Broadcasters’ hopes of cashing in on the cannabis legalization trend took a step forward Wednesday. The U.S. House approved a series of budget bills on a 220 to 207 vote, including one that would pave the way for local radio and television stations to accept cannabis ads as long as it is located in a state where the drug has been legalized.
As Inside Radio first reported last month, the language that would open the door for broadcasters to carry cannabis ads was tucked deep inside the proposed federal budget in the Financial Services and General Government portion of the hulking federal budget. It would prevent the Federal Communications Commission from taking administrative action against broadcasters that accept cannabis ads, as long as cannabis has been legalized in the state or jurisdiction in which the station is licensed. But even in places where local laws have not been changed, the FCC would not be able to go after a station if it takes ads from a business selling hemp, hemp-derived CBD products, or other hemp-derived cannabinoid products.
The Safe Advertising Coalition – the group of state broadcast associations advocating for cannabis ads – says the change recognizes the unfairness of the present situation with respect to cannabis advertising.
“This House-passed provision is a major step forward to level the playing field for local radio and TV broadcasters,” said David Donovan, President of the New York State Broadcasters Association, and leader of the Safe Advertising Coalition. “The provision makes clear that the law of the state in which a station is licensed should determine whether a station can accept cannabis advertising if they so choose,” he said in a statement.
Focus now turns to the Senate where cannabis ads face a steeper uphill climb as Democrats need to secure at least ten Republican votes. Broadcast lobbyists tell Inside Radio that they expect several GOP Senators to oppose the liberalization of drug advertising rules. But Donovan remains optimistic. “We look forward to working with the U.S. Senate and the FCC to help restore parity between local broadcasters and other media outlets,” he said.
Because the cannabis carve-out appears in a budget bill, if it is approved it would only be in effect during the fiscal year that begins Oct. 1. But if the experiment proves successful, it could serve as a way to convince lawmakers or the FCC to make the cannabis advertising exemption permanent.
In the meantime, the National Association of Broadcasters called the House vote an “important step” towards allowing broadcasters to be treated the same as other media when it comes to cannabis advertising.
“While we are pleased to see the House act, broadcasters will continue to work with policymakers for a permanent resolution to this competitive disparity to the benefit of consumers,” NAB spokesman Alex Siciliano said.
Currently, 37 states, three territories and the District of Columbia (D.C.) allow the medical use of cannabis products. Nineteen states, two territories, and D.C. have enacted measures to regulate cannabis for adult non-medical use. In these states, local radio and television stations are currently unable to accept advertisements from legally authorized cannabis distributors out of fear it would put their broadcast license at risk.
The budget bill would prevent the FCC from using any money to deny a license renewal or a station sale application as punishment for airing advertising for cannabis or cannabis-derived products. The bill would also prohibit the FCC from requiring an early license renewal application to be filed by a station for taking those ads. And the FCC would be prohibited from issuing fines.
How many ad dollars might flow to broadcasters from cannabis businesses isn’t known and estimates of the entire ad marketplace are hard to come by. According to Statistica, ad spending on cannabis in North America is forecast to reach $1.6 billion in 2022.