WASHINGTON —Without federal legalization, regulating marijuana is hazy territory. Policymakers across the nation are looking to states like Colorado and Oregon to blaze the trail.
Apart from regulating the drug itself, advertising and investment strategies are coming under fire, with accusations that the marijuana industry may too closely resemble alcohol and tobacco companies.
To date, nearly half the nation has legalized medical marijuana. Five states have legalized recreational use, with last week’s addition of Washington, D.C.
While marijuana may seem so separate as to warrant its own regulation system, there’s one significant piece that people seem to be missing. Why not look to other ‘drugs’ that, at one point, were also outlawed in the states?
At tobacco’s peak in 1954, 45 percent of U.S. adults smoked cigarettes regularly, according to a Gallup poll. For the past century, tobacco advertisements have evolved with technology–from signs on horse-drawn carriages to television, radio and print ads. Doctors were paid to endorse tobacco’s medicinal advantages. Companies changed chemical compositions to improve taste and increase addictiveness, and made more attractive packaging.
Americans now know there is nothing healthy about tobacco, and anti-tobacco messages have taken over advertisements. Still, some marijuana advertisements are reminiscent of the bad old days of Big Tobacco.
For example, doctors prescribe medical marijuana, and packages for some edibles bear a striking resemblance to popular candies. THC (the component that gets you high–and addicted) is nearly four times more concentrated than it was 50 years ago.
“We would be incredibly naive to think a commercial marijuana industry wouldn’t employ all of the same strategies to convince people — especially young people — to use marijuana,” the nonpartisan Smart Approaches to Marijuana project website reads.
But proponents say that similar advertising doesn’t mean similar products.
Unlike tobacco, “there are actual properties within the cannabis plant that have medical benefits,” Dr. Malik Burnett, Policy Manager of the Drug Policy Alliance, said.
The fact that cigarette smoking causes one in five deaths annually is another reason experts deem the comparison to tobacco unfair. They say, if anything, marijuana is closer to alcohol than tobacco on the drug scale, and should be regulated as such.
“Still, marijuana is far safer than alcohol, and we want to make sure that people know that’s a viable substitute,” Morgan Fox, communications manager of the Marijuana Policy Project, said.
Most of this issue surrounds public perception: Alcohol and tobacco are the closest regulated substances to marijuana, making it easy to group the three together.
However, because marijuana is not federally legalized, advertising regulations are actually much stricter than those for alcohol and tobacco.
“You look at the advertising of beer and you’d think it’s a health food product,” said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws. Alcohol abuse kills 88,000 Americans and shortens their overall life expectancies by 2.5 million years annually. “I don’t hear that alarm.”
The Bud Light-ification of bud
“Look at Budweiser (Anheuser-Busch): Stella Artois and other beers you don’t even associate with Budweiser are under that brand,” Armentano said.
A New York Times article last year referred to the idea of marijuana going mainstream, and companies taking monopolies on the market, the “Bud Light-ification of Bud.”
While the neighborhood convenience store doesn’t sell joints like it does cigarettes or beer, investors are pouring time and money into making that a future reality.
The leader in this movement is Privateer Holdings, a Seattle-based private equity firm dealing exclusively with marijuana growers. From production to sale and distribution, the company intends to establish a national brand to lead the industry.
It’s making news after Founders Fund, an investment firm led by PayPal co-founder Peter Thiel, invested undisclosed millions of dollars into the company. Privateer Holdings has now raised $82 million in funds and could be valued at over $400 million with this deal, according to a Business Insider report.
Experts are skeptical though.
“I don’t spend much time thinking about what a bunch of venture capitalists are doing, and whether they may or may not get a return on their investment,” Armentano said. “We have not yet achieved a legal environment that warrants that.”
The current market for marijuana is too small to tell if clients are really looking for a brand name.
“There’s a great demand for smaller boutique stores… that makes it much more analogous to the craft brewery industry,” Fox said.
However, legalization undoubtedly increases the number of clients, and new users won’t have the same interest in boutique shops as long-time enthusiasts do. In this case, marijuana companies may do well to take after tobacco and alcohol companies.
For example, Anheuser-Busch’s best-selling product, Natural Light, is also its cheapest.
“If you are over 30, you probably don’t even know what Natty Lite is because nobody over the age of 21 drinks it. They don’t even bother to advertise it. It’s cheap. It sells,” Armentano said. “I think this will translate to the cannabis market, too.”
Hashing out the law
People cite First Amendment free speech rights as both support for and against marijuana advertisements.
But marijuana is federally illegal, which makes advertising a confusing area.
Advertising regulations under the First Amendment must pass the ‘Central Hudson Test.’ The 1980 Supreme Court decision (Central Hudson Gas & Electric Corp. v. Public Service Commission of New York) outlined limits on regulation for non-fraudulent advertisements. Any state seeking to regulate advertisements must only take actions that “directly advance” state interest and are as minimal as possible.
Since marijuana is legal in some states, it’s technically legal to advertise all over the nation, so long as advertisers are careful.
“A newspaper in Nebraska could advertise that if you’re in Colorado you can purchase marijuana legally,” said Gene Policinski, vice president at the First Amendment Center. “If they were advertising mail-order supplies, that would be an illegal act.”
When asked about national advertising regulations should marijuana be federally legalized, Policinski said there’s no way to know.
“We’re really entering this conundrum of commercial speech being less regulated,” he said. “It’s not a slam dunk by any means.”