CBD: A ‘Crazy Big Deal’ for Radio?

CBD. No, it’s not a Canadian Talk radio station. Rather, CBD is cannabidiol, as in cannabis oil. And it’s one of the most asked-about topics among radio industry leaders. What you need to know today on tomorrow’s hottest revenue generator could put you a step ahead of your competitor.

Drive over the Columbia River from Portland, Ore., to Clark County, Wash., and within 20 minutes one can reach Main Street in the small city of Vancouver. The most prominent business on a street in need of some revitalization? Main Street Marijuana, a recreational vendor of all things cannabis.

Main Street Marijuana, like all other businesses of its kind in Washington, is a cash-only affair, with a complex method of allowing customers to enter and purchase everything from edibles to the finest smokable green bud.

What if Main Street Marijuana wanted to advertise on a local radio station?

Whoa…

The very idea is a controversial one, but one that has been widely discussed. The bigger topic isn’t “pot” or “grass,” however. It’s CBD.

Radio broadcasters are inquiring about what sort of advertising they can accept, and what they must decline, with respect to CBD vendors. Many have spoken in recent weeks to Wiley Rein attorney Ari Meltzer.

What are the issues regarding CBD ad acceptance? Will it take regulatory policy changes to get a CBD ad on a radio station, even in a locale where state law makes the recreational use of marijuana legal?

Meltzer says, “We are getting a lot of questions these days regarding CBD, which makes sense. It is a new and up-andcoming ad stream, and radio represents an attractive platform to do that — and also potentially legitimize their business.”

In fact, Meltzer says, radio is a much more effective medium for CBD vendors than television. “Radio provides an opportunity for better targeting and perhaps more attractive rates or packaging. But, looking at broadcast more broadly, it still remains the gold standard in terms of advertising. When someone hears a radio spot, it creates a strong impression that this a real, legit business. There is still a general distrust that anybody can put anything online.”

It also explains why auto dealer associations, political candidates and other businesses remain big users of radio.

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For Meltzer, radio station owners have usually approached him with two questions:

• Can I take the CBD ad?

• If not … how could I take the CBD ad?

How does Meltzer respond? First, he notes that Wiley Rein’s advice is continually being refined. Why? “It is still an area where broadcasters can tread very carefully,” he says.

The most important thing for a broadcaster to understand today is that state legislatures have been taking the lead on marijuana-related legislation. Scott Flick, a partner at Pillsbury Winthrop Shaw Pittman LLP, says some may be confused by this simple fact.

“The short answer is that it requires the cooperation of State and Federal governments,” he says. “The challenge is that under the Farm Bill, you can have CBD legally on the market, but there is a pre-condition that it needs to be produced from hemp product.

“Thus, there is a regulatory process that needs to be put in place to ensure it is hemp CBD from a legally recognized farm. That is a challenge, as the Federal government has not moved forward on this.”

And, Flick adds, it is a complex matter in that it is both a Federal and state issue, and broadcasters “live or die by a federally authorized license.”

Flick points to some stations that took money from CBD vendors at a time when auto dollars fell, but later stopped out of fear. In a way, he sees CBD advertising as similar to that for weight-loss products. “You don’t turn down all of them,” he says. “But if someone says to stop because of false claims, you do.”

As the debate over the legality of CBD ads on radio stations using federally administered airwaves won’t likely abate, some crafty GSMs may decide that a radio station’s digital home is “safer.”

That’s not exactly the case. “Whether or not that is through a website or through a radio station, you could still be accused of aiding and abetting the sale of an illegal product,” Flick says.