Michigan Cannabis Companies Face Increased TCPA Risk

In recent months, cannabis industry companies have increasingly found themselves the target of class action litigation brought under the Telephone Consumer Protection Act (TCPA). Cannabis companies are especially vulnerable to TCPA litigation. The absence of legalization at the federal level has resulted in a minefield of cannabis advertising regulations (or outright bans) that vary from state to state. Cannabis companies thus tend to rely on more direct advertising means, such as text messaging, to reach their customers.

For cannabis companies operating in Michigan and other states in the Sixth Circuit, the scope of potential TCPA liability just got wider. On July 29, 2020, the United States Court of Appeals for the Sixth Circuit held that telemarketing technology that automatically contacts phone numbers from a stored list is an automatic telephone dialing system, or ATDS, and therefore subject to the TCPA even if the technology did not generate the list of numbers itself.

With its ruling, the Sixth Circuit joins the Ninth and Second Circuits in a split with the Seventh and Eleventh Circuits that the Supreme Court is expected to resolve in summer 2021. The Seventh and Eleventh Circuits have narrowly interpreted ATDS to require that the technology randomly or sequentially generate and store the list of phone numbers to be autodialed.

Accordingly, cannabis companies should carefully assess their current and future telemarketing and text messaging strategies, particularly if automated technologies are involved. Honigman attorneys Kevin Blair and Jad Sheikali are experienced in TCPA compliance and litigation. Kevin has advised cannabis industry companies on a range of issues arising under the TCPA, including consent, opt-out, safe harbor, and data retention. Prior to joining Honigman, Jad prosecuted multiple TCPA class action lawsuits as a plaintiff’s attorney.