SCOTUS Case Will Affect How Cannabis Companies Reach Customers

The Supreme Court of the United States will make a decision in Facebook v. Duguid, expected by June 2021, and industry stakeholders believe the SCOTUS call will affect the way businesses of all kinds build relationships with their customers. It will have an especially significant impact on the cannabis industry.

If the court defines an automated telephone dialing system as a system using stored information collected from customers—rather than one that stores or dials randomly-generated phone numbers—then companies that call or text their clientele without first obtaining permission could face millions of dollars in penalties. 

The consequences may be detrimental to growing cannabis dispensaries and brands, because texts are often a primary method of contact with a mostly Millennial market. 

Lawren Zann, partner at Greenspoon Marder LLP, explained that litigators have already created an industry initiating Telephone Consumer Protection Act (TCPA) complaints. “It’s happening at rates we had previously not dreamt of,” he said. Cannabis companies are a particular target, “led by plaintiff’s attorneys who view the cannabis industry as the next Gold Rush.” 

Consumer outreach could get even more challenging, depending on the SCOTUS ruling. “If the Supreme Court goes against Facebook’s position, it’s going to embolden the plaintiffs and the attorneys,” he said.

According to Zann, some smaller cannabis companies already struggle to stand up to legal action, regardless of whether or not they are in the wrong. “They’ve lost millions of dollars settling out of court,” he said.

Abbas Kazerounian, partner at Kazerouni Law Group, is currently involved in six cases against cannabis companies, including Curaleaf and Mary Jane’s.

However, Kazerounian said, “This is not a personal attack on the cannabis or the marijuana industry. The number one complaint to the FCC and the FTC in the last decade is unwanted robocalls.” 

Steve White, CEO of Harvest Health and Recreation, said he’s not worried about TCPA litigation because, “This is something that was put on our radar a while ago. We hired a lawyer to tell us what we needed to do, and we revamped our list and our entire system.” 

The company has dispensaries in multiple states, and it serves millions of customers. Many receive promotional and informational texts on a regular basis.

White stressed that the nature of the industry means that every component of the work can help advance a common goal. “We have a responsibility to do all things responsibly—and marketing falls into that,” he said. In the end, he anticipates a “reasonable and logical conclusion that will not have innocent companies caught in the crosshairs.”

 

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