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NY Office of Cannabis Management Adopts Disappointing Ad Regs

The New York Office of Cannabis Management has published its final rules regarding advertising by licensed cannabis distributors. The rules place significant restrictions on cannabis advertising, which may prevent cannabis advertising on local broadcast stations.

To begin with, federal law still restricts stations from accepting cannabis advertising from licensed distributors in the state of New York. Since federal drug laws remain in place, stations may place their federal broadcast license at risk by accepting cannabis advertisements, even though the ads are being purchased by a legal cannabis distributor in New York. Each station must make its own decision, and we urge stations to consult with counsel before accepting cannabis advertisements.

At some point in time, we are hoping to change federal law. If federal law changes, then the New York State Cannabis advertising laws will take effect.

The new regulations apply directly to licensed cannabis distributors in New Your State. If they fail to follow the ad rules, they may risk losing their license. The regulations do not apply directly to stations. Although, as noted above, running advertisements that violate either state or federal law may create risks for your license.

90% Audience Placement Standard May Prevent Advertising During Popular Programs and Formats: Under the New York cannabis ad regulations, cannabis advertisements may only be placed in programs where the cannabis licensee has “reliable evidence” that 90% of the audience is reasonably expected to be 21 years of age or older. The burden of proof is on the licensed cannabis distributor.

We strongly object to this standard. On numerous occasions, we have advised NYOCM that this standard is too restrictive. The voluntary industry standards for alcohol advertising require that 71.6% of the audience must be 21 years of age or older. Most states approving adult-use cannabis have adopted the standard used for alcohol. NYSBA’s filings in this proceeding documented the significant preclusive effect of this restriction. The 90% standard will relegate cannabis advertisements to programs that have very small audiences, making it unlikely that licensed distributors will use broadcast, cable, print, or other electronic media.

Moreover, a cannabis advertiser has assumed the burden of showing that this standard is met by providing reliable evidence that 90% of the audience is reasonably expected to be 21 years of age or older. It is still somewhat unclear what will constitute “reliable evidence.” However, NYOCM previously published a guidance document stating:

“There are many forms of reliable evidence that can substantiate the composition of the audience that is reasonably expected to view an advertisement.
Some examples of such evidence are:
A description of the age verification methods of an establishment that only allows entrance to individuals who are at least twenty-one years old;
Audience composition data provided by a media purchasing agency or ad agency to verify the demographic information of an audience; and
Age analytics for the media unit purchased or considered.
Evidence is not reliable if it does not accurately represent the reasonably expected audience of an advertisement. The methods through which evidence is collected, the nature of the evidence itself, and the applicability of the information to the situation in which the advertisement will be placed are all factors that could result in evidence being deemed ‘unreliable.'”

Extensive Labeling May Prevent Most Radio Advertising: Simply stated, the proposed labeling requirements are simply too long for most radio advertising. While the regulations enacted an audio-specific label, it is still too long for 15-second and 30-second radio spots.

The base warning label for all “audio” cannabis ads reads as follows:

“For use only by adults 21 and older. Keep out of reach of children and pets. In case of accidental ingestion or overconsumption, contact the National Poison Control Center. Consume responsibly.”

The NYOCM Guidance Document issued in December only references this label requirement for “audio” only advertisements. However, the rules that have been adopted seem to say that stations must also include rotating labels and the HOPELine number. We are trying to clarify this now. In either case, the warning labels are too long for most radio spots.

Again, federal laws remain in place and stations accept cannabis advertising at their own risk. Even if federal laws change, NYOCM’s rules place significant restrictions on licensed cannabis distributors seeking to advertise on local broadcast stations.

NYOCM’s administration of the adult-use cannabis rollout has raised concerns on a number of issues. We anticipate that corrective legislation may move later in the year. We hope to find a legislative fix for these overly restrictive rules.

You can see the final NYOCM advertising regulations here.

You can see the NYOCM Advertising Guidance Document here.

You can see NYSBA’s filings before NYOCM here and regulation comments here.

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