Indiana HB 1390: CBDT Analysis of Marijuana Advertising Ban

How Banning Cannabis Education Sabotages Future Legal Market Optimization

Bill Status: Signed by Governor Mike Braun, May 6, 2025, Effective Immediately

CBDT Verdict: Catastrophically negative for Indiana's eventual legal market (-8 to -12 percentage points in legal market share when legalization finally occurs)

Last Updated: November 2025

The Bill at a Glance

Executive Summary

Indiana HB 1390 bans marijuana advertising "by any medium" within state borders—targeting Michigan, Illinois, and Ohio dispensaries marketing to Indiana residents. The bill passed as an amendment to Bureau of Motor Vehicles legislation after three standalone bills died without hearings.

CBDT Assessment: HB 1390 will catastrophically damage Indiana's legal market when legalization eventually occurs. By banning consumer education about legal cannabis for 10-15+ years while prohibition continues, Indiana ensures residents will enter any future legal market with zero understanding of product types, testing standards, and safety protocols.

Predicted impact: When Indiana legalizes (inevitable by 2032-2040), HB 1390's legacy will cost the legal market 8-12 percentage points in market share—the difference between Michigan's success (85%) and Illinois's failure (55-60%).

The irony: Indiana residents are already spending $286 million annually in Michigan, Illinois, and Ohio dispensaries. HB 1390 doesn't stop consumption—it just ensures Indiana gets zero tax revenue while maintaining consumer ignorance about legal cannabis.

The Problem: Indiana Surrounded by Legal Markets

Indiana is the only Midwest state entirely surrounded by legal cannabis markets:

• North: Michigan (85% legal market share, $3+ billion annually)
• West: Illinois (55-60% legal share, $2 billion annually)
• East: Ohio (65-70% legal share, $1+ billion projected)

Indiana's response: Complete prohibition. No medical program. No decriminalization.

Border-state losses:

• Michigan: $144 million annually
• Illinois: $100 million annually
• Ohio: $42 million annually
• Total: $286 million annually flowing OUT of Indiana
• Tax revenue lost: $55-85 million annually

Indiana's 2025 legislative session killed every cannabis reform bill without hearings (HB 1145 decriminalization, HB 1178 medical, HB 1630 legalization), but advanced the marijuana advertising ban—the only cannabis legislation that passed.

What HB 1390 Does

HB 1390 was originally a BMV procedures bill addressing electronic certificates of registration and temporary permits. Marijuana advertising ban provisions were added in the final weeks after standalone bills (SB 166, HB 1026, HB 1327) died in committee.

Core Prohibition: "A person may not advertise a product containing marijuana or a controlled substance listed in Schedule I by any medium within the borders of Indiana."

Scope of "Any Medium"

The language "by any medium" creates comprehensive coverage:

Physical advertising:

• Billboards and outdoor signage
• Direct mail, postcards, and flyers
• Print advertising in newspapers and magazines
• Mobile billboards and vehicle wraps

Digital advertising:

• Website banner ads and display advertising
• Social media advertising (Facebook, Instagram, Twitter/X, TikTok)
• Geo-targeted mobile advertisements
• Search engine marketing (Google Ads, Bing Ads)
• Email marketing campaigns
• Text message marketing (SMS)
• Streaming service advertising (Spotify, Pandora, YouTube)

Broadcast advertising:

• Radio advertising reaching Indiana audiences
• Television advertising on stations broadcasting into Indiana
• Podcast advertising if targeted to Indiana listeners

Enforcement Mechanisms

Primary enforcer: Indiana Attorney General

Available remedies:

• Civil penalties: $5,000 first violation
• Civil penalties: $15,000 for each repeat violation
• Injunctions to prevent future violations
• Recovery of investigation costs
• Recovery of attorney fees and legal expenses

Penalty destination: All penalties deposited into Indiana state general fund

Investigation triggers: Complaints from residents, law enforcement observations, proactive Attorney General monitoring

Existing Contract Grandfather Clause

Protection period: Contracts signed before May 6, 2025 remain valid through 2035

Example: Green Stem (Niles, Michigan dispensary) operates three billboards in Indiana under pre-existing contracts. These remain legal through 2035, but Green Stem cannot purchase new advertising in Indiana after May 2025.

