rewrite this title and make it good for SEOProtecting cannabis brands in a post-legalization world

As the United States inches closer to potential federal cannabis reform the implications for intellectual property in the marijuana industry are becoming a hot topic.

For cannabis operators, navigating the murky waters of IP protection has long been a challenge, and federal legalization or rescheduling could bring both opportunities and new complexities.

“It’s important for brands to think about how they situate themselves for future changes in the law,” said Jabari Shaw, an attorney in the Vorys Cincinnati office who focuses on intellectual property development, protection and enforcement.

Cannabis remains a Schedule 1 substance under federal law, making it impossible to secure federal trademarks for cannabis-related products, although some companies have skirted this issue by registering their trademarks federally on apparel products.

This leaves businesses relying on state-level trademarks, which only protect their brands within individual state borders,  although some companies like Cookies has a federal trademark pending on its smokable hemp.

For companies like Sun Theory, maker of Dialed In gummies, this means trademarking their brands in every state where they operate – a time-consuming and costly process.

Sun Theory moved its headquarters in January from Denver to Austin, Texas, where co-founder and CEO Connor Oman was raised. However, the company maintains a strong presence in Colorado, including a cultivation facility and 14 licensed retail locations.

“There’s no silver bullet,” Sun Theory President Matt Melander said. “The best protection have is to trademark the brand in every state we enter and protect as much as possible through trade secrets.”

What is intellectual property?

With innovations spanning cultivation techniques, product development and branding, protecting a cannabis company’s intellectual property is complex.

From patents and trademarks to trade secrets and copyrights, each method of protection offers unique benefits and plays a role in preserving a brand’s value and ensuring sustainable growth.

Patents: Protect innovations like novel strains, cultivation techniques and manufacturing processes. Give inventors exclusive rights for a limited time, preventing others from using or selling the patented invention without permission. Cannabis products cannot be trademarked at the federal level, but they can be patented.
Trademarks: Protects symbols, words and phrases that identify a brand. Federal trademark protection is limited to lawful products and services, so cannabis brands often seek protection for ancillary products or rely on state trademark laws.
Trade secrets: Protect confidential information that gives a competitive edge, such as cultivation techniques, recipes and business strategies. Protection requires maintaining secrecy through security measures, limited access and confidentiality agreements.
Copyrights: Protects work like logos, packaging designs, digital content and written materials. Federal illegality of cannabis does not affect copyright protection, making it a good tool for safeguarding creative expression.

Each type of IP protection covers a specific aspect of a cannabis brand, and not single type can protect everything.

Federal trademarks: A game-changer?

Federal legalization could open the door to national trademark protections, a significant advantage for cannabis brands, allowing them to better protect their IP.

Corey Keller, owner of Colorado-based Bonanza Cannabis Co., highlights challenges with the current system.

“You can’t federally trademark anything cannabis related. We’ve had to start separate businesses for CBD and apparel lines just to secure federal trademarks,” he said.  

Keller’s strategy is to leverage non-cannabis products, like hemp-based goods and branded apparel, to establish federal trademarks.

“Hemp is close enough to cannabis that we believe it could hold up in court,” Keller said.

But this workaround requires creating entirely separate entities, complete with their own bank accounts, websites and operations – a costly and complex endeavor, Keller said.

Rescheduling challenges

While rescheduling cannabis could ease some restrictions, it’s not a complete remedy.

IP attorney Mary Shapiro said the U.S. Patent and Trademark Office (USPTO) has historically rejected applications that directly reference cannabis.

Even with rescheduling, the process of secreting trademarks may remain challenging.

“The lawfulness requirement still creates hurdles, and the USPTO’s ID manual lacks descriptions for cannabis and hemp products,” Shapiro said.

When Shapiro was representing Oakland, California-based dispensary operator Harborside, she determined that protecting its educational material made more sense than trying to protect the brand.

“What we focused on was what would be the benefits of having federal registration for information, advocacy and education,” Shapiro said.

“You really want registration for selling cannabis, but you can’t get that because it’s unlawful.

“But there are significant benefits that come with registering marks in connection with ancillary services.”

Beyond trademarks: Patents and trade secrets

For companies focused on innovation, patents offer another avenue for IP protection.

Shaw highlights the potential for patenting novel strains, cultivation methods and manufacturing processes.

Patenting plants is commonplace in agriculture. Once a patent is issued, nobody can legally grow anything that falls under the patent without permission from the patent holder.

“Patents are expensive, but they encourage innovation,” Shaw said. “As the industry goes global, protecting these innovations will be crucial.”

Preparing for the future

As the cannabis industry anticipates federal legalization, companies are taking proactive steps to protect their IP. This includes securing state-level trademarks, leveraging ancillary products for federal trademarks and investing in trade secret protections.

“Planning for federal legalization is like preparing for a race,” Shaw said. “You want to be ready when the starting gun goes off.”

Melander said the best way to protect a brand is to trademark it in every state it’s available.

For cannabis operators, the road to IP protection is anything but straightforward. But with careful planning and the right legal guidance, they can position themselves to thrive in a post-legalization landscape.

“It’s an inexact science, but you do the best you can to stay ahead of the situation,” Melander said.

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.