Rock icon turned ‘CEO’ part of marijuana rush
Expect marketers to push back against decidedly sober regulations
Canada’s fledgling recreational cannabis industry has a bit of a conundrum.
Brand profile is expected to be critical as companies seek to gain recognition among the buyers who will be choosing from any number of, well, plain brown packages with bold yellow health warnings.
Federal politicians are promising strict regulations and say they intend to guard against any promotion of cannabis. The tension between the government’s words and the industry’s desire to sell product is obvious.
To wit, rock stars such as Gene Simmons of Kiss fame are lending their names to various brands, through some unusual arrangements. In Simmons, case, he’s been named the “chief evangelist officer” of a Vancouver-based producer.
The looming pot law prohibits testimonials and endorsements, but it doesn’t define those terms.
“So it’s not a testimonial or endorsement if it’s coming from your chief evangelist officer?” tweeted Ottawa lawyer Trina Fraser.
“I suspect some companies will continue to push the boundaries, push the boundaries again, until Health Canada or someone tells them to stop,” she says.
Kiss bass player Gene Simmons says he’s never smoked a joint in his life, but he’s now the global ambassador for a company that’s gearing up to sell recreational pot to Canadians.
In fact, the 68-year-old rock star is the CEO at Vancouver-based Invictus MD Strategies Corp.
That’s “chief evangelist officer,” the title Simmons gained in a multimillion-dollar deal with the company.
Simmons, famous onstage for his demon makeup, large tongue and fire-spitting, will put his “branding and merchandising genius” to work on behalf of Invictus, the company says.
Simmons isn’t the only celebrity hooking up with a cannabis company.
Members of the Tragically Hip are creative partners and shareholders in Newstrike Resources Ltd., the owner of Up Cannabis. Beleave Inc. has a brand licensing deal with Kevin Smith and Jason Mewes, who played pot dealers Jay and Silent Bob in movies and animated TV series. The team behind made-in-Canada stoner characters the Trailer Park Boys has a business and brand development deal with New Brunswick’s OrganiGram. Tweed Inc. in Smiths Falls sells rap icon Snoop Dogg’s “Leafs by Snoop” weed.
It’s all part of a push by cannabis companies to build brands and make their products stand out. But that effort is going to be complicated by the pending legalization law in Canada, which will come with strict regulations.
The federal Cannabis Act will ban mass advertising and promotion. It will not allow any TV commercials, billboards or glossy magazine ads extolling the virtues of the dried weed and cannabis oil that will be sold in plain packages from behind the counter upon legalization. Cannabis companies won’t be allowed to sponsor people or events or put their names on sports and cultural facilities, either.
The law will also prohibit promotion of cannabis through endorsements and testimonials, by depicting people, characters or animals, by appealing to youth, or by associating the drug with a lifestyle of “glamour, recreation, excitement, vitality, risk or daring.”
However, the law has yet to be interpreted.
And what type of celebrity partnerships will be allowed is a big question for the fledgling cannabis industry, says Aaron Sonshine, cohead of the cannabis law section at Toronto firm Bennett Jones.
“Companies are trying to find ways to create brand profile in an industry that is increasingly competitive,” Sonshine says. “(Companies) will be looking for ways to create brand recognition by aligning themselves with popular figures in a way that doesn’t cross the line with the new regime.”
Federal politicians have emphasized their intention to guard against the promotion of cannabis, especially to young people. The tension between the government’s promise of “strict regulation” and the industry’s desire to sell products and expand is obvious.
The day before Simmons appeared at the Toronto Stock Exchange when Invictus changed its trading symbol to “Gene,” Health Canada unveiled a proposed design for cannabis packages.
The package is dominated by health warnings printed in screaming yellow, alerting users to the risks of addiction, psychosis, schizophrenia, hurting their unborn babies, inhaling harmful chemicals or injuring or killing themselves or others if they drive or operate heavy machinery while stoned.
The packages also include a warning symbol for products containing THC: a red stop sign with a cannabis leaf inside.
Companies will be allowed to add small slogans or logos and choose one background colour for the package. No fluorescent or metallic colours, glossy coatings, texture or foil allowed.