Impact on border dispensaries:

• Michigan: ~40-50 billboards grandfathered (northern Indiana corridor)
• Illinois: ~20-30 billboards grandfathered (western Indiana corridor)
• Ohio: ~10-15 billboards grandfathered (eastern Indiana corridor)

New advertising: Completely prohibited regardless of medium or target audience

What the Ban Does NOT Prohibit

Consumer activity (still legal):

• Indiana residents traveling to Michigan, Illinois, or Ohio
• Word-of-mouth recommendations from friends and family
• Social media posts by consumers (non-commercial speech)
• Online research: Weedmaps, Leafly, dispensary websites, Google searches
• GPS searches for "dispensary near me"
• Reading out-of-state newspapers/websites with marijuana advertising

Related products (still legal):

• Hemp-derived Delta-8/9/10 products (legal in Indiana under 2018 Farm Bill)
• CBD products (legal with <0.3% THC)
• Cannabis-adjacent products (pipes, vaporizers, growing equipment)

The absurdity: Indiana residents can legally purchase intoxicating Delta-9 THC gummies at gas stations (marketed with bright packaging, flavor varieties, and prominent shelf placement), but Michigan dispensaries selling traditional cannabis—which contains the identical psychoactive compound—face $15,000 fines for any advertising in Indiana.

The CBDT Framework: Market Entry Knowledge Deficit

The Consumer-Driven Black Market Displacement (CBDT) Framework identifies five policy levers determining legal market capture. HB 1390 doesn't affect Indiana's current market (no legal market exists), but creates long-term damage through Market Entry Knowledge Deficit (MEKD).

Market Entry Knowledge Deficit (MEKD): The cumulative loss of consumer understanding about legal cannabis products, safety standards, and market norms during the period when advertising is banned while prohibition persists.

The Consumer Education Gap

In successful legal markets, advertising serves as the primary consumer education tool. Consider what happened in states that allowed advertising before and during legalization:

Colorado (2012-2014 pre/post legalization):

• Dispensaries educated consumers through billboards, radio, print ads
• Consumers learned about product types, dosing, testing standards
• When legalization occurred, consumers entered with baseline knowledge
• Result: 73-78% legal market share by Year 4

Michigan (2017-2020 pre/post legalization):

• Medical program (2017-2019) created consumer familiarity
• Dispensaries advertised medical benefits, product safety, testing protocols
• Adult-use launch (2020) benefited from educated consumer base
• Result: 85% legal market share by Year 4 (best in Midwest)

Nevada (2014-2017 pre/post legalization):

• Las Vegas dispensaries advertised to tourists and locals
• Consumers understood dispensary experience before legalization
• Adult-use launch (2017) achieved immediate high legal capture
• Result: 82-88% legal market share by Year 3

Indiana's Unique Problem

Timeline: HB 1390 bans advertising 2025-2040+ (15+ years minimum)

When Indiana eventually legalizes, consumers will enter legal market with:

Zero product knowledge:

• Don't understand difference between flower, concentrates, edibles, topicals
• Don't know appropriate dosing (5mg edible vs. 50mg vs. 100mg)
• Can't distinguish indica, sativa, hybrid effects
• Unfamiliar with terpene profiles, cannabinoid ratios, potency variation

Zero safety understanding:

• Don't understand testing standards (pesticides, heavy metals, potency verification)
• Can't identify legitimate vs. counterfeit products
• Unaware of child-resistant packaging requirements
• Don't understand contamination risks in illicit products

Zero market literacy:

• Don't know what to expect at licensed dispensaries
• Unfamiliar with purchase limits, ID requirements, tracking systems
• Can't evaluate fair pricing (no reference point)
• Unaware of product return policies, quality guarantees

Entrenched illicit habits:

• 15 years of successful black market purchases
• Established dealer relationships built on trust
• "This has worked perfectly for 15 years—why change?"
• Deep skepticism of government-regulated products

The Mechanism: Why Knowledge Deficit Reduces Legal Market Share

Successful legal markets convert illicit consumers through three mechanisms:

1. Price competitiveness: Legal products priced within 15-25% of illicit
2. Safety/quality advantage: Testing eliminates contamination concerns
3. Convenience advantage: Retail locations easier than dealer coordination

Indiana's handicap: When consumers lack knowledge of mechanism #2 and #3, only price matters. If legal cannabis costs more than illicit (even by 10-15%), uninformed consumers revert to familiar dealers.

Example scenario (2040, Indiana legalization day):

Informed consumer (Michigan resident): "I know legal edibles are lab-tested for potency. I've had black market edibles that were 10mg labeled as 50mg. I'll pay 20% more for consistent dosing."

Uninformed consumer (Indiana resident): "My dealer's edibles work fine and cost $20. Dispensary edibles cost $25. Why would I switch?"

This scenario repeats millions of times across product categories, dosing situations, and consumer segments—each uninformed decision reducing legal market capture.

