Early next week, a Vermont judge will consider a legal motion that could have a tremendous impact on the state’s retail cannabis industry.
The case involves regulations for how stores can advertise their products, which the plaintiffs argue violate free speech protections in the Vermont Constitution.
A retail store in Middlebury, FLŌRA Cannabis, filed the lawsuit, and a number of other cannabis businesses have joined.
How did the state’s cannabis advertising regulations become what they are now?
Restrictions on advertising were included in the original bill that legalized the cannabis retail marketplace, which passed in 2020.
When lawmakers considered this issue at that time, the bill that passed the House prohibited all types of advertising. But that didn’t sit well with the Senate, and so a compromise was reached:
All ads, including radio, TV, newspaper and social media posts have to first be approved by the Cannabis Control Board to make certain that those ads don’t appeal to younger people and don’t include misleading statements, therapeutic claims or promote overconsumption. And the ads must also include a lengthy health warning.
They don’t want to promote consumption. They don’t want to create new consumers. And so how do you thread that needle?
James Pepper, chair, Cannabis Control Board
James Pepper, the chair of the Cannabis Control Board, is one of the defendants in this case. He said over the last two years, the board has received almost 600 advertising requests from various retailers, and it’s approved 55% of them.
He said there’s a reason why lawmakers included these restrictions in the original bill.
“Part of the rationale, again, is an acknowledgement that people are consuming cannabis, and it would be a net benefit for public health to have them consuming a product that’s been tested,” Pepper said. “But they don’t want to promote consumption. They don’t want to create new consumers. And so how do you thread that needle?”
What specific issues does the lawsuit address?
Dave Silberman, owner of FLŌRA Cannabis, said the restrictions on advertisements, particularly the prior approval rules, violate the free speech rights of the Vermont Constitution. That’s Chapter 1 Article 13, which says, “The people have a right to freedom of speech and of writing and publishing their sentiments.”
Silberman argues that the state’s restrictions are having a very negative economic impact on all aspects of the state’s cannabis industry.
“It’s losing this money to fewer people buying cannabis from stores,” Silberman said. “There’s still a strong black market for cannabis in Vermont that is not regulated, and so consumers lose, public safety loses, taxpayers lose and then we, as the cannabis industry, lose.”
Silberman also said the state is being hypocritical. That’s because, on one hand, he said it wants to get tens of millions of dollars in new revenue from the sale of cannabis, but it doesn’t want to be in the position of allowing the promotion of this product.
“What they’re really trying to do is keep us from talking with adult consumers about cannabis and normalizing cannabis in society,” Silberman said. “They want to perpetuate a stigma that is not appropriate when you’re talking about a product that at the state level is legal now.”
How do legal experts view the case?
They’re fascinated by it. Jared Carter, a constitutional law professor at Vermont Law School, said a key part of this case is the recognition that the retail sale of cannabis is now a lawful activity in Vermont.
The fact that this is illegal at the federal level and legal at state level creates a real conundrum for the courts.
Jared Carter, constitutional law professor, Vermont Law School
“If the plaintiffs can get past that, and the court, in this case, the court looks at Vermont law, in which case, it is obviously lawful, then I think the plaintiff’s claim is quite, quite strong,” Carter said. “But it’s really going to be that threshold issue, and it does tie back to exactly that: The fact that this is illegal at the federal level and legal at state level creates a real conundrum for the courts.”
Carter said the outcome could be affected if the lawsuit is considered under the provisions of the Vermont Constitution.
How do other states with legal retail cannabis deal with advertising?
They vary. Many focus on not promoting products to people under 21. Others prohibit false claims. Some regulate the signage at the stores themselves. And there are some states that don’t have any restrictions at all.
James Pepper said it’s a case where every state is making this decision for themselves.
“You know, every state gets to kind of choose its own adventure with how they’re going to regulate cannabis until there’s federal legalization,” he said. “You know, you’re going to get a patchwork of opinions from the various state courts.”
Where does the case go from here?
The plaintiffs are asking for two things: They’re seeking an injunction to prohibit the state from enforcing the current advertising restrictions. And, if they’re successful, they’re calling for the development of regulations that allow them to responsibly advertise their products.
It may take a little while for a decision to be handed down, and it’s certainly possible that the decision ultimately will be appealed to the Vermont Supreme Court.
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