GHOST DROPS LAUNCHES LEGAL BATTLE OVER CANNABIS MARKETING AND PROMOTIONAL RESTRICTIONS

TORONTO, April 29, 2025 /CNW/ - Ghost Drops, a prominent player in Canada's cannabis industry, 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 an unprecedented $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.

This unprecedented penalty underscores the heightened scrutiny that cannabis businesses face in Canada. It suggests a strict regulatory environment but rightfully raises questions about the consistency of enforcement practices by regulators within the industry. Ghost Drops is the first cannabis business to receive a regulatory fine of this magnitude. The brand maintains it is a victim of arbitrary enforcement. An easy target for scrutiny known for its bold, street-inspired identity, edgy, urban aesthetics and unmistakably loud, rebellious, culture-driven branding.

"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."

As the first major cannabis company to take legal action against Health Canada for marketing prohibitions, Ghost Drops hopes to set a precedent for other businesses in the industry. The brand believes that by addressing these regulatory issues, a more balanced approach to marketing and promotion of cannabis can be achieved, benefiting consumers and the industry.

To combat the overreaching authority imposed by Health Canada, Ghost Drops has enlisted Canadian lawyer and social justice advocate Kirk Tousaw. The brand believes Mr. Tousaw's experience with Charter applications and his vast understanding of the framework surrounding cannabis legalization in Canada will be a tremendous asset to their challenge.

"I think it is clear that the marketing restrictions violate the commercial free speech rights protected by section 2 of the Charter," said Tousaw. "The real issue for trial will be whether the government is entitled to override those rights and, if so, whether the rules as applied minimally impair those critical freedoms in a way that is rationally connected and proportionate to the government's goals. We say that cannabis, a far safer product than alcohol, can't be treated in such a heavy-handed way by the government."

Ghost Drops continues to be committed to advocating for responsible cannabis consumption and promotion, which aligns with Health Canada's objective. However, the brand and its supporters feel they should be afforded the same rights as all consumer-packaged goods businesses including those granted to alcohol and pharmaceutical drug manufactures whose products have been proven to kill people.

Ghost Drops hopes the action garners support from various stakeholders within the cannabis industry, media, and consumers who believe in the fair treatment of all businesses under the law. Ghost Drops plans to actively engage with regulators and the public throughout the legal process to emphasize the necessity of reform.

**About Ghost Drops**
Ghost Drops is redefining cannabis in Canada. Through its commitment to innovation in the cannabis space and delivering a unique customer experience, the Ghost Drops model brings to the legal market the very best in Canadian craft cannabis. Established in the legacy market to disrupt the status quo, Ghost Drops built a loyal cult following by setting the standard of cannabis excellence. Now in the legal market, the Ghost Drops business model delivers the most unique play the industry has ever seen by creating brand loyalty, via a unique consumer experience.

SOURCE Ghost Drops

For media inquiries, please contact: Kirk Tousaw, Barrister, Jack Lloyd Law Corporation, [email protected], 1-250-510-0789