Bill to Lift FCC Ban: Is the US Ready for Cannabis Ads?Producers, advertisers, and consumers prepare to take advantage of cannabis ads if Congress greenlights a House Bill to lift the FCC’s ban on cannabis advertising in states where cannabis is legalized for adult use.
The estimated value for cannabis advertising is around 18.5 billion for 2022. But Cannabis remains a schedule 1 controlled substance. Because of this classification, the Federal Communications Commission (FCC) prohibits commercial broadcasters from running cannabis advertisements (ads) on tv and radio. Generally speaking, the FCC doesn't regulate, and therefore the bans are not applied to newspapers, magazines, billboards, and online publications.
Broadcasters that publish cannabis ads on tv or radio risk federal charges or loss of their license. But that might soon change.
On June 24, The U.S. House Appropriations Committee drafted the Financial Services and General Government appropriations bill for 2023. In that bill, the FCC would be barred from spending any of the fiscal budget on the denial of license renewals, the station sales for broadcasters in response to airing cannabis ads, and issuing fines.
These provisions, however, would only apply to areas where the cannabis products being advertised are legal for medical and/or adult use; that includes 39 states, the District of Columbia, and U.S. territories.
If approved, the bill would mean transformative change for the cannabis and advertising industries. Moreover, the cannabis industry will be one step further in acquiring federal level-regulation, with a developing framework favoring states with legalized marijuana.
But not everyone favors legalizing marijuana advertisement, and there is still widespread doubt that the bill will be passed. FCC Commissioner, Nathan Simington, expressed a “zeal to protect consumer interests.” Simington’s support of efforts to relax current radio ownership limits echoes the need for broadcast tv and radio to keep up in a world where online digital advertisers have a competitive edge over their lower-tech and under-funded counterparts.
WHAT DOES THE BILL MEAN FOR CANNABIS PLAYERS?
Legal marijuana sales are expected to reach $33 billion, potentially benefiting a whole host of players, from cannabis producers to advertisers to consumers. But keeping up with regulations is something that these players will need to account for if the bill in question is passed. And navigating that regulatory minefield can be tricky.
The Fyllo Regulatory Database is the most comprehensive research platform for highly-regulated, high-growth industries. Dawn Hartman, VP and GM of Regulatory Solutions at Fyllo, recognizes the potential for cannabis advertising in the tv and radio broadcast industry.
Hartman envisions that “producers could soon have the option of running cannabis and hemp-derived CBD television and radio advertisements without fear of federal intervention. This means producers must be fully versed in the new advertising criteria and how they should be incorporated with already stringent state regulations for advertising cannabis and hemp-derived CBD products.”
Furthermore, the budget proposal must be determined yearly, meaning that regulations are constantly changing. If this bill takes hold, updates to advertising regulations may require future FCC involvement in coming years (budget permitting). “If so, then other states will need to quickly update their advertising regulations concerning cannabis and hemp-derived CBD products,” says Hartman - which could ultimately mean more spending from producers for lawyers, insurance, and tighter budgeting for additional licenses or mal-interpretation errors.
Advertisers have tremendous room for growth in tv and radio, especially for older, less tech-savvy audiences. The potential to reach and educate demographics least likely to consume cannabis is a yellow-brick road for developing markets like cannabis.
When asked what this means for advertisers, Hartman responded that publishers would likely be more willing to run these ads due to the lower risk of adverse events. Some publishers may update their own guidelines to allow for more hemp and cannabis advertising opportunities as well. An example of this can be found under ESPN Advertising Standards & Guidelines, “ESPN does not accept advertisements for CBD/Cannabis-related products or services on any network or platform.”
With the cannabis market exploding into the mainstream media and the millennial consumption of medical and recreational use far greater than any other demographic, digital-based advertisers have been reaching their target consumer base for years. However, “for those consumers who are not active online, radio and television advertisements provide an opportunity for them to become more educated on cannabis companies, product offerings, and potential health benefits,” suggests Hartman.
TRANSMITTING THE SIGNAL
Marijuana companies have seen the potential for cannabis sales since it was legalized at the state level. Amid the declining state of tv and radio, this bill may help the broadcast industry stay competitive amid rapid digital change. And while the potential of this bill is breaking down barriers across several industries, some pushback is expected.
Budget cuts, for whatever reason, are favoring the prospect of cannabis ads for the next fiscal year. This may be just enough time for producers, advertisers, and consumers to prove how valuable cannabis advertising can be to the U.S. economy and set the tone for the future of federal-level regulations in the industry.