Cannabis Advertising: Are the Restrictions Enforceable, or Do They Impermissibly Burden Commercial Speech?
Initiative 502 legalized the production, sale and possession of recreational marijuana in Washington—subject, of course, to numerous restrictions. For example, RCW 69.50.369(2) generally limits marijuana retailers to no more than two exterior advertising signs of no more than 1,600 square inches apiece. WAC 314-55-155(2)(a) echoes these constraints.
In Plausible Products, LLC v. Wash. State Liquor and Cannabis Bd., King County Superior Court Cause No. 19-2-03293-6 SEA, we represented a marijuana retailer that had received an Administrative Violation Notice, or AVN, from the Washington State Liquor and Cannabis Board after one of its managers had used Christmas lights to spell out the word “POT” in a store window. The AVN asserted that this makeshift sign violated RCW 69.50.369(2) and WAC 314-55-155(2)(a). We challenged these provisions on First Amendment grounds because they impermissibly restricted commercial speech. In response to our challenge, the LCB had the burden of justifying the restrictions under the factors set forth in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of New York. This required the LCB to show, among other things, that the restrictions directly and materially served a substantial government interest and were no more extensive than necessary.
In an order issued on November 18, 2019, King County Superior Court Judge David S. Keenan held that although the government had a substantial interest in preventing the underage consumption of marijuana, the challenged provisions were unconstitutional because they did not “directly and materially advance the State’s substantial interest in preventing underage consumption, and … [were] not sufficiently tailored to advance the State’s interest.”
RCW 69.50.369 was in play again a few years later in a case captioned Seattle Events v. Wash. State Liquor and Cannabis Bd., but unlike our client in Plausible Products, the Seattle Events plaintiffs (the producer of Seattle Hempfest and two marijuana retailers that wanted to participate in the event) didn’t challenge subsection (2) of the statute. Instead, their complaint only challenged the constitutionality of two specific statutory provisions: RCW 69.50.369(1), which prohibits all signs and other advertisements for any cannabis business or product “within one thousand feet of the perimeter of a school grounds, playground, recreation center or facility, child care center, public park, or library, or any game arcade admission to which is not restricted to persons aged twenty-one years or older”; and RCW 69.50.369(7)(b)(i), which prohibits cannabis licensees from engaging in outdoor advertising “in arenas, stadiums, shopping malls, fairs that receive state allocations, farmers markets, and video game arcades, whether any of the foregoing are open air or enclosed, but not including any such sign or placard located in an adult only facility.”
The LCB successfully moved for summary judgment on the Seattle Events plaintiffs’ claims, and the plaintiffs appealed. The Court of Appeals upheld “[t]he challenged restrictions,” which “minimize[d] marijuana advertising near locations where one can reasonably assume children congregate,” and thus were “narrowly tailored to achieve the desired objective [of] preventing underage marijuana consumption.”
But what were “[t]he challenged restrictions”? The plaintiffs’ complaint didn’t place at issue—indeed, didn’t even mention—the restrictions on the quantity or size of advertising signs imposed by RCW 69.50.369(2) and WAC 314-55-155(2)(a). Yet incongruously, the Court of Appeals asserted in passing, without citation to the record, that the “the sign size limitation” was among the restrictions the plaintiffs had challenged. Maybe the Court of Appeals did this deliberately, intending to reach out and express approval for “the sign size limitation” “near locations where one can reasonably assume children congregate.” If so, its opinion on that issue would be gratis dictum. It seems more likely, though, that the Court of Appeals’ misstatement was inadvertent.
In any event, the LCB has glossed over these issues, and has continued to attempt to enforce RCW 69.50.369(2), and the corresponding restrictions in WAC 314-55-155(2)(a), broadly and without regard to the geographic location of advertising signs—including by issuing Notices of Correction (“NOCs”) to marijuana retailers with signage consistent with Plausible Products. In Triangle Consulting LLC v. Washington State Liquor and Cannabis Board, Thurston County Superior Court Cause No. 23-2-00699-34, three marijuana retailers that had received such NOCs brought a facial challenge to RCW 69.50.369(2) and WAC 314-55-155(2)(a). (A statute is vulnerable to a facial challenge “where no set of circumstances exists in which the statute, as currently written, can be constitutionally applied.”) The plaintiffs asserted that their retail shops were more than 1,000 feet from schools, parks and other areas likely to be frequented by minors, and sought to enjoin the LCB from enforcing this statute and rule against them. The LCB moved to dismiss the plaintiffs’ complaint, arguing that Seattle Events had upheld the constitutionality, in all geographic locations, of the restrictions imposed by RCW 69.50.369(2) and WAC 314-55-155(2)(a) on the number and size of external signs marijuana retailers could deploy. The LCB inaccurately asserted in its briefing that the plaintiffs in Seattle Events had unsuccessfully challenged the same statute and rule. The Triangle Consulting plaintiffs countered (correctly) that Seattle Events had only concerned restrictions on cannabis advertising within 1,000 feet of schools, parks and the like. Apparently rejecting the plaintiffs’ arguments, the Thurston County Superior Court dismissed the Triangle Consulting case on May 12, 2023.
This was the wrong result. There’s no dispute that RCW 69.50.369(2) and the corresponding restrictions in WAC 314-55-155(2)(a) inhibit commercial speech, or that under Central Hudson the LCB has the burden of establishing that these restrictions directly and materially serve a substantial government interest and are no more extensive than necessary. Not only were these restrictions not challenged in Seattle Events, the decision in that case can’t plausibly be read to uphold any of the restrictions away from “locations where one can reasonably assume children congregate”—that is, more than 1,000 feet from “schools, playgrounds, recreation centers, childcare centers, parks, libraries, game arcades, arenas, stadiums, malls, fairs, and farmers markets.” Indeed, the Court of Appeals didn’t address in any way—whether in its holding or in dictum—the constitutionality of these restrictions in areas not likely to be frequented by minors. In Plausible Products, the LCB tried but failed to show an adequate “fit” between the restrictions in such areas and the government’s asserted interest in preventing the underage consumption of marijuana. The LCB didn’t even try to make such a showing in Seattle Events or Triangle Consulting. And it’s no more likely to be able to make the requisite showing in a future case.
So what are the takeaways for cannabis retailers? First, retailers must know that rightly or wrongly, the LCB continues to try to enforce RCW 69.50.369(2) and the corresponding restrictions in WAC 314-55-155(2)(a) despite the Plausible Products decision. Second, in Triangle Consulting, the LCB used Seattle Events to argue successfully that the Court of Appeals had held these provisions to be enforceable regardless of the geographic location of challenged signage. But third, notwithstanding Triangle Consulting, the LCB is misreading and misapplying Seattle Events, and its legal position is tenuous to the extent it seeks to enforce RCW 69.50.369(2) and WAC 314-55-155(2)(a) against marijuana retailers whose stores are more than 1,000 feet away from schools, parks, and the like.
Finally, it bears noting that the Washington Legislature may yet weigh in on this issue. During the 2022-23 legislative session, a bill was introduced (SB 5363) that would have eliminated the restriction in RCW 69.50.369(2) on the size of marijuana advertising signs. The bill didn’t get out of committee, but a similar bill could be introduced and enacted into law in a future legislative cycle.
 See United States v. Lam, 803 Fed. App’x 796, 797 (5th Cir. 2020) (“Dictum is language unnecessary to a decision, a ruling on an issue not raised, or the opinion of a judge which does not embody the resolution or determination of the court, and which is made without argument or full consideration of the point.”) (citations and internal quotation marks omitted).