The legal cannabis space has reached new territory. While some states are in the first steps to reform, others are over a decade in. This new weed phase has led to interesting territory, like one Canadian brand seeking legal action against the regulatory body punishing them.
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Ghost Drops has been fighting a $500,000 fine from Health Canada since its issuance. Despite the regulators lowering the fine, the legacy-turned-licensed weed brand is not ready to settle.
“We didn’t do anything different from what our competitors do,” Ghost Drops president John Dean Durante said in a press release. “Did we do it better, maybe? But allegedly violating an unconstitutional marketing regulation is a far cry from endangering human health.”
Ghost Drops denies wrongdoing in ongoing drama
Health Canada issued two fines to Ghost Drops for advertising at The Haunting of Hexwood, an all-ages event. The Cannabis Act prohibits weed advertisements in any space that allows people under 21, regulators believe that Ghost Drops violated this.
Ghost Drops does not deny promoting the brand at the Halloween party, but other cannabis brands sponsored the event without repercussions. The weed company believes enforcement is inconsistent, which sparked the initial review request with the Minister of Health. The Ministerial review maintained that the fines should stand. However, since they were each accrued at the same event, it cut the original $500,000 owed down to $250,000.
That did not settle things for Ghost Drops. The company recently filed a formal legal claim against Health Canada. The official legal challenge remarks that federal advertising rules infringe on the protected right to freedom of expression and the ability to engage in meaningful, competitive commerce under the Canadian Charter of Rights and Freedoms.
Health Canada confirmed the known details about the potential legal battle with GreenState. But, as for any further guidance, they will wait until the courts are through with the matter before weighing in.
Ghost Drops is not staying silent and has issued a press release detailing its intentions regarding the potential legal battle. Similar, more established industries have lobbyists and advocacy groups working in their best interest. The brand believes this lack of support in its corner gives regulators a wide berth in the interpretation and enforcement of regulations like these.
“This lack of coherent representation creates uncertainty and variability in enforcement, which can lead to inconsistent application of the law,” said Ghost Drops CEO Gene Bernaudo in the press release. “As a result, businesses within the cannabis sector often navigate an unpredictable regulatory landscape, making compliance challenging and fostering an environment where some players may face stricter scrutiny than others based solely on regulatory whims.”
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Ghost Drops legal battle hits new stride
The company is not arguing that there were no promotions at an all-ages event, but is putting the regulators under a microscope instead. Next, a court will examine the legality of the decision-making process that led to the fine. The court could set the ruling aside after deeming it flawed, refer it to the tribunal for reconsideration, or take other action.
Ghost Drops can take the decision to the Supreme Court of Canada for a final appeal if they remain unsatisfied after this process. This level is reserved for cases deemed nationally significant. For example, it could answer a legal question that impacts many Canadians.
Barrister Kirk Tousaw, who filed the challenge on behalf of the cannabis brand, is confident that the court will see that these marketing restrictions violate commercial free speech protections. The argument is going beyond whether a cannabis brand violated the regulations. It tears into the fabric of the rules themselves.
“The real issue for trial will be whether the government is entitled to override those rights and, if so, whether the rules as applied minimally impair those critical freedoms in a way that is rationally connected and proportionate to the government’s goals,” Tousaw concluded in the release.
