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SMS Platforms Terminate Services for Cannabis Companies

As if there are not already sufficient difficulties faced by cannabis companies operating in states where marijuana and cannabis products have been legalized one more is being added to the list.

It seems that some text messaging providers (SMS) have now decided to cancel contracts with marijuana and cannabis businesses citing illegality at the Federal level for their decision. One major provided of SMS services, Twilio, clearly state in their legal/messaging-policy:-

Cannabis. Messages related to cannabis are not allowed in the United States as federal laws prohibit its sale, even though some states have legalized it. Similarly, messages related to CBD are not permissible in the United States, as certain states prohibit its sale. Twilio defines a cannabis message as any message which relates to the marketing or sale of a cannabis product, regardless of whether or not those messages explicitly contain cannabis terms, images, or links to cannabis websites.”

Twilio is not the only SMS provided adding this restriction to their terms and conditions. AT&T and T-Mobile are also understood to be following a similar route. It is believed that this review of terms and conditions has followed the introduction of 10DLC, a new telecommunications regulation intended to counter the growing problem of spam. Not that that is anything to do with the cannabis industry but a more general effort to control unwanted messages.

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It is known that many businesses in the cannabis industry rely on SMS to reach their customers and to manage deliveries and order pickups as well as a means of marketing their products.

Many other forms of advertising and promotion are already unavailable to the industry.  Email providers, such as Mailchimp do not permit campaigns involving cannabis, and traditional advertising on search engines and Facebook is already prohibited.

As with email and some other forms of promotion, it is possible for cannabis companies to find niche providers for SMS but, as has been the case with other mediums, the costs are generally higher and the service may not be of a similar standard.

And, as advertising and communication costs are not deductible for federal tax accounting because of Sect 280e, the additional expenses only serve to make profitability extremely difficult forcing businesses to raise prices to consumers to compensate.

Once again, until the Government addresses the disparity and incompatibility between federal law and local state law cannabis businesses operating wholly legally with state laws will struggle to achieve viable businesses.

 

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