Experts expect that, at some point, Health Canada will provide more guidance, either in regulations or guidelines. For example, the looming pot law does not define the terms “testimonial” and “endorsement.”
“So it’s not a testimonial or endorsement if it’s coming from your chief evangelist officer?” tweeted Ottawa lawyer Trina Fraser, using the hashtag #LetTheWorkaroundsBegin.
“There’s obviously a lot of room for interpretation with what’s in there,” said Fraser in an interview.
“I suspect what will happen is that some (companies) will continue to push the boundaries, push the boundaries again, until Health Canada or someone tells them to stop.”
Nothing in the law forbids a celebrity from representing a cannabis company, she says, “but if what is coming out of their mouth constitutes a testimonial or endorsement (of cannabis), that’s really the issue.”
In a news release, Invictus said Simmons will offer advice on marketing, make public appearances, attend investor and annual general meetings, and be a spokesman in the media.
It’s not a “day-to-day job,” Invictus CEO Dan Kriznic told the Business News Network.
“It’s somebody who spreads the message.” Simmons has a global fan base, he said in the interview. “For a public company, I wanted to get more eyeballs onto Invictus, and looking at Gene, he was somebody who could help me do that.”
For Simmons, it’s simply a good business opportunity.
“I’ve never had any cannabis of any kind,” Simmons told BNN. He’s never been drunk, either, or smoked cigarettes, he said.
“I invest in all sorts of things that I don’t personally use,” Simmons told BNN.
Simmons said he was impressed with Invictus and finds the cannabis industry fascinating.
He certainly has business savvy. Simmons helped create the Kiss spinoff empire of more than 2,500 licensed items, from T-shirts to lunch boxes, starred in a reality TV show with his family, has his own record label and is a bestselling author. His entrepreneurial ventures include a restaurant chain and a soda line called Moneybags.
But can a celebrity such as Simmons make public appearances on behalf of a cannabis company without promoting cannabis?
It will be up to Health Canada to draw the line, says Matt Maurer, head of the cannabis law section at Minden Gross in Toronto.
He sums up both sides of the argument: “Is Gene Simmons not allowed to talk about the company he (partly) owns because the legislation says he’s not allowed to endorse cannabis? If you put Gene Simmons beside a picture of Invictus, is that an endorsement?”
On the one hand, business owners should be allowed to “say whatever they want and sing the virtues of their business,” Maurer says. “On the other hand, if all that was required was an ownership stake in the business, then every company could simply grant shares, however minimal, to the celebrity of their choosing and get around the no-testimonial/endorsement requirement.
“It wouldn’t surprise me if it ends up somewhere in the middle, where the relationship is allowed to stand, but there is just more guidance on what these celebrity owners are allowed to say and not say, and do and not do.”
In the meantime, companies are looking at opportunities — Sonshine says he knows of half a dozen celebrities who are “kicking the tires” on deals with cannabis companies. “It’s a race to position yourself as a company before the new rules come into effect.
“It’s pretty clear the rules, once introduced, will be pretty restrictive.”
The chief financial officer of Beleave Inc. said his company is taking a cautious approach to its licensing deal with Kevin Smith and Jason Mewes.
Beleave hopes to work with the actors to develop a cannabis strain, but the details will be worked out when it’s more clear what will be allowed, Bojan Krasic said.
Beleave won’t be going into the “grey area of promotion” in the months before the law comes into effect because there is no point spending time and money on a marketing campaign now that won’t be allowed later, he said.
“This is a long-term project. How it may turn out we’ll have to see.”
It’s an open question whether the restrictions on cannabis promotion would withstand a legal challenge based on the Charter of Rights and Freedoms guarantee of freedom of expression, said Matt Anderson, a lawyer at Duncan Craig in Edmonton.
For the time being, companies are doing things that will be prohibited under the new law, such as sponsoring music festivals and other events. Tweed Inc., the cannabis company based in Smiths Falls, for instance, sponsored a show at Toronto Men’s Fashion Week last month. The ensembles by 19 designers featured tweed, of course.
The new cannabis law is expected to be in force by late summer or early fall, unless the bill gets tied up in Parliament.