Hanan Kolko Co-Authors, “Marijuana Advertising and the First Amendment” for the NYLJ

Publication Source: New York Law Journal

In the past decade, through referenda and legislative action, states have been enacting laws legalizing recreational or medicinal marijuana. Most recently, voters in Washington and Colorado have, through referenda, passed laws legalizing private possession of up to one ounce of marijuana for recreational purposes. In addition, 23 states have now enacted laws legalizing marijuana for medical use. Medical marijuana laws are not limited to states traditionally thought of as liberal: they have been enacted in states including Arizona and Montana, and Nevada voters overwhelmingly approved an amendment to that state’s constitution allowing the medical use of marijuana. New York is the 23rd, and most recent, state to enact a medical marijuana law; Governor Andrew Cuomo signed the law on July 5, 2014.

However, despite this activity at the state level, under federal law—which applies throughout the country, regardless of state law—possession, sale, and cultivation of any amount of marijuana is a crime. Federal criminal penalties remain harsh: Depending on the amounts sold or cultivated, a life sentence is possible. This patchwork environment presents significant legal challenges to entrepreneurs who seek to take advantage of state laws legalizing marijuana.

One legal challenge facing marijuana entrepreneurs is how they can advertise, given the reluctance of many advertising outlets to allow such advertising, and the fact that the First Amendment does not protect advertisements for unlawful activity. This article proposes one potential legal solution to that challenge for those seeking to advertise in New York City, a solution that has its genesis in a widely publicized spat between then Mayor Rudolph Giuliani and New York Magazine.

In February 2014, Weedmaps, a company with a website that offers marijuana users access to information on marijuana dispensaries and strains, paid Neutron Media, a company which manages ad space in Times Square, $50,000 for an ad on a Times Square digital billboard. They anticipated that the ad would begin to run on April 1, 2014. The ad did not run: shortly after April 1, Neutron Media informed Weedmaps that the owner of the billboard—CBS—vetoed the ad.

Beer, like marijuana, is a widely used intoxicant. Given that Anheuser-Busch InBev was reported to have spent $1.42 billion in advertising in 2011, there is, potentially, a large market for advertising of cannabis-related products. However, Weedmaps’ experience with the Times Square billboard ad illustrates a dilemma facing legitimate cannabis-related businesses: in the current legal environment, where owners of private advertising outlets have the right to turn down cannabis-related advertising, how do cannabis-related businesses advertise? This article offers a key to unlocking the advertising dilemma faced by cannabis-related businesses.

Buses as Public Forums
The first part of the key is that the Giuliani case establishes that the exteriors of MTA buses are designated public forums. In 1997, Transportation Displays, Inc. (TDI), acting on behalf of the Metropolitan Transportation Authority (MTA) entered into a contract with New York Magazine pursuant to which the MTA agreed to display a three-part series of New York Magazine advertisements on the sides of 75 MTA buses. The ads were to run from late 1997 through early 1998.

New York Magazine provided TDI with the ad copy, and neither TDI nor the MTA objected to it. The MTA began posting the ads on its buses around Nov. 24, 1997. One ad, featuring the New York Magazine logo, stated: ‘Possibly the only good thing in New York Rudy hasn’t taken credit for.’ New York Magazine v. Metropolitan Transportation Authority, 136 F.3d 123, 125 (2d Cir. 1998). ‘After the ad had begun to run on City buses, New York’s Mayor, Rudolph Giuliani…requested Deputy Mayor Randy Mastro to notify the MTA that the ad should be pulled because it violated his rights under Section 50 of the New York Civil Rights Law…needless to say, the ad was immediately pulled.’ New York Magazine v. Metropolitan Transportation Authority, 987 F.Supp. 254, 257 (S.D.N.Y. 1997).

New York Magazine then sued, seeking a preliminary and permanent injunction barring the MTA and the city of New York from refusing to run the advertisement. Judge Shira Scheindlin found that ‘the exterior of an MTA bus is a public forum,’ 987 F.Supp. at 264, ruled that plaintiffs were entitled to a preliminary injunction barring the MTA and the city from refusing to display the ad, and ordered that ‘the ad in issue should be reinstated forthwith.’ 987 F.Supp. at 270. The MTA and the city appealed.

On appeal, New York Magazine argued that the exterior of an MTA bus is a designated public forum, while the MTA and the city argued that the space is a non-public forum. Under First Amendment jurisprudence, this distinction is critical: If that space is a non-public forum, restrictions on speech are subject to ‘limited review,’ and are lawful as long as they are ‘reasonable’ and not ‘an effort to suppress the speaker’s activity due to disagreement with the speaker’s view.’ International Soc. for Krishna Consciousness v. Lee, 505 U.S. 672, 679 (1992). In contrast, the regulation of speech in a public forum or a designated public forum is subject to the highest degree of scrutiny, surviving only if it is narrowly drawn to achieve a compelling state interest. Perry Ed. Assn. v. Perry Local Educators’ Assn., 460 U.S. 37, 45 (1983); Pleasant Grove City, Utah v. Summum, 555 U.S. 460, 470-71 (2009).

The Court of Appeals agreed with New York Magazine, concluding that ‘the District Court thus correctly found that the advertising space on the outside of MTA buses is a designated public forum, because the MTA accepts both political and commercial advertising.’ 136 F.3d at 130.

