In the ever-evolving world of digital marketing, text messaging has emerged as a powerful tool for businesses, particularly in the cannabis industry. However, SMS marketing is fraught with legal complexities and regulatory hurdles. For plant touching cannabis businesses, navigating the intricate web of state and federal laws becomes a critical task when leveraging text messaging for marketing and customer engagement.
The Compliance Challenge with Text Messaging Advertising
In the U.S., the legal status of cannabis remains a complex issue. Classified as a Schedule 1 drug by the Drug Enforcement Agency (DEA), it is not federally legal. Furthermore, the combination of the Cellular Telecommunications and Internet Association (CTIA) and individual state regulations places strict oversight on SMS marketing, particularly for SHAFT (sex, hate, alcohol, firearms, and tobacco) content, which encompasses cannabis, CBD, and similar products.
Cannabis SMS marketing in the U.S. falls under the jurisdiction of several federal bodies and legislations, including:
The FCC’s enforcement can be strict, with potential fines ranging from $500 to $1,500 for each non-compliant message, not counting additional legal fees and damages.
Navigating these regulations can be particularly challenging for marketers in the cannabis and CBD industry, given the complexities and nuances of the TCPA rules and regulations. This legal ambiguity presents a significant concern for businesses striving to market these products responsibly and legally.
This challenge is further accentuated by initiatives like The Campaign Registry, which aims to bring transparency and compliance to the messaging ecosystem. As regulations continue to evolve and vary across jurisdictions, cannabis businesses must tread carefully, balancing the potential benefits of text messaging with the stringent compliance requirements and legal constraints that govern their industry.
T-Mobile Is Trying to Fine into Compliance
The recent announcement of fines by T-Mobile (full text here) for non-compliant cannabis advertising via text messaging has posed new challenges for the cannabis industry. With strict regulations making text messaging a risky endeavor.
Understanding T-Mobile’s Fines: T-Mobile’s tiered fine structure – with penalties ranging from $500 to $2,000 – targets various violations, including the promotion of cannabis through text messaging. This rigid approach highlights the difficulties cannabis businesses face in navigating the complex web of regulations in text message marketing.
Overview of T-Mobile’s New Fine Structure
Tier 1 Violations ($2,000 Fine): for phishing, smishing, and social engineering. Social Engineering refers to the practice of targeting individuals in a way that manipulates individuals to reveal private information like credit card numbers, or social security numbers.
Tier 2 Violations ($1,000 Fine): for illegal content (included content must be legal in all 50 states and federally). Illegal content includes, but is not limited to, Cannabis, Marijuana, CBD, Illegal Prescriptions, and Solicitation.
Tier 3 Violations ($500 Fine): for all other violations including, but not limited to, SHAFT
Also of note is restrictions on gambling, payday loans and work from home programs. The code of conduct also discusses opt-out and that high opt-out rates will warrant investigation.
III. The SHAFT Code of Conduct
S for Sexually Inappropriate Content
H for Hate Speech or Profanity
A for Alcohol
F for Firearms and Violence
T for Tobacco and Illicit Drugs
The Risks of Text Messaging for Cannabis Businesses: Text messaging, though an immediate and personal communication channel, now comes with increased risks of non-compliance, especially given the varying legal status of cannabis across different jurisdictions. This uncertainty has made it a less favorable option for cannabis marketers.
Email Marketing: A Compliant Alternative
Why Email Marketing is Safer and More Effective: Unlike text messaging, email marketing offers a more secure and flexible platform for cannabis businesses. It allows for detailed content, better audience segmentation, and most importantly, adheres to compliance requirements more easily than text messaging.
The Benefits of Email Marketing for Cannabis Businesses: Email marketing not only reduces the risk of non-compliance but also provides enhanced metrics, customizable content, and a broader reach. It’s an efficient way to educate, engage, and retain customers without the looming risk of hefty fines.
Compliance Strategies in Email Marketing: Businesses can utilize various tools and practices in email marketing to ensure adherence to legal standards. This includes consent-based subscriptions, clear opt-out options, and content that is informative and compliant with the legal landscape of the cannabis industry.