The U.S. cannabis industry is estimated of producing $10.2 billion in the next five years. This is not entirely surprising as the road to legalization has been paved with Colorado and Washington having legalized recreational use of cannabis, while many other states including California have legalized it for medicinal use and following 2016’s Proposition 64 legal for recreational use. Meanwhile, the Federal government has not yet changed the classification of cannabis as a Schedule 1 substance under the Controlled Substance Act of 1970. The use, possession, sale, cultivation, and transportation of cannabis is still illegal under Federal law.
In the past few years, startups in cannabis industry have been hitting their stride, and even Wall Street has gotten into the game with several publicly traded companies on the scene. And while the direct industry participants such as dispensaries, processors, growers, and the sale of cannabis itself is at the core of the industry, the ancillary goods and services pose as its lucrative equal. Just as with any business, intellectual property protection of the goods and services is critical.
Trademark Protection for Marijuana
Federal US trademarks are registered with the United States Patent and Trademark (USPTO), which typically affords the strongest level of protection and enforcement in the US. Not too long ago for a short period of time, applicants were able to receive issuance of a trademark from the USPTO, of their brand names for strains of cannabis and related goods and services. However, that window has not only closed, but the trademarks that were previously registered were retroactively removed from issuance following the enactment of US federal laws prohibiting the use of marijuana. At the current time, attempts to apply for trademarks with the USPTO for cannabis products are denied, mainly in view of the Controlled Substance Act (CSA), 21 U.S.C. ” 810-971. The typical trademark office action rejection in view of the CSA usually includes language like this:
The CSA prohibits, among other things, manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations. 21 U.S.C. §§812, 841(a)(1), 844(a); see also 21 U.S.C. §802(16) (defining “[marijuana]”). The CSA also makes it unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under [the CSA].” 21 U.S.C. §863.
Generally, there are some goods and services that fall outside the CSA, such as trademarks for seminars or conferences about marijuana as long as it does not touch upon the distribution or dissemination of how to acquire marijuana. While the CSA poses a hurdle for most marijuana related trademarks, as stated above it may not in many circumstances. In the current competitive landscape to obtain IP rights in the cannabis business, obtaining a federal trademark registration is beyond significant, so advice from experienced trademark counsel is worth its weight in gold to be deemed as a serious player in the industry.
Even if the opportunity for a federal registration is foreclosed, there may be other strategies such as the application of a trademark at the state level, while not as strong as a federal registration, still conveys advantages.
Other Forms of IP
In addition to federal or state/common law trademark protection, the US federal patent laws are available to cannabis related inventions without as much scrutiny of running afoul of federal statutes. While some of the technology in the marijuana industry may be simplistic, there are several untapped areas from technological innovation that fall under the umbrella of utility or design patent protection.