State Marijuana Laws Create New Trademark Issues for Pot Entrepreneurs

ganjagonia trademark dispute

 

As additional states choose to ease laws on marijuana use for medicinal and recreational purposes, more and more Marijuana related business owners are cropping up. Marijuana dispensaries, along with brands peddling various marijuana strains, some backed by celebrities including Snoop Dogg and Willie Nelson, are going into business in states like California, Colorado, Oregon, and Washington. But going into the Marijuana business comes with all the challenges faced by traditional businesses, as well as some unique trademark related challenges.

For starters, the federal government has not eased up on its own marijuana restrictions and does not yet grant trademark registrations in classes covering marijuana. Business owners who want to receive federal trademark rights on their brands, have to file in classes ancillary to marijuana use. Without trademark protection in their main business segment, these business owners risk having other brands infringe on their marks without federal recourse. This leaves marijuana sellers to seek trademark protection for related goods, such as rolling papers, and hope that these goods are considered related enough that they can assert their marks for infringement when competitors are using similar marks but not on the exact same product.

Additional issues come up when seeking federal registration of a trademark for marijuana related goods or services. For example, it has become common place for office actions to cite the Federal Controlled Substances Act, 21 U.S.C. §§801-971 (“the CSA”) and require that an applicant submit additional information about the goods or services described in the trademark application. The office action will say something to the effect of “The CSA prohibits, among other things, manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations. . . . The CSA also 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.” The applicant will then be required to answer two questions:

1. Will applicant’s identified services feature the sale, provision, and/or possession of marijuana, cannabis, hemp, marijuana-based, cannabis based or hemp-based preparations, or marijuana, cannabis or hemp-based extracts or derivatives, synthetic marijuana, or any other illegal controlled substances?

2. To the best of the applicant’s knowledge and belief, are the services on which the mark will be used compliant with the federal Controlled Substances Act as outlined above?

Responding to such inquiries can be very uncomfortable for young businesses in the marijuana industry. There may also be some ambiguities regarding how to answer such questions from the USPTO. There are some inherent risks when responding to such inquires. Some responses may be viewed as admissions to violations of federal law. Some responses attempting to avoid an admission to illegal conduct may instead be viewed as false or misleading and consequently open the applicant up to an invalidity defense when the application seeks to enforce its trademark registration. Anyone venturing into this market will want to seek the advice of a good trademark attorney if they plan to register any of their brand marks.

Companies providing marijuana related goods or services are also finding they have to deal with trademark threats from companies in other industries who have a big head-start on the newly developing legalized marijuana businesses. For example, Stash Tea Co. of Tigard, Oregon, which has been using the common marijuana buzz word “stash” as its brand name since it began operation in 1972. Stash recently sent cease-and-desist letters to two marijuana based companies calling themselves Stash, Stash Pot Shop of Seattle and Stash Cannabis Co. of Beaverton, Oregon respectively.

Stash Tea Co’s trademark attorney cited several trademark registrations covering “stash” in categories including tea and dried plants. The letters indicated that the marijuana companies’ use of Stash was confusing to consumers and depleted the brand equity and goodwill that the tea company had built up over decades of use. As a fledgling business and not wanting to take on the risk of litigation, Stash Pot Shop quickly conceded and has changed its name to Lux Pot Shop. Stash Cannabis Co. on the other hand, is fighting the infringement claim, stating that the marks are not confusingly similar because the products are in different markets. The infringement suit is set to go to trial January of 2018.

It’s a brave new world with the easing of marijuana laws and with it comes business opportunities and pitfalls for entrepreneurs. Branding is of critical business importance and whether you are an upstart company or well established, trademark issues can pop up in all sorts of ways. A good trademark attorney may be crucial to meeting your long term business goals without hiccups.