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Turning the Spotlight on Celebrity Endorsement of Cannabis Companies

by Matthew Kittay, William Bogot, Joshua Horn, and Michael Reinert, Attorneys at Fox Rothschild LLP

As cannabis brands expand nationally in the United States, and the industry begins to consolidate, it is not a surprise that enterprises are looking to distinguish their products on the shelves and in the mind of the consumer.  Leveraging a “celebrity” brand – whether athlete, influencer, musician, film or television star, or just about anyone with a following, is a typical strategy. From the celebrity’s perspective, it can also be a meaningful way to expand and monetize their image.  However, as is the case in any product or lifestyle association, all elements must be weighted carefully with regards to the over-all image and brand of the celebrity in question. While there may be financial rewards in the short run, there must also be consideration of the total effects on the name and marketability of the persona to the public.

With emergence of the legal cannabis market over the last decade, we have had the opportunity to see relationships develop from both the celebrity and brand partners perspectives.  It can be a challenge, but a successful relationship can accelerate the opportunity for all parties.  On the other hand, a misstep can damage both the cannabis brand and the celebrity brand.

A thoughtful approach that combines the right brand with the right celebrity – plus careful crafting of a deal that will work, is often the recipe for success.

Here are aspects that we have found critical to consider:

  1. Authenticity. This may be the most critical component of a successful deal.  Some celebrity founded brands – like those offered by Willie Nelson or Marley Natural – require no introduction- they are not endorsements per se, but in these cases the celebrities are synonymous with the space and the association with their respective celebrities is captive to the products.  A more typical approach for those brands not launched by celebrities is a partnership, and they have varying degrees of success- sometimes characterized in the media as “gimmicky.” However, even uncommon associations – such as the combination of Snoop Dogg and Martha Stewart – can catch the public’s attention and somehow still feel genuine, highlighting that cannabis culture and collaboration transcends stereotypes to unite scions with seemingly little in common.
  2. Executable Endorsements. It is easy to shake hands over a desire to work together, but defining what that really means and reducing it to contractual provisions that can work for both parties often defines the success.  Provisions which require the celebrity to post on social media or to talk up the product at concerts or on screen are not only difficult to enforce, but be frustrated by legal limitations (prohibitions by the social media platforms or the artist’s other agreements, to name a few.)  In other cases, brands can be saddled with major costs and obligations upfront – such as production obligations to put on festivals featuring the artist – which became difficult to honor when Covid shut down venues and live events.  We recommend sticking to a plan that will highlight the product in a way that is natural for the celebrity to embrace and the consumer to understand, and which does not come with a hefty price tag or commitment for the brand – such as creative packaging or a novel product that the celebrity played a role in designing. One creative and effective example is a Jam Master Jay pre-roll pack for sale at dispensaries in Denver – which features the iconic hip hop artist’s image on a mix-tape style cassette tape case that carries four joints.
  3. Marketability. Although obtaining a celebrity endorsement may seem like the golden road to profitability, that is not necessarily the case. Having an endorsement or celebrity-tied product line may seem all well and good, the challenge is to be able to market that connection into a profitable business arrangement, which is easier said than done. Ideally, the company relying upon the celebrity connection must already have a credible and substantial position in the space with its own brand recognition.  If that is the case, tying a celebrity to that company could generate the additional buzz to make a celebrity-based line of products more marketable.
  4. Celebrity Concerns. As we discussed above, not all associations with the cannabis market are necessarily going to benefit the celebrity. For while legalization and acceptance of cannabis becomes rapidly more accepted throughout society, there are still factions that do not respond well to it and take a “guilt by association” attitude to those who endorse or promote its use. This is also true of other products, i.e., liquor. We have clients who will not allow their name, likeness, or IP to be used in any form of alcohol advertisement – not because they themselves oppose its use but out of fear of offending a constituency. The stigma of cannabis can be greater in some minds because of the issues of legality and misinformation of it being a “gateway” drug. There is also the concern that other potential advertisers or branding partners outside the cannabis industry might by turned away from the celebrity because of their cannabis connection. Again, this extension of what the personality stands for may seem incongruous with their own product or message. And lastly, there are the potential contractual limitations that may be placed on a public figure. While the old fashioned “morals clause” may be something that fell be the wayside in modern entertainment agreements, it has seen a renaissance in recent years for many reasons. And in doing so the drafters have tried to cast as wide a net as possible in defining what is “acceptable” behavior to them. So rather than test the strength of these clauses, some have simply opted out of anything controversial that they feel could damage them with the public or other possible business partners.

About The Authors

 

 

Joshua Horn is co-chair of Fox Rothschild’s Cannabis Law Practice Group. He can be reached at [email protected].

 

 

 

William Bogot is co-chair of Fox Rothschild’s Cannabis Law Practice Group. He can be reached at [email protected].

 

 

 

 

Michael Reinert is a senior partner in Fox Rothschild’s Entertainment Practice Group. He can be reached at [email protected].

Matthew KittayMatthew Kittay

Matthew Kittay

Matthew R. Kittay is the Co-Chair of the Mergers & Acquisitions Practice Group and Chair of the New York Corporate Team at Fox Rothschild LLP. He has handled major structuring deals and secured private equity and venture capital for a number of companies in the cannabis sector. He can be reached at [email protected].

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