Ghost Drops has formally filed a legal claim against Health Canada. This action comes in response to mounting regulatory pressure regarding the brand's marketing and promotional practices. On April 4th, 2025, the company launched an official challenge to the strict federal advertising rules governing cannabis. The claim asserts that these regulations infringe upon the Canadian Charter of Rights and Freedoms—specifically the right to freedom of expression and the ability to engage in meaningful, competitive commerce.
The marketing and promotion of cannabis in Canada has faced limitations since legalization in October 2018. Ghost Drops argues that these stringent regulations hinder both creativity and the ability to share meaningful, informative content—key elements in fostering responsible consumer awareness and encouraging fair competition across the industry.
Since mid-2023, Ghost Drops has been targeted by Health Canada after the agency claimed it received a wave of public complaints. These claims led to an extensive investigation that ultimately resulted in a $500,000 fine—imposed for alleged breaches of the Cannabis Act's restrictive marketing rules. The brand maintains that these accusations are not only exaggerated but highlight the disproportionate enforcement facing innovative industry leaders.
"We are the epitome of what the Cannabis Act was designed to achieve." Says Ghost Drops President John Dean Durante. "We were a legacy cannabis brand which transitioned to a legal cannabis business. We employed dozens of people, generated millions in tax revenue for our government while helping convert thousands of legacy consumers to legal tax paying consumers." He goes on to say, "We didn't do anything different from what our competitor's do, did we do it better? Maybe? but allegedly violating an unconstitutional marketing regulation is a far cry from endangering human health."
The brand maintains there is nothing unconventional or unprecedented in their marketing tactics and insists it has adopted proven strategies utilized by major CPG companies. Common marketing campaigns focused on customer experience, data analysis, and optimization, while leveraging digital marketing channels like SEO, social media, email marketing, including influencer marketing and affiliate programs. These are all common practices afforded to 99% of businesses and are essential strategies required to succeed in commerce.
With a massive fine looming the brand undertook to suspend all marketing and promotional activity in the hopes the regulator would consider the action as compliance and forgoes the fine. All the while, competitors continued to thrive utilizing the same tactics Ghost Drops is being persecuted for.
The brand believes the fine to be punitive in nature rather than "promoting compliance through education, information sharing, and guidance documents, aimed to help regulated parties understand their obligations and prevent non-compliance" as outlined in the regulators mandate. Ghost Drops believes it was treated unfairly which ultimately hindered its ability to effectively compete. This inequitable treatment placed immense pressure on the brand, ultimately threatening its very existence in a very saturated competitive marketplace bound by over-reaching regulations.
"The cannabis industry lacks organized lobbying power that other regulated industries possess. This provides regulators broad discretion when interpreting and enforcing regulations." Says Ghost Drops CEO Gene Bernaudo. "Without well-established advocacy groups to represent their interests, cannabis businesses often find themselves at the mercy of regulators who may apply rules based on their individual interpretations rather than consistent industry standards. Bernaudo goes on to say, "This lack of coherent representation creates uncertainty and variability in enforcement, which can lead to inconsistent application of the law. As a result, businesses within the cannabis sector often navigate an unpredictable regulatory landscape, making compliance challenging and fostering an environment where some players may face stricter scrutiny than others based solely on regulatory whims."
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Ghost Drops
ghostdrops.com/