CBDT Impact Calculation

Standard Indiana projection (WITHOUT HB 1390):

• Assuming legalization with optimized policy + federal reform by 2032-2035
• Price competitiveness: 0.82 (15-18% tax, no 280E) × 4 = 3.28
• Access density: 0.80 (110-140 stores + delivery) × 1 = 0.80
• Safety/quality: 0.85 (strong testing) × 1.2 = 1.02
• Convenience: 0.75 (SAFE Banking) × 1 = 0.75
• Enforcement: 0.70 (strong interdiction) × 0.6 = 0.42
• Fragmentation penalty: -0.15 × -0.8 = -0.12
• Net Score: 6.15 → Predicted 78-85% legal market share

WITH HB 1390 (Market Entry Knowledge Deficit penalty):

• All variables above remain constant
• Add MEKD penalty: -0.18 to -0.22 × 1 = -0.18 to -0.22
• New Net Score: 5.93 to 5.97 → Predicted 70-73% legal market share

HB 1390 impact: -8 to -12 percentage points in legal market share

Why This Matters: The Revenue Translation

Scenario A: Indiana without HB 1390 (78-85% legal share):

• Annual legal sales: $820-980M
• State tax revenue (18% rate): $148-176M annually

Scenario B: Indiana with HB 1390 (70-73% legal share):

• Annual legal sales: $700-780M
• State tax revenue (18% rate): $126-140M annually

Annual loss from HB 1390:

• Legal sales: -$120-200M
• Tax revenue: -$22-36M
• Jobs: -1,500-3,000

Over 10 years post-legalization, this compounds to $220-360M in lost tax revenue.

The Michigan vs. Illinois Lesson

Michigan (advertising allowed):

• Consumer education: 2019-2025 (6+ years of dispensary advertising)
• Consumers learned about testing, product types, safety advantages
• Legal market share: 85% by Year 4

Illinois (advertising allowed):

• Consumer education: Similar timeline and advertising access as Michigan
• Problem: Catastrophically high taxes (25-40%), not consumer knowledge
• Legal market share: 55-60% (Illinois failed on price, not education)

Indiana (with HB 1390):

• Consumer education: ZERO (2025-2040+, 15 years of advertising ban)
• Even with optimal pricing (15-18% tax), knowledge deficit reduces capture
• Predicted legal market share: 70-73% (underperforms Michigan by 12-15 points)

The lesson: Advertising didn't cause Illinois's failure—price did. But advertising prevented Illinois from falling below 50%. Indiana will start with Michigan's price advantage but Illinois's knowledge gap, landing in the middle.

The Economic Impact

Annual revenue loss (when legalization occurs):

10-year cumulative loss (assuming legalization in 2035):

• Legal sales: -$1.2-2.0 billion
• Tax revenue: -$220-360 million
• Jobs: -1,500-3,000 sustained positions

What $300 million could fund:

• Indiana State Police for 18 months (entire agency budget)
• 300 miles of rural broadband infrastructure
• 30,000 teacher salaries for one year

The irony: Indiana is sacrificing hundreds of millions in future tax revenue to ban advertisements for products already legal 30 miles away that Hoosiers are already purchasing ($286M annually).

Political Analysis

The Last-Minute Amendment Strategy

Three standalone advertising ban bills died in committee: SB 166 (Sen. Deery), HB 1026 (Rep. King - buffer zone approach), HB 1327 (Rep. Wesco).

Timeline:

• Early April 2025: Standalone bills dead, session ending April 29
• April 15-20: Advertising ban language added to HB 1390 (BMV procedures bill)
• April 23: House passes (81-9), April 24: Senate passes (31-19)
• May 6: Governor Braun signs

The strategy: Attach controversial provision to necessary bill in final days when scrutiny is reduced. Classic legislative maneuver.

Governor Braun's stance: Previously stated he's "amenable to hearing a case for medical marijuana" but skeptical of recreational. Signing HB 1390 costs nothing with conservative base and creates appearance of action on cannabis.

Winners and Losers

Winners

1. Illicit market dealers (biggest winners):

• Zero legal competition for 10-15+ years minimum
• Established customer relationships become harder to displace
• When Indiana legalizes, dealers retain customers through price advantage + familiarity
• HB 1390 ensures consumers remain ignorant of legal product advantages
• Estimated benefit: Retain 8-12% more market share than without HB 1390

2. Indiana Republican leadership:

• Symbolic victory: "We stopped marijuana advertising"
• No political cost with conservative base
• Delays legalization conversation: "We just passed comprehensive marijuana legislation"
• Media coverage positions them as "tough on drugs"
• Avoids difficult conversations about taxation, regulation, licensing

