Marketing by text is a reality, and with the growing cannabis industry, cannatexting appears to be one tool to build a brand and attract customers. What many in the cannabis industry don’t realize, texting for marketing purposes can lead to a huge liability under the Telephone Consumer Protection Act.
Marijuana Business Daily (February 2019) featured the article, “Boost Your Message with Age-Specific Marketing.” A customer relationship management tool with a lead database tailored toward the cannabis industry was advertised. Mass texting websites and apps targeting cannabis industries can be easily found via Google and other search engines. However, the dangers of violations using text leading to judgments are not part of any advertising message or easily found on search engines.
According to attorneys Jeffrey Backman and Gregg Strock of Greenspoon Marder, LLP, a violation of the TCPA can lead to a judgment costing millions. For example, if 10,000 texts are considered in violation of TCPA rules, on the low end, it can cost $500 per violation adding up to $5 million. On the high end, $1,500 per violation at 10,000 improper texts can cost a business $15 million.
This information can stun those who believe TCPA rules apply to only call centers. According to Backman and Strock, this is not clear. The Federal Communications Commission, which sets policy and issues regulations to implement the TCPA, does not offer a straight answer.
TCPA prohibits making telemarketing calls or sending texts to residential subscribers of the National Do-Not-Call Registry. Texts or calls to a cell phone with a prerecorded or artificial voice are also prohibited. Use of an automatic telephone dialing system—that is up for debate depending on the jurisdiction since different courts use various standards.
This includes texting to market the sales of medicinal cannabis. In 2015, the FCC issued a ruling allowing an exception for specific calls and texts for healthcare purposes. However, it should be noted that the courts have interpreted the exception narrowly. Acceptable calls include appointment and exam confirmations and reminders, hospital pre-registration instructions, wellness checkups, pre-operative instructions, lab results, prescription notifications, post-discharge follow-up, and home healthcare instructions. If the call or text includes “telemarketing, solicitation, or advertising content, or … accounting, billing, debt collection, or other financial content” in any way, then it may not fall within the exemption.
A pharmacy or a physician’s practice does not protect the owners or management from violations if cannabis is involved in any way. In Florida, doctors are competing for patients since it is required that qualified patients renew their doctor recommendations every 70 to 270 days. Medical practices might decide to text patients about their renewal periods to retain those patients and find new ones. Medicinal cannabis is legal in Florida but federally illegal so it remains a gray legal area if doctors and other healthcare professionals who work with medicinal cannabis can still use texts for marketing purposes.
Eaze Solutions, Inc. (Williams v. Eaze Solutions, Inc., 3:18-cv-05176-JD (N.D. Cal. 2018); Lloyd v. Eaze Solutions, Inc., 3:18-cv-05176-JD (N.D. Cal. 2018)) was fighting two class actions alleging that text message advertising of its cannabis delivery app violated TCPA. While the first case is still pending, the second will probably be dismissed with a settlement. Natura Miracles, Inc. (Miller v. Natura Miracles, Inc., 0:18-cv-61987-KMM (S.D. Fla. 2018)) was sued in Florida under TCPA for texts allegedly sent advertising CBD products, but the case was settled in February 2019. These are just two examples of what can happen with cannatexting or even market texting if cannabis is part of the business in any facet.
While texting remains a valuable marketing tool, for now, the best recommendation is to seek the advice of an attorney with experience about cannabis laws.