uncle Ike’s has a glassware shop right next to its cannabis shop, so it has a massive “Uncle Ike’s” sign, clearly against LCB rules, but for its glassware shop. That sign has been up for years now, so retailers can be expected to try to find workarounds such as this.

The question of whether these laws are unconstitutionally overbroad or vague requires a more detailed legal analysis, and rest assured many lawyers and businesses are doing just that. This may be just the beginning of this issue.