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By: Rebecca Stamey-White, Hinman & Carmichael LLP
April 1, 2020
During the age of Corona, with people staying in place (if they are lucky), restaurants and bars closed, and stores overwhelmed, how do brands stay in business? They go where their customers are and do promotions and partnerships. They build loyalty through good marketing that speaks to the current situation and connects to the causes that their customers care about.
They do Stay-At-Home kits instead of pairing food and wine in a tasting room.
They give away free* wine for people stuck at home (spoiler/disclaimer: the wine isn’t actually free) in Instagram stories.
They raise money for cannabis chefs. They provide grants to laid off bartenders and mobilize volunteers (and supplier brands rush to partner on cause marketing campaigns).
A twitter meme of homemade alcohol hand sanitizer goes full circle with the TTB authorizing production of hand sanitizer by distillers across the country. Cannabis extractors do their part too.
Brands must move quickly, confidently and creatively to engage their customers, because nobody knows how long this will last, or which brands will be left standing on the other side.
Quick and compliance do not generally go together. But for regulated businesses that need their licenses in order to do business, the reward of a successful promotion needs to be balanced against the risks of noncompliance. Promotions often require careful structuring, pre-approvals, legal terms, contracts, state registrations, recordkeeping and reporting, so how can brands cut the legal red tape?
Cannabis businesses have been deemed essential, but haven’t gotten the regulatory relief that we’ve seen from alcohol regulators, perhaps to offset the mandatory closures of bars, restaurants and tasting rooms. But this relief doesn’t include suspending tied house for promotions, and includes guidance that commercial co-ventures (CCVs) are unlawful for alcohol brands (despite licensing many suppliers over the years whose business models are built entirely on cause marketing and never conducting enforcement against the many alcohol brands that do CCV promotions). **4/2/20 UPDATE** The California ABC is suspending CCV enforcement for promotions involving bona fide charitable organizations providing relief to the pandemic, the promotion is in connection with the sale of sealed containers, and the promotion does not involve or promote retail licensees.
Know what’s more and less regulated, and go for less if you don’t have time, go for more if you want to make a bigger impact and have a bigger budget. Giveaways, contests, sweepstakes, commercial co-ventures and retail-supplier campaigns are all legally intensive programs. If you want to do something quick that leaves out the lawyers and the legalize, keep it simple with discount codes and include shipping in your prices. Match consumer donations, give consumers the chance to buy your products for healthcare workers, and partner with unemployed bartenders who aren’t affiliated with restaurants or bars, and temporarily at least, don't have tied house issues. Keep good records, and be ready to untangle relationships and promotions when circumstances change.