United States: Branding Your Bud: Why Trademarks Are Tricky For Marijuana Businesses

Brand loyalty builds businesses. That's why most businesses need successful brands, and, ideally, brands backed by a federal trademark registration. But because of the federal laws affecting marijuana and related products, marijuana growers and distributers don't have access to the same avenues of brand protection. So although Dr Pepper/7 Up, Inc., can trademark "Hawaiian Punch," a Colorado cannabis grower can't trademark "Maui Waui."

Still, marijuana companies do have some options for federal trademark protection for certain items and services. State trademark protection is another option. In this post, we'll give background on trademark law and how it applies to businesses in the cannabis industry.

Trademark basics

Trademarks identify the source of goods and services and include not only words and logos, but also slogans, symbols, colors, sounds and product designs. For example, KIVA is a trademark for medical cannabis chocolate bars and SELL SMARTER is a slogan for financial services for marijuana retailers. You generally can obtain unregistered trademark rights by simply using the trademarks. However, the rights are limited to the geographic area where the marks have been used. As a result, a company that uses a trademark only in Washington state will only acquire rights in that state, and can't enforce its rights in other states.

Marijuana companies that understand the need to differentiate their products and services from those of their competitors need to know what they can do to enhance and protect their brands. This is where the registration process comes into play. A federal trademark registration provides significant benefits, including nationwide protection and a presumption as to the ownership of the trademark, but might be difficult to obtain for a variety of reasons; a state registration doesn't provide the same benefits, but is easier to obtain.

What qualifies for federal trademark protection?

Although medical marijuana may be legal in certain states, licensed marijuana sellers are facing a serious brand protection problem with federal trademark registrations.

The use of a trademark in commerce must be lawful to form the basis of a federal trademark registration. Where it appears that the mark is used in connection with a product/service that is illegal under federal law, the Trademark Office might refuse registration of that mark on grounds that it is not in lawful use in commerce. Generally, the Trademark Office presumes that use of a trademark in commerce is lawful unless evidence shows a violation of law, such as the sale or transportation of a controlled substance.

As it currently stands, the Controlled Substances Act (CSA) specifically prohibits manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations. In addition, the CSA 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]."

Therefore, you cannot obtain a federal trademark for those types of goods/services. For example, you cannot obtain federal trademark registration for a mark in connection with pipes for marijuana, marijuana bongs, or a marijuana strain name.

Federal registration is possible, however, for other goods and services that are not illegal under the CSA. For example, a medical marijuana business might be able to register its strain name for cookies or other food items not infused with cannabis, promotional products such as shirts, or educational services or publications. Most cannabis-related applications that the U.S. Trademark Office has approved so far cover dissemination of information about marijuana. In this way, businesses are able to gain protection for their trademarks for marijuana-related uses through legal goods/services.

Below are some real-life examples from U.S. Trademark Office records:

Accepted: MEDICAL JANE (providing a website featuring information, news and commentary in the field of health and wellness relating to medical marijuana); DR. GANJA (medical marijuana medical referral services); THE MARIJUANA COMPANY (clothing, namely, shirts, t-shirts, sweatshirts, tank tops, bandanas, pants, headwear, and footwear); THE BLUNT-HEADS BLUNT (bumper stickers)

Rejected: MAUI WAUI (medical marijuana); PRIMORA (medical marijuana)

State trademark registrations

Although the U.S. Trademark Office is restricted by the Schedule I status of cannabis products, there are many states where medical marijuana is legal — which means that medical marijuana companies are less likely to face scrutiny when seeking a state trademark registration, and are less likely to face restrictions on the goods/services covered in such registration.

State trademark registrations are generally inexpensive and easier to get than federal trademark registrations, but do not provide the same degree of protection as a federal trademark registration. That's because each state trademark registration protects the trademark only in that particular state. Thus, you must obtain multiple state trademark registrations to protect your trademark in multiple states.

Here are some issues to consider when selecting and trying to protect a brand:

  • Is your trademark distinctive, descriptive or generic? Distinctive, unique trademarks generally receive broader protection than marks that describe the relevant goods/services. Descriptive trademarks are not automatically protectable — instead, they are only protectable after they have been used extensively and consumers recognize them as a brand. Generic names are never protectable.
  • Are there any conflicting trademarks? In other words, could use of your mark confuse consumers as to whether your product/service is somehow related to another party, or negatively affect another's brand? Trademark searches can help determine whether your mark will infringe another party's rights. Different types of searches are available, but comprehensive searches will generally identify potentially conflicting marks that are registered at the federal or state level, and will even identify unregistered marks.
  • Is the mark used in connection with any goods/services that are lawful under federal law? The U.S. Trademark Office won't permit federal registration of a mark in connection with products and services that are illegal under federal law, but might permit registration of your mark for other lawful goods/services.
  • Would it be worthwhile to seek state registration? In states where medical marijuana is legal, it might be possible to obtain a state registration — even for goods for which the U.S. Trademark Office is likely to refuse registration.
  • Is the mark used in a way that would support a claim that you have acquired protectable rights, even if it isn't federally registered? For example, is the mark used on or in connection with products — e.g., on the packaging, tags, labels or the like?

Thompson Coburn has attorneys that can help you and your cannabis company navigate these issues, as well as the other challenges such companies face, from real estate agreements, FDA labeling compliance and funding.

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.

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