At the start of August, a short-research firm called Friendly Bear attempted an attack to bring down Hexo’s share price, claiming that Hexo ads run on Snapchat were a scandal worthy of the name “CannTrust 2.0.”
Friendly Bear argued Snapchat was “synonymous with teenagers” and that by using slogans “A Fresh Spark” and “Are You Ready,” Hexo was encouraging “risk taking, and [associating] Hexo’s brand with ‘glamour, excitement, and vitality’,” which would violate Health Canada regulations.
Hexo claimed it followed the rules strictly, and investors were so unmoved by the news that Hexo stock actually went up. Aurora and Zenabis were also noted for advertising on Snapchat and Twitter, which experts agree seems regulatorily dicey.
But the murkiness of Health Canada’s advertising regulations may play in favour of licensed producers, as it’s unclear if or how companies advertising on social media could be punished under the Cannabis Act.
When it comes to keeping ads away from minors, the law only says, “the person responsible for the content of the promotion has taken reasonable steps to ensure that the promotion cannot be accessed by a young person”—but, it doesn’t define “reasonable steps.”
Suffice it to say, lawyers warn LPs advertising on Snapchat or Twitter that they’re risking a warning letter, but may expect little punishment beyond that.