Law Times

LAW TIMES 10 COVERING ONTARIO'S LEGAL SCENE | MARCH 18, 2019 www.lawtimesnews.com BY DALE SMITH For Law Times T he rules around advertising and promotion of canna- bis are restrictive; however, lawyers say there is room within federal regulations to be creative if their clients are willing to as- sume a little risk. The Cannabis Act states that it is prohibited to promote canna- bis, a cannabis accessory or any service related to cannabis, with a list of exceptions. Among the prohibitions are using any brand elements that evoke a positive or negative association with a "way of life," such as glamour, recre- ation, risk, excitement or vitality. Sara Zborovski, a partner at Norton Rose Fulbright Canada LLP in Toronto, says it's very dif- ficult to interpret what the "way of life" prohibition is supposed to mean. "What if someone wants to put their cannabis brand element on a skateboard or a basketball or a yoyo?" asks Zborovski. "There is a slippery slope. Where do you go from be- ing safe to being not safe?" Zborovski says the cannabis industry is in its infancy and lawyers have a situation where there are consumers who know nothing about the cannabis brands and brand owners who have invested significantly in getting licensed and producing good, safe, quality products. "How do you play within the super restrictive promotion guidelines and educate con- sumers about your safe, quality, amazing product and everything that you offer?" asks Zborovski. "That's why this is important to lawyers." Lawyers need to pay atten- tion to the prohibitions because the penalties associated with im- proper advertising can be levied against non-cannabis compan- ies, says Matt Maurer, a partner and vice chairman of the canna- bis law group at Torkin Manes LLP in Toronto. "The way [the act] is worded, it is possible that if you're a tele- vision company or a media com- pany and you run something that's improper, you could end up paying for it," says Maurer. "Lawyers should have an aware- ness [of the prohibitions], be- cause there could be an issue." Maurer says any cannabis promotion that is geared for business-to-business purposes is exempt from all of the restric- tions in the act and that canna- bis-related businesses can also send certain advertising by dir- ect mail as long as it's directly addressed to a person that is over the legal age in that province. He says cannabis-related businesses can also use company websites to market products, as long as the site is properly designed to ensure that minors are not ac- cessing it. Health Canada put out a letter on March 8 to licenced producers that expressed concerns that the steps taken to restrict access to websites can easily be circumvented by youth. Alice Tseng, a partner at Smart & Biggar in Toronto, says that the one provision of note amid the default prohibition on all advertising in s. 17 of the act is the brand element exception. This exception states that a brand element can be dis- played to promote cannabis, accessories or services and that informational advertising and brand preference promotion can happen in environments where minors are barred. "The provision says that you can put a brand element on a 'thing' and the thing can't be something that is appealing to kids or associated with chil- dren," says Tseng. "The intention is you can clearly put a brand element on a T-shirt or a cap. You clearly can- not put it on a child's T-shirt." Tseng says the provision is strangely worded if the intent is to keep the "thing" to just mer- chandise that can be sold. She says the word "thing" is not defined in the [Cannabis] Act or the regulations, and the use of "thing" is fairly broad and can include contest entries in certain provisions. "That's where I think the big- gest wiggle room is," says Tseng. She says that while there are clear prohibitions against spon- sorship of events in the act, there could be room for certain kinds of co-operation with event pro- moters, but she cautions that there are prohibitions in the legislation about promoting the "lifestyle" of cannabis. Zborovski says there is un- certainty in terms of how the advertising prohibitions in the act are being enforced. Tseng adds that Health Canada has not been helpful in providing guid- ance because it will only repeat what's in the legislation without explaining it. Zborovski says it's incredibly difficult for lawyers to advise in- dustry because they don't know Health Canada's limits at this point. "We don't have great insight into where Health Canada is coming down hard," says Zbor- ovski. James Wishart, a partner at Dentons Canada LLP in Ottawa, says that Health Canada hasn't prosecuted anyone yet for con- travening the advertising pro- hibitions in the act and hasn't ag- gressively stepped up against any particular advertising or spon- sorship, with the exception of sporting and rock concert events. "When we're trying to inter- pret the Cannabis Act, we go back to the Tobacco Act, from which many of the provisions were taken, close to word for word," says Wishart. "That was as a result of a very hard line being taken by Health Canada against tobacco companies over a num- ber of years. We haven't seen the court cases or aggressive push against cannabis companies yet." Wishart adds that while Health Canada has used webi- nars to give direction to indus- try, the feedback has been that everything is all about context. "The context is that you can't put a billboard in an airport be- cause that's general public ad- vertising," says Wishart. "Within the scope of advertising that's not to the general public, you have the classic bathroom adver- tisements in bars and those are being used." Zborovski says the best thing lawyers can do for industry at this stage is to be aware of the prohibitions contained in the act and to look to see what other cannabis businesses are do- ing and asking clients to do the same. "This is all about risk manage- ment right now," says Zborovski. "It's risky to do any promo- tion whatsoever, full stop, so let's find out where the client is com- fortable on the risk continuum, and as a lawyer, I help inform that decision based on what I see in the industry based on what other players are doing." Maurer says that if a com- pany is making a representation that is not likely to inf luence behaviour — such as putting a brand out there without any statement — it gets the name out there but is not selling a product. This can include things such as a safe driving campaign. "It is heavily restricted," says Maurer. Sara Zborovski says that there is uncer- tainty in terms of how the advertising prohibitions in the Cannabis Act are being enforced. 'It's risky to do any promotion whatsoever' Companies need to be aware of advertising restrictions "Lawyers should have an awareness [of the prohibitions], because there could be an issue." Matt Maurer FOCUS See Grey, page 12 Canadian Law List 2019 gives you immediate access to: • An up-to-date alphabetical listing of more than 80,000 barristers, solicitors and Quebec notaries, corporate counsel, law firms and judges across Canada • Legal contact information for all federal and provincial courts, law societies, law schools, Legal Aid and other important law-related offices • Government contact information for Canada, the provinces and territories including cabinet ministers, departments, boards, commissions and Crown Corporations Canadian Law List 2019 includes value-added features that make it easier to use: • Last name first identification in the federal and provincial listings • A separate section listing corporate law departments for over 1,250 companies • Professional cards of prominent Canadian law firms • International Agency Referral Cards Order your copy today! Call 1.800.387.5164 or visit www.store.thomsonreuters.ca for a 30-day no risk evaluation copy. Hardbound • Published .BSDI On subscription $184.50* • One time purchase $205* 0SEFS/PL7798-8406 • ISBN 978-0-7798-8406-3 Multiple copy discounts available *Plus shipping/handling and applicable taxes. Prices subject to change without notice. 2019 Canadian Law List Untitled-15 1 2019-02-26 4:10 PM

• Cover