California Cannabis Lawyers Explain Why “Free Samples” Could Cost Your Pot Business

Many retailers extend promotional offers to drum up new business or garner awareness of a new product. However, just as with almost every other aspect of operation and sales, California cannabis companies must be especially careful about how they market and promote their product. Otherwise, as our California cannabis lawyers can explain, distributors may find their green business deep in the red – and themselves in handcuffs. 

Recently, The Olympian reported recently that a pot shop owner in a Washington state suburb drew the attention and ire of state regulators for allegedly passing out free samples in violation of the state’s recreational marijuana laws. An undercover investigation was launched after officials received an anonymous tip about an alleged illegal marijuana club on site. Social media advertisements indicated free samples to the product were provided upstairs. Undercover officers began investigating the pot shop, and were offered free samples by an employee, who told them they could try it in another section of the building that wasn’t licensed. The officers reported that when they got to this portion of the building, they saw several individuals smoking marijuana.

The problem is marijuana retailers cannot, as Los Angeles cannabis business lawyers can explain, offer a ‘try it before you buy it” sort of deal for marijuana customers. This is largely owing to the fact marijuana business licensees in California, just as in Washington, are required to keep track of their product from seed to sale. By diverting products to be distributed as free samples, they are in violation of the law. 

However in this case, the pot shop owner said he plans to challenge the citation (which could cost him his license) because No. 1., he insists the marijuana distributed at the shop was sold, not given out, and No. 2, the site where marijuana was being consumed was a separate business, owned by his film production company. He argued these two separate businesses were being treated as one by prosecutors. He is facing a Class C felony charge of operating a marijuana club.

Marijuana dispensaries in Los Angeles, Orange County and surrounding communities have caught heat in the last few months, despite the state legalizing recreational use of the drug, because a significant number don’t have licenses, as reported by The Los Angeles Times. In some cases, individuals are calling the business something entirely to avoid detection. For instance, one man in Costa Mesa reportedly referred to his marijuana dispensary as a church. Although he was visited by code enforcement several times and allowed a walk-through of his facility, undercover agents allegedly purchased marijuana from him on site on several different occasions. They were likely tipped off by the fact it is listed on weedmaps.com, a popular site consumers search to easy find marijuana sales. However it’s important to note police and federal agents can view it there also.

Even if you are a fully-licensed manufacturer or dispensary, you will want to check in with your Los Angeles marijuana business attorneys before running any kind of specials, particularly if it involves a give-away of marijuana, to ensure the practice aligns with the rules set forth by the Bureau of Cannabis Control and the California Department of Public Health.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Lacey marijuana store in hot water with regulators over ‘free samples’, Nov. 28, 2018, By Abby Spegman, The Olympian

More Blog Entries:

California Marijuana Investor Accused of Plot to Kidnap, Murder Cannabis Business Partner, Nov. 25, 2018, Los Angeles Marijuana Lawyer Blog