Marijuana and NFT: Collecting Art or Regulating Advertising?

Back in 2015, when I was a columnist for “Above the Law”, I wrote an article entitled “Marijuana ads: Is the pot obscene?“. That article focused on general speech issues related to cannabis advertising. Over the years, we have also written about how various social media platforms have broadly banned almost any speech with the word “marijuana”. Sometimes, Even CBD.Fast forward to 2021 and we still haven’t seen any serious actions taken by the Federal Reserve against advertisers of cannabis and/or cannabis companies, and we may never do it at this point (although the USPS has two or three things to say Marijuana advertisements in the mail Even if possible Can’t do anything About them). In addition to the headaches of social media, the biggest business presentation problem faced by cannabis companies has always been the need to comply with the wide variety of labeling, marketing, advertising, and promotion laws and regulations enacted under the state’s legalization system. However, the emergence of cannabis NFTs is an interesting presentation and new issues related to advertising.

NFT stands for non-fungible token.One NFT “It is a unit of data stored in a digital ledger called a classification chain, which proves that digital assets are unique and therefore not interchangeable. NFT can be used to represent items such as photos, videos, audio, and other types of digital files. “After translation, NFT is a unique token on the blockchain that can establish ownership of digital collectibles (such as digital art). There is no doubt that NFT is part of an emerging sub-industry that includes blockchain technology. Especially this year, There has been a substantial increase in the buying and selling of NFTs (for example, Jack Dorsey) First tweet The transaction price of NFT exceeds 2.9 million U.S. dollars). Certain businesses and venture capital firms in the legal cannabis industry quickly adopted NFTs to help promote various products, businesses, industry influencers, cannabis culture, and even “Strain art“.

From the perspective of marijuana business compliance, the question for NFTs is whether they are equal to marketing, advertising or promotional materials, which must comply with the laws and regulations of various states for legalization.One thing to note is Lava coins, This is “… a bag of marijuana that only exists online and is linked to blockchain technology to achieve “authenticity”.” Peakz is behind the lava coin in Forbes magazine. Obviously, according to Forbes, when you buy lava coins, “[y]You can’t smoke, but as a bonus, if you buy the “first digital marijuana strain” and if you live in Oregon or California, you can also get some “real” physical marijuana. “For me, as a compliance lawyer in the California cannabis field, concepts like Lava Coin may encounter when complying with the California Medicinal and Adult Cannabis Regulation and Safety Act (“MAUCRSA”) and its strict requirements. Some interesting questions. Marketing, advertising and promotion regulations start from the NFT concept itself.

In California, Marijuana Advertising include:

. . . Any written or oral statements, illustrations or descriptions designed to induce the sale of cannabis or cannabis products, including any written, printed, graphic or other materials, billboards, signs or other outdoor displays, bus cards, other periodicals, publications , Radio or television broadcasting or any other media.

It seems that even if the NFT is only used as “art”, that is, it is described as “a description designed to induce the sale of cannabis or cannabis products”, it will be interpreted as an advertisement under MAUCRSA, which means that it must comply with the relevant Many other laws regarding its dissemination, consumer age and content (including not being attractive to minors in any way, and the license number of the related cannabis business must be displayed in the advertisement). In addition, if the purchase of NFTs results in abandonment of adult use of cannabis (not allowed in licensed dispensaries or unlicensed businesses in California) or licensed cannabis businesses’ cannabis discount sales, it may be additional potential evidence. NFT is indeed advertising, marketing or promotional material.

When NFT and marijuana are exploring interesting marriages, NFT producers need to be aware that their creation can be regarded as marijuana advertisements, but they must comply with comprehensive laws and regulations, especially when creators cooperate with marijuana businesses to ultimately promote through NFT In the case of consumer sales. buy. And don’t forget that if the cannabis license holder is involved in any intellectual property license or hired work service agreement, depending on control and compensation issues, it may actually be necessary to disclose the creator of the NFT to the national regulator.

At the same time, cannabis NFTs can absolutely only be collectible assets that have nothing to do with advertising or promoting cannabis businesses or brands-the question is whether the NFT is primarily designed to induce or promote commercial cannabis sales. Ultimately, the regulator decides where the appropriate enforcement route is, but the creator of the NFT and the cannabis company or brand with which it works should ensure that they understand where they are before entering the joint venture.

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