California cannabis companies face costly peril with marketing robocalls, lawyer says


Automated calls aren’t just a nuisance. They can be expensive for the cannabis industry.

That’s the assessment a lawyer made at the North Coast Cannabis Industry Conference Wednesday during a discussion of the legal ramifications of the Consumer Protection Act by telephone.

“Everyone hates receiving unsolicited phone calls,” lawyer Farella Braun + Martel, Cynthia Castello, told attendees of the Business Journal’s virtual conference, which was underwritten by her San Francisco-based law firm.

The TCPA requires businesses to make calls and texts to cell phones using automatic dialing features to obtain the recipient’s written consent.

Fines for non-compliance can range from $ 500 to $ 1,500 per appeal. Castillo noted a case in Oregon in which plaintiffs were awarded $ 925 million in damages from a company that allegedly made 1.8 million appeals.

The cannabis industry is particularly vulnerable to these class actions because it is relatively new and companies “may not know all the rules,” Castillo said.

“(The complainants) are able to exploit these weaknesses,” she said.

It doesn’t help matters for the industry that the law is interpreted in different ways depending on the court and the interpretation of what constitutes automatic numbering – whether random or sequential.

The hope is that lower courts will hear cases that interpret the High Court’s decision over the next several years.

“The next few years, we’ll start to see clarity,” she said.

In the meantime, Castillo added that the industry will have to negotiate “a patchwork of rules”. To avoid getting slapped with a class action lawsuit and opening up to millions in damages, she advises companies to do the following:

  • Work with an experienced lawyer
  • Continue to obtain written consent and allow the deactivation of promotional texts
  • Standardize a company policy
  • Keep adequate records
  • Ensure suppliers are compliant

“Right now, the surest course of action is to get expressed consent,” she told participants.

Cannabis and social conscience make legal bed companions

The cannabis industry has had a tough road over the years as a target for the federal government in particular. There have been more conflicts as far back as the Nixon administration when the federal government cracked down with tougher laws.

Nonetheless, as Judith Schvimmer points out, the dealers are still not out of the woods to avoid jail time.

Minorities such as blacks and Hispanics are particularly targeted, making up half of the prison population – a social injustice which the lawyer says must be addressed. Schvimmer, with 15 years of experience in regulated industries such as Jackson Family Wines and Lagunitas Brewing Company, now serves as legal counsel to the parent company.

“These racial disparities are found in all phases of our criminal justice system,” she said.

Another cannabis conference presenter, Morgan Fox of the National Cannabis Industry Association, noted that the industry has made major strides. He first saw an increase in the number of states decriminalizing cannabis and in another saw the close passage of the SAFE Banking Act.

The US House of Representatives passed the bill for the third time in this session, an action considered “a landslide victory,” Fox told attendees.

The US Senate is another matter. He has blocked several efforts to remove barriers to provide a safe harbor for banks to do business with cannabis operations.

But Fox said U.S. Senator Chuck Schumer, D-New York, the majority leader, is committed to pushing through legislation that would decriminalize drugs. Democrats made this attempt with the MORE Act, which is a bill that would decriminalize cannabis in the United States. He stalled in the Senate.

But to pass such a sweeping law, Fox insists that the filibuster rule must end in the US Senate. Systematic obstruction is a parliamentary procedure that allows a minority party, as is currently the case with the Republican Party, to block a bill by attaching it to the Senate.

Still, Fox shared his optimism that it’s a new day and a new era for Republicans weaning their cannabis adoption off – especially when they see Virginia as the first southern state to legalize cannabis. .

“It’s pretty revolutionary,” he said.

As for President Joe Biden: “It would be hard to imagine a world in which Biden would oppose legislation to downgrade it (if a bill is introduced). It’s going to be driven by Congress, ”he said, referring to the legislative effort to remove cannabis from the list of illicit drugs.

Follow the money

Speaking about the industry’s growing reach, CEO and Co-Founder of Headset Inc., Cy Scott, said the Seattle-based company expects cannabis sales in the United States to exceed $ 22.7 billion dollars. ‘by the end of 2021 and would grow another $ 6 billion next year.

Much of the “strong growth” is centered in California, which is experiencing 30% year-over-year increases and absorbing about a quarter of rising cannabis sales in the United States, he said. he adds.

“California is the price,” he said.

To illustrate the dominance of the Golden State, he listed New York, New Jersey, Connecticut, and Pennsylvania as collectively rivals of the West Coast state.

Demographics are also changing ”. Millennials beat the beatnik baby boomers by 39% of the market cake, with more than half of consumers in that age group defined as those between 25 and 40. Gen Z’s 12% market share as a “remarkable demographic” matches that of baby boomers, while Gen X represents 22% of buyers.

“Millennials are still the dominant engines. But targeting Generation Zers would be wise, ”Scott said, referring to the Generation’s potential.

The market is booming, with flowers “the predominant category” remaining a “stable” force, Scott’s business intelligence firm has found. The market for vape pens and cartridges represents strong sales potential among 800 active brands.

According to Headset data, the top 10 brands absorb a quarter of cannabis sales in the United States – but that could all change in the years to come.

“The book hasn’t been written on this yet. That’s what makes this industry so exciting, ”he said.

Susan Wood covers law, cannabis, manufacturing, energy, transportation, agriculture, and banking and finance. For 25 years, Susan worked for a variety of publications, including the North County Times, now part of the Union Tribune in San Diego County, as well as the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Contact her at 530-545-8662 or [email protected]


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