Cannabis and Trademarks

With more states looking to legalize recreational use of marijuana, more and more individuals are looking to jump into this lucrative industry. According to Fortune.com, legal sales of marijuana are expected to top $33 billion by the end of 2022 according to a study by MJBiz. That is a 32% increase over 2021’s total of $25 billion, and by 2026, annual sales are estimated to exceed $52 billion. Insane, right?! On top of that, states that have legalized marijuana for adult use collectively generated more than $3.7 billion in tax revenue from recreational cannabis sales in 2021 according to a report from the Marijuana Policy Project.

So now to the meat and potatoes, can one even legally register a trademark in connection with a cannabis/marijuana? Technically, the answer is yes. However, there are very strict rules regarding this topic. IN 2019, the USPTO issued guidance that stressed that the use of a trademark must be “lawful” under federal law. Under that guidance, the USPTO found that marks for marijuana violate federal law, and therefore, cannot be federally registered. On the other hand, they determined that marks for hemp-derived CBD products containing no more than .03% THC are lawful under the 2018 Farm Bill. The Bill removed hemp and derivatives of cannabis with extremely low concentrations of THC (delta-9-tetrahydrocannabinol) from the definition of marijuana in the Controlled Substances Act (CSA).

So with all of this in mind, I bet you are wondering how cannabis businesses in states like California are protecting their brands…well lets talk about it. These brands have registered for a state registered trademark which is issued by the California (or other state) Secretary of State. In California, the mark must be lawfully in use in commerce, meaning that the cannabis-related goods or services associated with the mark are authorized under California law, applicants must have all local and state licenses required to conduct cannabis related activities in California prior to applying for the trademark, and their labeling and packaging must be in compliance with the requirements for cannabis products.

For Federal USPTO registration, the applications have to be for non-plant-touching businesses and the products or services cannot involve the CSA, i.e. products such as apparel, lighters, ashtrays, rolling papers, vaporizers, and websites.

So while a federal registration is what we want to strive for as it grants mark owners the highest level of protection, until cannabis is 100% federally regulated and the USPTO updates its guidelines, the state registration is the way to go for protecting your cannabis brand.

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