MJBizMag August 2021 - 63

N
ew marijuana retailers looking
to connect with consumers
might inadvertently violate
federal law by using robocalls or text
messages if they don't first ask for
recipients' permission.
The 1991 Telephone Consumer
Protection Act-or TCPA, as the law is
commonly known-prohibits private
companies from using unsolicited
text messages or calls to advertise to
consumers. Companies that break
the law can be fined up to $1,500 per
violation. That amount can easily
skyrocket if a company is sending text
messages to hundreds of consumers.
BACKBREAKER FOR BUSINESS
The amount of money to be made has
created a cottage industry of lawyers who
are willing to file lawsuits on the chance
they'll be able to profit by forcing a quick
settlement agreement.
Overlooking the TCPA has been
extremely costly for many cannabis
companies, often to the tune of tens of
thousands of dollars, if not more, said two
attorneys consulted by MJBizMagazine.
" To defend a case like this (can cost)
tens of thousands of dollars into the six
figures, depending on how far the case
gets, " said Marc Roth, a former Federal
Trade Commission attorney and partner
at Cobalt Law in Berkeley, California.
" It's astounding how companies that
are in the cannabis space continue to
just not be aware of the TCPA and how
dangerous it is. "
Roth and Pennsylvania-based
attorney Michael Sampson, a partner
at Leech Tishman, both have been
watching closely as TCPA cases
involving marijuana businesses
have proliferated since 2018, when
California-based delivery business Eaze
became one of the first large marijuana
companies hit with such a suit.
Although Eaze was ultimately able
to force the plaintiffs in its case into
arbitration (the company had the
foresight to include such a provision
in its terms of service), many other
Michael
Sampson
Texting regular consumers about
sales has become an increasingly
popular sales tactic in recent years.
But a federal law prohibits companies
from contacting customers via text
or robocalls without permission.
Businesses that send such messages
without documented permission
could find themselves faced with
large fines. Before sending that text,
companies should know:
* Businesses that break the law can
be fined up to $1,500 per violation.
* Some lawyers are willing to file
lawsuits on the chance they'll be
able to profit by forcing a quick
settlement agreement.
* The key to adhering to the TCPA is
ensuring consumers have opted to
receive text messages or robocalls.
Buying lists of consumers' phone
numbers is a major misstep.
* Including an arbitration clause in
your company's terms of service
can help avoid a full court battle.
* Attorneys advise companies that
have violated the law to settle
the case quickly and obtain a
nondisclosure agreement.
cannabis businesses haven't been as
fortunate. That ignorance about the
TCPA has cost an untold number of
companies a sizable chunk of change.
MJBizMagazine asked Roth and
Sampson for their best advice on how to
avoid a TCPA suit and what companies
should do if they are faced with one.
'CONSENT, CONSENT, CONSENT'
The key to adhering to the TCPA is
ensuring consumers have opted to
receive text messages or robocalls, Roth
and Sampson said. If that critical step is
skipped, and a company utilizes these
forms of communication, the business
will be vulnerable to a lawsuit.
One common way this happens
is when companies purchase lists
of potential consumers' names
and telephone numbers, which are
commodities in the marketing world.
" Consent, content, consent. That is the
ultimate defense. Otherwise, you have no
other defenses, " Roth said.
Consent can be achieved through
direct contact with consumers, either
when they visit a retailer's store, website
or some other direct interaction.
This means that buying lists of
consumers' phone numbers is a major
Mark Roth
misstep, Roth said.
" That's the biggest no-no, because they
don't have consent " from consumers to
be added to contact lists, Roth said. If
you're " texting someone who you don't
know, you're dead in the water. And
there's a cottage industry of plaintiffs
out there who will just sue based on any
kind of unauthorized text. So the real
watchword is: Don't buy lists. "
Sampson even advocated setting up
a " double opt-in " system that requests
consent from consumers more than
once, providing extra insurance against a
TCPA lawsuit.
" When they've opted in, the first text
message basically (requires them) to optin
again, which is considered by many
to be kind of state-of-the-art now in the
industry, " Sampson said.
He also suggested having written
August 2021 | mjbizdaily.com 63
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MJBizMag August 2021

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