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Opposition Letter California Senate Bill 162 (SB162)

Opposition Letter California Senate Bill 162 (SB162)


7770 Healdsburg Ave., Suite A                                                              omar@omarfigueroa.com

Sebastopol, CA 95472                                                                           www.omarfigueroa.com

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August 15, 2017

The Honorable Senator Ben Allen
State Capitol, Room 5072
Sacramento, CA 95814

The Honorable Senator Jim Nielsen
State Capitol, Room 2068
Sacramento, CA 95814

Dear Senator Allen, Senator Nielsen, and Members of the California State Senate and Assembly:

We are writing in opposition of Senate Bill 162 (“SB162”) in its current form. Specifically, we are opposed to the proposed amendment to Section 26152(e) of the Business and Professions Code, which would read: “A licensee shall not do any of the following: … Advertise or market cannabis or cannabis products ... through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.”
A prohibition on branded merchandise would put licensed cannabis businesses at a severe disadvantage compared to non-licensed cannabis businesses and non-cannabis-related businesses. Not only would this create a disincentive for bringing cannabis businesses within the state-created licensing structure, a detriment in its own right, but it would also amount to an overbroad and unconstitutional restriction on free speech, as discussed in detail below.
The First Amendment prohibits the government from making any law abridging the freedom of speech, unless strict standards are met. In sum, truthful commercial speech may only be constitutionally regulated if (i) the government has a substantial interest in regulating the speech; (ii) the regulation directly advances the governmental interest asserted; and (iii) the regulation is not more extensive than necessary to serve that interest.  The government must prove the challenged regulation advances their interest in a direct and material way, using “means narrowly tailored to achieve the desired objective.” [2] Not only does SB162 not advance the supposed interest in a direct and meaningful way, it also does not appear to be a “reasonable fit.”
SB162 cites Commonwealth Brands, Inc. v. United States, 678 F.Supp.2d 512 (2010) (which is not binding on California courts) in support of the position that the contemplated restriction on speech for cannabis businesses is constitutional. However, Commonwealth Brands dealt with a very different subject matter that does not translate to the matter at hand, namely tobacco advertising. Tobacco and cannabis are very different items that have very different effects on the human body. Commonwealth Brands implicitly accepted the government’s stated interest in attempting “to curb tobacco use by adolescents” (at 519), and given the numerous substantiated studies evidencing the inherently dangerous nature of tobacco - which is a direct and substantial cause of cancer, heart disease, and other serious health effects - the interest is easily validated. Here, the government has also indicated that the ban on branded merchandise is intended to curb use of cannabis by minors. While the State may well posit an interest in ensuring that children do not have access to cannabis (in much the same way that the State has an interest in ensuring children do not have access to alcoholic beverages), the scientific data is entirely lacking to put cannabis on par with tobacco given the severe and undisputed health effects associated with one but not the other. There is simply no evidence that cannabis poses the same potential harm to the human body as tobacco and therefore the interests implicated are very different as well. The government lacks a comparable body of evidence demonstrating that cannabis is carcinogenic or otherwise harmful to one’s health. In fact, a number of recent studies comparing tobacco smokers and cannabis smokers found that cannabis users had better long-term health and were less likely to suffer from cancer than tobacco users. 
To that end, in Commonwealth Brands the government provided “extensive documentation” to show that marketing of tobacco products had a causal connection on consumer behavior of children. However, SB162 simply states that “Research by The RAND Corporation indicates that adolescents who are exposed to advertising of cannabis were more likely to report using cannabis or say they planned to use the substance in the future. The American College of Pediatricians’ research has found that cannabis has adverse effects on the adolescent brain and is associated with psychiatric illness and negative social outcomes.” The bill does not provide specific studies from either organization to support this position or to demonstrate that restricting speech in this broad manner will achieve the desired outcome. Failure to provide the studies not only leaves the public in the dark as to what exactly the government posits its specific interest to be, but also creates a lack of accountability regarding the manner in which it was substantiated.
Commonwealth Brands largely relies on the idea that when branded merchandise is utilized by the public, even if only by those over 21 years of age, such individuals become walking advertisements to which minors will be inevitably exposed. If this concept is accepted and taken to its logical conclusion, no brands affiliated with products intended for adults should be visible in the public domain – the ban would include not only tobacco and cannabis, but also alcohol, pharmaceuticals, cars (which are not to be driven except by individuals aged 16 and older), military careers, and more. Even if such items may be willingly forgone by some, the U.S. Supreme Court has already rejected such logic. Retailers and manufacturers of adult-oriented products have an interest in conveying truthful information about their products to adults and adults have a corresponding interest in receiving truthful information about such products. The level of discourse reaching the public “simply cannot be limited to that which would be suitable for a sandbox,” despite the inevitable exposure of minors to such discourse; to hold otherwise would reduce the adult population to reading only what is fit for children. 
Cannabis advertising constitutes, at the very least, commercial speech and the restriction on branded merchandise included in SB162 simply does not withstand Central Hudson review.  While the State may have an interest in ensuring children do not have access to cannabis products (akin to alcoholic beverages, for example), the restriction is more extensive than necessary, to the point of being overbroad, given the plethora of valid and easily implemented alternatives such as restricting marketing specifically designed to be attractive to children or the distribution of branded merchandise at locations where children are present. But even more importantly, the restriction, which is applicable only to licensed entities, does not in fact advance the posited interest given that businesses without a state-issued cannabis license, such as a “head shop” or an unpermitted operator (both of which are more accessible to minors) could continue to advertise cannabis products through branded merchandise without repercussion.
Therefore, we urge you to vote “NO” on SB 162 unless it is amended to remove the blanket prohibition on licensees ability to advertise using branded merchandise.
Thank you for taking the time to consider our concerns regarding this measure. 

Lauren Mendelsohn, Esq., Law Offices of Omar Figueroa
Omar Figueroa, Esq., Law Offices of Omar Figueroa
Stacy Hostetter, Esq., Law Offices of Omar Figueroa
Mario Guzman, Therafields LLC 415-910-6979
Adam Mintz, CEO, AgraDora, LLC
Heather Coladonato, CEO, California Canna Coalition
Luis Fausto, CCO, California Canna Coalition
Sam Sabzehzar
Susan Soares Executive Director C.A.R.E. 
Leslie Stern, Ingrid Marketing
Joshua Romo, HR, SeedCity
Jared Steinman, Co-founder, CBD Power Bars
Jackie Subeck, CEO & Founder, Hey Jackpot!
Gil Latimer, Founder/CEO, EdgewireMedia
Johnny Sayegh GRASSPOSTS
Ramon Garcia, CEO Healing Herbs Distribution Inc. 
Mara Felsen, Esq.

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[1] Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557 (1980).

[2] Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 561 (2001).

[3] Melamede R. Cannabis and tobacco smoke are not equally carcinogenic. Harm Reduction Journal. 2005;2:21. doi:10.1186/1477-7517-2-21. Meier MH, Caspi A, Cerdá M, Hancox RJ, Harrington H, Houts R, Poulton R, Ramrakha S, Thomson WM, Moffitt TE. Associations Between Cannabis Use and Physical Health Problems in Early MidlifeA Longitudinal Comparison of Persistent Cannabis vs Tobacco Users. JAMA Psychiatry. 2016;73(7):731–740. doi:10.1001/jamapsychiatry.2016.0637.

[4] Id (citing Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 74 (1983) and Butler v. Michigan, 352 U.S. 380, 383 (1957)).

[5] Given the varied acceptance of cannabis state by state and even federally, cannabis advertising could fairly be deemed political speech, which is accorded even greater protection than purely commercial speech.

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