Proposed pot swag ban makes it harder to compete with illicit pot: producers

TORONTO — A proposed ban on the use of cannabis brand elements on T-shirts and other swag would make it more difficult to stamp out the black market after legalization and have “significant” unintended consequences, licensed producers said Monday.

The Senate is set to make a final vote Thursday on an amended Bill C-45 before it goes back to the House of Commons for approval. The amendments include one that would prohibit the use of cannabis brand elements on promotional items that are not marijuana or marijuana accessories.

The amendment is “unwarranted” and could have unintended consequences beyond swag, such as barring the use of company logos on retail signage and promotional flyers, said Allan Rewak, executive director of the industry association Cannabis Council of Canada, which represents 80 per cent of licensed producers.

“It’s a messy amendment that will have significant implications far beyond than the idea of T-shirts and hats,” he said. “And the appropriate place for such restriction, if they’re warranted, would be in regulation.”

Licensed producer Tantalus Labs’ managing director Dan Sutton added that non-cannabis accessories, such as caps with the producer’s branding, are a useful tool in differentiating their products from the illicit marijuana already being purchased.

“Black market cannabis is likely to continue to be prevalent … we need all the weapons we can get,” he said.

Bill C-45 in its current form already prohibits advertising of cannabis products in traditional radio or television ads. As well, Health Canada unveiled its guidelines for cannabis packaging in March, which requires packages to be a single, uniform colour without images or graphics other than the logo and a health warning. However, the bill does allow companies to distribute promotional products with their brand logo.

Sen. Judith Seidman, who put forth the amendment, said we are already seeing a “proliferation” of products such as T-shirts and backpacks with marijuana company logos thanks to the allowance, which undoubtedly appeal to kids and youth.

“My amendment fixes that loophole, closes what I could call the backdoor on marijuana marketing,” she said in an interview.

Past experience with tobacco showed partial advertising restrictions were ineffective, so it was important to have a full ban in place, said Seidman.

“We have a unique opportunity with a new product to do the right thing we should learn from our past mistakes.”

But in order to migrate consumers away from the black market over to the regulated market after pot for recreational use is legalized later this year, licensed producers need to do a certain amount of reasonable, restricted branding, said Cam Battley, chief corporate officer for Aurora Cannabis.

People can easily purchase T-shirts and other swag with alcohol branding now, he noted.

“Nobody in the legal cannabis sector wants cannabis to be used by underage youth any more than we want youth using alcohol or psychoactive prescription drugs,” Battley said. “The same cannot always be said for operators in the black market.”

Seidman said it’s better to start with stricter restrictions and then possibly loosen them later if warranted, since it would be a challenge to add the restrictions later.

“It’s pretty impossible to put the genie back in the bottle,” she said.

A ban on branded promotional items or “brand stretching” in conjunction with hefty restrictions on packaging and advertising deals a “significant blow” said Patricia McQuillan, president and founder of Brand Matters agency in Toronto. The primary tool for branding is packaging, and after that it would be any promotional items or swag, she noted.

“From a pure branding perspective, what’s left?… You can’t put it on the product, now you can’t put it on something non-product related… then how will you effectively brand at all?”

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