On July 1, 2021, when the State of Virginia’s and the State of Connecticut’s cannabis legalization took effect , 18 states across the nation had legalized adult-use cannabis. With positive momentum on states legalizing recreational cannabis, as well as clear and repeated assertions from Senate Majority Leader Chuck Schumer (D-NY), it’s not farfetched to assume that nationwide legalization is on the horizon. Cannabis businesses in states with legal regimes have spent thousands of dollars and countless hours developing distinctive visual looks, crafting the perfect logo, and devising ways to make their product packaging stand out from their competitors. In the wake of legalization, many copycats, especially ones from across state borders, might emerge and try to profit off of the intellectual property and branding of established cannabis brands from legal states like California and Oregon.

What Is a Trademark?

A trademark is a brand name. A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.

Federal Trademark Registrations

Federal trademark registrations serve as an important tool for enforcing ownership rights in a brand. The United States Patent and Trademark Office (USPTO) is the federal agency for registering trademarks. Registering a trademark with the United States Patent and Trademark Office (USPTO) expands enforceability across the country and provides nationwide priority over others using similar names or designs.

Restrictions of Trademarks for Cannabis Businesses

The USPTO only registers trademarks associated with goods or services in “lawful” commerce, which means that the goods or services sold under the brand must comply with federal law. TMEP §907. Unfortunately for cannabis businesses, cannabis, and its psychoactive component, THC, remain classified as Schedule I controlled substances under the federal Controlled Substances Act (CSA). As such, the USPTO refuses to register trademarks that identify goods or services related to manufacturing, distributing, dispensing and possessing cannabis and cannabis-based preparations.  In other words, any and all plant-touching operations are ineligible for federal trademarks. This deprives licensed and tax-paying cannabis businesses in states with legal adult-use cannabis regimes of the ability to fully protect their trademark rights at the federal level.

An Interim Solution for Cannabis Businesses: Protecting Non-Plant Touching Trademarks

While plant-touching cannabis-related activities are ineligible for federal trademark protection, cannabis businesses can protect certain non-plant touching activities which ARE federally legal and consequently eligible for federal trademark registration. Examples of legal activities that cannabis businesses can secure federal trademarks for include:

• Clothing and other apparel, including t-shirts and hats featuring a cannabis-related trademark. (This is perhaps the most common route taken by state-legal cannabis businesses to secure a federal trademark registration.)
• Smoker’s articles, such as cigarette lighters and ashtrays, that are not specifically intended for use with cannabis products.
• Educational programs in the fields of cannabis, including for health benefits, state laws, etc.
• Providing an internet news portal or blog that features information about cannabis or cannabis products.
• Entertainment services, namely, providing podcasts featuring medical and industry experts in the field of cannabis and medical marijuana.

Why Cannabis Businesses Should Secure Federal Trademarks

Securing federal trademark registrations for marks identifying non-plant touching legal cannabis-related activities, including those listed previously, may arguably protect the brand for future product and service expansion once cannabis is federally decriminalized or legalized. Trademark law recognizes a doctrine known as the “zone of natural expansion,” which provides some trademark protection in areas one might expect a trademark owner’s business to expand into. Securing a federal trademark for a non-plant touching part of the business may help cannabis businesses avoid losing valuable trademark rights to third parties in the wake of federal legalization. Many within the cannabis industry have already started establishing trademark rights at a federal level, in anticipation of “expanding” their national brands into cannabis following a change in federal law.

Are State Trademarks Enough?

Opting for a state trademark registration in states like California that have legalized cannabis is often easier and less costly than obtaining a federal trademark registration. However, unlike a federal trademark registration which would protect a mark nationwide, a California state trademark would only protect the mark only in the registered state (California).

In Conclusion

The owner of a California trademark registration could not use their state trademark registration as the basis for establishing priority or asserting infringement against the user of a competing mark in a different state. It is essential for cannabis businesses to protect their intellectual property to the fullest extent permissible under current law. This need to secure the interests of your business is made more urgent with the (long-awaited) possibility of federal legalization. Originally published July 5, 2021 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.