Market Overview

Cannabis Still Can't Be Sold, Promoted On Facebook Or Instagram

Cannabis Still Can't Be Sold, Promoted On Facebook Or Instagram

Cannabis has gained mainstream acceptance in recent years, but it's still federally banned in the U.S. That ban puts platforms like Facebook Inc. (NASDAQ: FB) in a difficult situation when it comes to cannabis advertising, and Facebook decided this week it will maintain its stance against marijuana advertising on its social media platforms.

What Happened

MarketWatch reported Facebook held a special product policy meeting this week to discuss potential changes to its stance on cannabis. Ultimately, the company opted to maintain its current policies toward cannabis, dealing a blow to legal cannabis companies.

Why It’s Important

Under its current policies, Facebook doesn't allow any attempts to buy, sell or trade cannabis on its platforms, including Instagram. Facebook does allow advertising of products derived from cannabidiol, a compound derived from cannabis that is devoid of psychoactive activity. Facebook also allows content related to the sale of cannabis seeds or other cannabis-related paraphernalia, including bongs, rolling papers and vaporizers.

Unfortunately, cannabis producers that operate legally in Canada or in U.S. states that have legalized the drug will still no longer have direct access to Facebook and Instagram’s massive user base of more than 2 billion consumers.

What’s Next

Facebook’s decision to maintain its current policies is particularly disappointing to cannabis investors and companies attempting to establish brand strength as the industry grows. Investors will be watching closely to see if further momentum in the legalization movement can persuade Facebook, Google and other major online advertisers to eventually ease their restrictions on cannabis content.

Despite the setback, 2019 has still been an extremely good year for cannabis investors. The ETF MANAGERS TR/TIERRA XP LATIN AME (NYSE: MJ) is up 35.8 percent year to date.

Related Links:

'A Bit Scrappier': How Cannabis Marketers Navigate Social Media Restrictions

Report: Facebook Looking To Ease Cannabis Advertising Rules


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