In American Freedom Defense Initiative v. Metropolitan Transportation Authority, 880 F.Supp.2d 465 (S.D.N.Y. 2012), the court followed the U.S. Court of Appeals for the Second Circuit’s New York Magazine holding, reiterating that the exterior of MTA buses is a designated public forum. 880 F.Supp.2d at 470-74.

Because the exteriors of MTA buses are a designated public forum, any restrictions on advertising on the exterior of MTA buses would be upheld only if it were found to be ‘necessary to serve a compelling state interest and…narrowly drawn to achieve that interest.’ Cornelius v. NAACP Legal Defense and Education Fund, 473 U.S. 788, 800 (1985).
First Amendment

Because the exterior of an MTA bus is a designated public forum, it would seem to be an ideal venue for cannabis-related advertising for Weedmaps and other marijuana-related enterprises. However, cannabis-related businesses seeking to advertise on MTA buses are likely to face an additional hurdle. Because ‘the government may ban….commercial speech related to illegal activity,’ (Central Hudson Gas & Electric v. Public Service Commission, 447 U.S. 557, 563-64 (1980)), and because ‘offers to engage in illegal transactions are categorically excluded from First Amendment protection,’ (United States v. Williams, 553 U.S. 285, 297 (2008)), the MTA could, consistent with the First Amendment, bar Weedmaps and other similar enterprises from advertising marijuana for sale, because federal and New York State law ban the sale, purchase, and possession of marijuana.

Banning Pro-Legalization Ads
The second part of the key to unlocking the advertising dilemma faced by cannabis-related businesses is overcoming the fact that Congress has banned the running of ads in favor of legalization on public mass transit systems. This hurdle is not insurmountable. While the MTA could, lawfully, bar advertisements offering marijuana for sale, a 2004 decision striking down a federal statute barring public transit authorities from accepting pro-legalization ads suggests that the MTA could not bar advertisements advocating the legalization of marijuana or the legalization of medical marijuana.

Nearly 60 years ago, the Supreme Court explained that the First Amendment ‘was fashioned to assure unfettered interchange of ideas for the bringing about of political and social changes desired by the people.’ Roth v. United States, 354 U.S. 476, 484 (1957). This general First Amendment principle has been specifically applied to speech advocating legalization of marijuana.

In American Civil Liberties Union v. Mineta, 319 F.Supp.2d 69, 74 (D.D.C. 2004), the court addressed the constitutionality of Section 177 of Division F of the Consolidated Appropriations Act of 2004 (Section 177). Section 177 barred the appropriation of any federal mass transit funds ‘to any federal transit grantee….involved directly or indirectly in any activity that promotes the legalization or medical use of any substance listed in Schedule 1 of Section 202 of the Controlled Substances Act (21 U.S.C. 812 et seq.),’ a group of substances which includes marijuana.

The Mineta plaintiffs, a group of ‘non-profit organizations that seek to participate in public debate on issues relating to marijuana laws and policy,’ advertised on property owned by the Washington Metropolitan Area Transit Authority (WMATA). They ran some ads before the passage of Section 177, including one which uses the phrase ‘legalize and tax marijuana.’ In February 2004, shortly after Section 177 took effect, WMATA informed the plaintiff organizations that it had rejected their request for subsequent similar advertising ‘because of its concern about jeopardizing its federal funding.’ 319 F.Supp. 2d at 74.

Plaintiffs sued, arguing that Section 177 violated their rights under the First Amendment. The court ruled that Section 177 was a ‘restriction on the expression not just of content, but of a certain viewpoint,’ (319 F.Supp.2d at 86), lacked ‘viewpoint neutrality,’ and thus could not survive the ‘heightened scrutiny analysis’ applied to the viewpoint-based restrictions on speech. Id.

The court concluded: ‘[j]ust as Congress could not permit advertisements calling for the recall of the sitting Mayor or Governor while prohibiting advertisements supporting retention, it cannot prohibit advertisements supporting legalization of a controlled substance while permitting those that support tougher drug sentences. The court concludes that because Section 177 is viewpoint discriminatory, it is an unconstitutional exercise of Congress’ broad spending power,’ and that ‘the government has articulated no legitimate state interest in the suppression of this particular speech other than the fact that it disapproves of the message, an illegitimate and constitutionally impermissible reason.’ 319 F.Supp.2d at 86.

Any MTA rejection of advertisements advocating the legalization of marijuana is thus subject to a strong claim under Mineta, that such prohibition is unconstitutional. Read together, New York Magazine and Mineta provide a key for cannabis-related businesses to unlock the difficulties they face in finding advertising outlets. While Weedmaps and other similar businesses can’t run ads advertising marijuana for sale, in New York City, these cases suggest they can run pro-legalization ads on MTA buses.

While the MTA could lawfully bar ads that advised consumers where to buy marijuana, a court would likely find that Weedmaps and other businesses have a First Amendment right to run ads on the exterior of MTA buses advocating legalization, and including the business’ name, logo, and web address where a person could find more information on legalization.

Because the New York Magazine ruling is based on the specifics of how the MTA sold ads on the sides of its buses, the extent to which it will serve as a precedent for other transit systems will depend on the factual details of how those systems sell ads. However, as a practical matter, if marijuana-centric businesses successfully run pro-legalization ads on New York City buses, it may set a precedent for advertisers and transit systems elsewhere.

Hanan B. Kolko is a member of Meyer, Suozzi, English & Klein, in the firm’s New York City office.

Reprinted with permission from the July 11, 2014 online issue of New York Law Journal. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.