California Court Bans Cannabis Billboard Advertising on All Highways That Cross State Line

The San Luis Obispo County Superior Court recently granted a petition to ban almost all outdoor cannabis advertising on more than 4,000 miles of California highways. The case was brought by county resident Matthew Farmer, who claimed the Bureau of Cannabis Control's (BCC) interpretation of Proposition 64 would unnecessarily expose him and his teenage children to cannabis advertising. Farmer v. Bureau of Cannabis Control, No. 19-cv-0597 (San Luis Obispo Super. Ct.).

In 2016, Californians overwhelmingly approved Proposition 64, which legalized cannabis for adult use, and created the BCC to administer and enforce the law. Reflecting sensitivity to interstate marketing of cannabis, Proposition 64 prohibits licensed cannabis businesses from "advertis[ing] or market[ing] on a billboard or similar advertising device located on an Interstate Highway or on a State Highway which crosses the California border."

The BCC later issued rules interpreting this restriction to prohibit only cannabis billboards and other outdoor advertising "within a 15-mile radius of the California border on an Interstate Highway or on a State Highway that crosses the California border." Cal. Bus. & Prof. Code § 26152 (emphasis added).

Farmer sued, claiming that BCC's regulation conflicted with the statute and that his status as a taxpayer gave him standing to challenge the rule. The Hon. Ginger E. Garrett granted the petition and ordered the BCC to meet and confer with Farmer to propose an order to withdraw the regulation—and presumably implement a stricter ban on outdoor advertising on any interstate or state highway that crosses the California border. 16 Cal. Code Regs. § 5040(b)(3).

Although the decision is vulnerable to appeal on a variety of issues (including not only the merits of the claimed "conflict," but also the plaintiff's standing to sue), the BCC decided not to appeal. Instead, it issued a "Notice Regarding Billboard Advertisements On Interstate And State Highways" on January 21, 2021, instructing licensees to "not place new advertising or marketing on any interstate highway or state highway that crosses the California border" and to "begin the process of removing current advertising and marketing that meets this criteria."

The court's decision—and the BCC's updated regulation—gives short shrift to First Amendment concerns. A broad reading of the terms "interstate highway" and "state highway" could effectively prohibit all outdoor advertising on a vast swath of the state's roads, far from any border. For instance, U.S. Route 101 runs as a surface road through San Francisco and many Northern California towns before crossing the border into Oregon.

Moreover, the statutory definition of cannabis "advertising" is broad and lacks exceptions for educational or noncommercial messages that other states have adopted to avoid chilling speech about cannabis. In short, an expansive interpretation of the statutory ad restrictions would prohibit a wide range of outdoor cannabis communications, and such a broad ban on cannabis ads on highways throughout the state may be subject to challenge as an unconstitutional restriction on speech.

A constitutional challenge, however, may not be necessary. On February 19, 2021, Assembly Bill (A.B.) 1302 was introduced; it would effectively restore the BCC's original regulation by updating California's cannabis statute to prohibit cannabis billboards only on interstate highways within a 15-mile radius of the California border. On the other hand, a prior legislative proposal, A.B. 273, would have doubled down on the billboard ban's constitutional infirmities by prohibiting advertising on any billboard that is merely "visible" from any interstate highway from California. It can only be hoped that this more restrictive proposal has been superseded by A.B. 1302.

Cannabis operators and outdoor advertising companies should be aware of this development, immediately factor it into their cannabis communications strategy, and continue to monitor ongoing legislative efforts to respond to the Farmer decision.