3. Social conservatives:

• Reduced normalization pressure in border communities
• Less visible cannabis advertising near schools and parks
• Cultural victory even if ineffective at reducing consumption
• Moral high ground: "We protected children from marijuana advertising"

4. Michigan/Illinois/Ohio dispensaries (paradoxical long-term winners):

• Short-term: Cannot advertise to Indiana residents (minor inconvenience)
• Long-term: HB 1390 prevents Indiana consumer education about legal cannabis
• When Indiana legalizes, northern/western/eastern Indiana residents remain loyal to established border dispensaries
• Michigan brands (Green Stem, Pleasantrees, Herbology) already trusted by Indiana consumers
• Cross-border shopping continues post-Indiana legalization due to brand loyalty

5. Indiana law enforcement:

• Maintains prohibition status quo
• Continued arrest authority for marijuana possession
• Budget justification for cannabis enforcement operations
• No need to retrain officers or revise protocols

Losers

1. Future Indiana legal cannabis businesses (biggest losers):

• Market entry handicap: Launch day consumers have zero product knowledge
• 10-15% lower market share than optimal (Michigan comparison)
• Reduced revenue, profitability, and sustainability
• Harder to secure financing when market projections show 70-73% vs. 85% capture
• Longer path to profitability due to smaller market share

2. Future Indiana state budget:

• Annual loss: $22-36M in tax revenue (post-legalization)
• 10-year cumulative loss: $220-360M
• Opportunity cost compounds annually
• Education funding, infrastructure spending, public services all receive less funding
• Other states (Michigan, Illinois, Ohio) continue collecting taxes on Indiana resident purchases

3. Indiana residents (present and future):

• Present: Continue spending $286M+ annually in border states (Indiana gets zero revenue)
• Future: Enter legal market unprepared, skeptical, prone to black market reversion
• Safety: More likely to continue buying untested illicit products due to ignorance
• Economic: Miss out on job creation (1,500-3,000 fewer jobs than optimal)
• Health: Lack understanding of appropriate dosing, product selection, safety protocols

4. Border-state dispensaries (short-term losers):

• Cannot advertise billboards, radio, or digital ads in Indiana
• Existing contracts grandfathered until 2035, but cannot purchase new advertising
• Must rely on word-of-mouth, GPS searches, and organic traffic
• Estimated 5-10% reduction in new customer acquisition from Indiana
• Long-term, this is offset by brand loyalty benefits when Indiana eventually legalizes

5. Media companies:

• Billboard operators lose revenue (estimated $2-4M annually from border dispensaries)
• Radio stations near borders lose advertising dollars
• Digital advertising platforms lose geo-targeted campaign revenue
• Print publications lose classified and display advertising

6. Indiana municipalities:

• When Indiana legalizes, local option taxes will generate less revenue
• Reduced sales tax revenue from lower legal market capture
• Fewer licensing fees from businesses (smaller market means fewer businesses)
• Less economic activity in downtowns and commercial districts

Conclusion: The Verdict on HB 1390

Should Indiana have passed HB 1390? NO.

What HB 1390 actually accomplishes:

• Bans marijuana advertising within Indiana borders
• Symbolic victory for prohibition supporters
• Delays legalization conversation

What HB 1390 does NOT accomplish:

• Does NOT stop Indiana residents from buying in Michigan/Illinois/Ohio ($286M annually continues)
• Does NOT reduce cannabis consumption
• Does NOT protect tax base (still loses $55-85M annually to neighbors)
• Does NOT generate revenue

What HB 1390 DOES damage:

• Sabotages future legal market: 8-12 percentage point penalty vs. optimal
• Costs $22-36M annually in future tax revenue (post-legalization)
• Costs $220-360M over 10 years cumulative
• Advantages Michigan competitors permanently

The honest assessment: HB 1390 is political theater that costs Indiana nothing today but will cost hundreds of millions when legalization inevitably occurs (demographic inevitability by 2035).

When Indiana eventually legalizes, policymakers will ask: "Why is our legal market underperforming despite optimal policy?" The answer will be found in May 2025, when Governor Braun signed HB 1390 and guaranteed that Hoosiers would enter the legal market after 15 years of enforced ignorance about legal cannabis.

About This Analysis

This prediction uses the Consumer-Driven Black Market Displacement (CBDT) Framework, adapted to assess long-term market entry impacts of advertising restrictions in prohibition states.

Framework methodology: The Black Market Death Equation

Indiana state analysis: Indiana Cannabis Market Analysis

Related analyses: Connecticut HB 7181, Georgia SB 220

Sources: Indiana General Assembly HB 1390

Analysis by The Silent Majority 420 | November 2025

Analysis licensed CC BY 4.0