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How do the laws effect cannabis trademarks

The Great State Divide—Cannabidiol Restrictions to Cannabis Trademarks

Zarley Law \ November 20, 2017

While the use, possession, sale, cultivation and transportation of cannabis, a Schedule 1 substances, is illegal under federal law, the government has made clear that if a state passes a law to decriminalize cannabis for recreational or medical use, it can do so, as long as a regulatory system is in place. Navigating between state and federal laws regulating the growth, usage, and sale of marijuana is a difficult task as it is, but before the state versus federal regulatory analysis can even begin, practitioners must first consider the wide variation occurring in state legislatures.

Currently, eight states provide a broad allowance of marijuana including legalization of both recreational and medicinal.[1] Twenty nine states, including those that allow recreational usage, the District of Columbia, Puerto Rico, and Guam, have broadly legalized medical marijuana.[2] Almost all of the states allowing marijuana in some form do have limitations on the amount to be possessed, registration, transportation of, types–including whether psychoactive or non-psychoactive, uses and cultivation. Most narrowly, in three states, Kansas, Idaho, South Dakota and two inhabited territories, marijuana possession and sales for any use are illegal and prohibited entirely. [3]

Let’s take a look at some recent events happening in two very distinct states.

Recently, the Iowa legislature recognized that while it is advantageous to allow immediate access to cannabis oil, before April 2017, there was no way for Iowans to get access to CBD (smoking marijuana is still prohibited). The Iowa GOP sought to change this circumstance by adding provisions to the law calling for in-state production system for cannabis oil that would also allow partnerships between other states and Iowa in order to bring out-of-state distributors into Iowa.[4] Now, however, the Iowa Attorney General’s office advised the Iowa Department of Public Health that it should not implement this portion of the law until the federal government “provides further guidance regarding state medical marijuana programs.”[5] The advisement has been heavily criticized by many people in need of medicinal marijuana within the state, and by the National Organization for the Reform of Marijuana Laws, or NORML. The pro-marijuana group reasons that the requirements for in state or multi state licensing schemes simply overcomplicates a simply need for Iowans. Thankfully, the law does still provide for two cannabis oil manufacturers in Iowa and up to five dispensaries to sell it in state–i.e., the oil could be supplied in Iowa by the end of 2018. The topic still remains heavily debated in the Iowa legislature.

In contrast, California was the first stated in the United States to legalize medical marijuana in 1996. As of November 8, 2016, California legalized the sale and distribution of cannabis in both a dry and concentrated form for adults up to one ounce of cannabis for recreational use and adults are also allowed to grow up to six live plants individually, or more commercially with a license. As of February, the state’s projected legal marijuana business is in excess of $18 billion dollars. With such substantial monetary value, California is actively taking federal regulation on all fronts of protection of their business into consideration. Until recently, it has been near impossible to receive a trademark on any cannabis product due to the USPTO’s restriction on trademarking only uses that would constitute “lawful use in commerce.”

For example, the brand “Hi”, under it’s parent company, Cannabis Sativa Inc., has been unsuccessful in trademarking their massage oil and Hi Releaf pain-relief balm. However, they may be able to find success by trademarking goods other than the illegal substance itself, such as hats, t-shirts, and other apparel. This is not ideal, however, because while other companies will be barred from using the brand on similar products, Cannabis Sativa Inc., might not be able to stop rivals from setting up Hi-brand marijuana shops or from selling knockoff Hi-brand products. Worse, in order to maintain the limited trademark that Cannabis Sativa Inc. may acquire, Hi-brand will have to keep using the products listed for the trademark–even if those products are not successful or profitable.

Another useful strategy that many other cannabis-related businesses than adopted is applying for trademarks relating to rolling papers for by providing cannabis information that will be enough of a hint that a company has laid claim to a cannabis-related trademark. As such, practitioners must craft applications wisely and advise their clients to include and maintain their particular trademark.

In addition to trademark, another alternative to solve this inconsistency with “lawful use” requirements is to seek a patent. Because there is no lawful use requirement for patents, it appears unlikely that the PTO would refuse to grant such a plant patent simply because growing cannabis is till illegal under federal law.

California’s lawmakers are taking a third route by currently proposing an amendment to California’s trademark laws that will aim to fill the gap between California’s pioneer status in the legalization of marijuana and the ability to trademark brands and businesses based on legal marijuana products. If adopted, the amendment would allow California state trademark registrations for cannabis products as of January 1, 2018. Washington, Oregon and Colorado have already allowing for registration of cannabis related marks, recognizing that federal trademark law does not preempt state common law.

AS of now, businesses trying to protect trademarks of cannabis and cannabis products really only have the option of trademark protection at common law, or through state registrations. While the fate of cannabis use in various forms is uncertain under the current federal regime, what is known is that in order to properly advise a cannabis business owner and entrepreneur, all practitioners must evaluate their client’s needs against the wide spectrum of state regulations. Perhaps as more sates codify trademark protections and classifications like Washington, Oregon and Colorado have done, national law will follow.

[1] Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington

[2] Montana, North Dakota, Minnesota, Arizona, New Mexico, Hawaii, Michigan, Illinois, Arkansas, Louisiana, Florida, Ohio, Pennsylvania, New York, Vermont, New Hampshire, Connecticut, Rhode Island, New Jersey, Delaware, Maryland

[3] Kansas, Idaho, South Dakota

[4] Barbra Rodriguez, AP, September 10, 2017

[5] Geoff Greenwood, spokesman for the Attorney General’s Office stated in an email.

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