Cannabis Businesses: Beware of the Internet

07 Jan Cannabis Businesses: Beware of the Internet

Across practices, we are seeing the internet turn into a menace for businesses dealing with law enforcement and regulatory agencies. Risks are present for entities of all stripes, but cannabis businesses in particular need to beware of the Internet and what it says about them.

If the Internet says so, it must be drug paraphernalia

Under the Controlled Substances Act (CSA), certain acts involving drug paraphernalia are prohibited, including their import and export. 21 U.S.C. § 863(a). The CSA’s definition of drug paraphernalia is expansive and highly subjective. This creates a fraught situation from a legal standpoint, as an imported product’s legality may hinge not on its immutable characteristics, but rather on subjective factors.

Take a water pipe made in Jordan. If the importer of that product is a company that sources Middle Eastern products, including flavored tobacco, and refers to the pipes as shisha or argileh on its website, they are unlikely to face issues upon entry into the United States on drug paraphernalia grounds.

On the other hand, if the importer calls the product a water bong and alludes to cannabis on its advertising, there is a good chance the products will be seized as drug paraphernalia.

Cannabis businesses need to beware of the Internet, as it is a particularly useful tool for the feds to use when trying to determine if a product should be categorized as drug paraphernalia. And trust us when we say the feds will look everywhere on the internet.

Consider the Portibol, a product described by the company that designed it as “a highly engineered, patented design that enables users to mobilize the device for use outside the home for smoking tobacco and tobacco related products.” However, U.S. Customs and Border Protection (CBP) determined that the product was “primarily intended for use with cannabis.”

CBP relied in part on “Portibol’s online social media and YouTube presence,” which “does not indicate that a legitimate use for the subject water pipe exists within the community for which the Portibol is intended.” Portibol’s social media presented “many photos of their product accompanied by marijuana culture-themed hashtags, thus showing that the Portibol is intended to be used with cannabis.” CBP noted Instagram posts with the hashtags #weed, #marijuana, #ganja, #cannabis, and #bong.

In other instances, CBP has relied on videos posted by influencers, in which they use a particular product in connection with cannabis. It has even pointed to Amazon reviews that suggest uses in connection with cannabis, even if no such suggestions are made on the product maker’s own channels.

These examples demonstrate not only the lengths CBP will go to in order to glean information about a product’s intended use, but also how the actions of unrelated third parties can get importers in trouble. Even if a brand does all it can to disassociate itself from cannabis, its consumers can create that association in the eyes of the government.

And in case you are wondering, the fact that hemp is not a controlled substance is not enough to neutralize the negative impact of a product’s connections to cannabis generally.

Hemp CBD businesses need to beware of the Internet

Businesses that market Hemp CBD products must also beware of the Internet. While Hemp CBD is not a controlled substance, the Federal Food, Drug and Cosmetic Act (FD&C Act) prohibits the introduction of certain Hemp CBD products into interstate commerce. As happens with drug paraphernalia, whether a product falls into a prohibited category sometimes hinges not on its characteristics, but on the way it is marketed.

The FD&C Act defines a “drug” as an article “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man.” 21 U.S.C. § 321(g)(B). New drugs cannot be introduced into interstate commerce without approval from the U.S. Food & Drug Administration (FDA). When determining a product’s intended use, the FDA will look to health-related claims made in connection with the product. Obviously, any claims made in the product’s labeling and packaging could be scrutinized by the agency, but the FDA will sometimes look much further than that.

Consider the 2019 warning letter issued by the FDA to Mr. Pink Collections, LLC (“Mr. Pink”) regarding its Hemp CBD products. In support of its determination that three Hemp CBD products offered by Mr. Pink were “drugs” as defined by the FD&C Act, the FDA cited Mr. Pink’s website, as well as its Facebook and Instagram pages. The FDA even cited captions on a YouTube video. Needless to say, social media managers have a key role to play in compliance!

I fought the law and the law… Googled

In conclusion, cannabis businesses need to beware of the Internet and what it says about them and their products. While businesses cannot entirely control what is said about them online, they should at a minimum ensure that their own messaging is consistent with their business and legal objectives. At the same time, they should monitor what is being said about them by third parties, and take corrective action where possible.