Will Marijuana Ads Make License Renewals Go Up in Smoke?
[Commentary] Broadcasters don't know it yet, but recent actions by the Department of Justice suggest that the federal government may be moving closer to raining on their upcoming license renewals. The reason? Medical marijuana advertising.
While it seems like a recent phenomenon, the first state laws permitting medical marijuana go back some 15 years. The movement by states to permit the use of medical marijuana has grown steadily since then, with half the states in the U.S. (and the District of Columbia) now having medical marijuana laws on the books or under consideration. Of course, when an entrepreneur sets up a medical marijuana dispensary, the next step is to get the word out to the public. In the past few years, these dispensaries began approaching broadcast stations in growing numbers seeking to air advertising. In the depths of the recent recession, medical marijuana dispensaries were one of the few growth industries, and many stations were thrilled to have a new source of ad revenue. But In February 2011, the Department of Justice said that it "will enforce the [Controlled Substances Act] vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana, even if such activities are permitted under state law. Far more likely than widespread prosecutions of media organizations accepting medical marijuana ads are headaches for stations seeking license renewal at the Federal Communications Commission. In processing license renewal applications, the FCC must determine whether, in light of the station's past performance, renewal of its license will serve the public interest. It is an admittedly ambiguous standard, and if the federal government, via the FCC, wants to use the license renewal process to pressure broadcasters to reject all future medical marijuana ads, it is not a difficult task. Fines and the threat of non-renewal can be very effective persuaders. By severing the link that advertising offers between medical marijuana producers and the patients who use their product, the federal government might feel that it can suppress demand for that product. In reality, the advertising would likely just shift from broadcast stations to other media not so dependent upon the federal government. Regardless, broadcasters whose license renewals are caught in the middle of this power struggle between the state and federal governments will be the ones feeling the heat.