While the cannabis industry is rapidly growing, some estimates project sales to be upwards of $25 billion by 2035. Although, 33 states and the District of Columbia has legalized medical and recreational marijuana, marijuana is still considered a Schedule I drug under the Federal Controlled Substances Act (CSA). The potential of this business, has compelled cannabis related business owners to seek trademark protection, but prohibition of marijuana by the CSA has created hurdles for many trademark applicants.
In addition to creating confusion for consumers who legally purchase and use marijuana according to the laws of their state, the rights of business owners are severely restricted by the CSA’s impact on protecting their intellectual property rights. Business owners seeking to obtain a trademark in connection with goods containing marijuana or marijuana derivatives have been barred from doing so, for failure to comply with the CSA.
Under the CSA, the common denominator amongst drugs classified as Schedule I are that, the federal government recognizes such items as “not currently accepted as medical use and… has a high potential for abuse.” Marijuana’s Schedule I classification positions cannabis alongside drugs such as heroin, lysergic acid diethylamide (LSD), 4-methylnedioxymethamphetamine (ecstasy), methaqualone, and peyote; all which impose the harshest penalties for violations under federal drug policy.
Notwithstanding the views codified by the CSA, public opinion continues to sway in favor of legalizing marijuana. This conflict has only intensified as the legislative gap between state and federal law widens.
The“Lawful Commerce” Rule
The United States Patent and Trademark Office (USPTO), is a federal agency that examines trademark applications for approval and registration. The USPTO requires trademarks to be for goods or services used in lawful commerce. This means that trademark applications must comply with all federal laws, including the CSA’s own regulations. Therefore, any trademark applications for marks and/or goods associated with cannabis products, in any form, will be rejected.
THC vs. CBD and Marijuana vs. Hemp Derived Products
Marijuana products are usually made from plants with high concentrations of the psychoactive chemical compound tetrahydrocannabinol (THC). On the other hand, Cannabidiol (CBD), is another chemical compound found in marijuana, as well as other plants, notably hemp; unlike THC, CBD does not have psychoactive properties, but may offer some of the purported health benefits of medical marijuana without the “high.” Therefore, many feel that CBD may be a safer, less controversial alternative to traditional marijuana products.
CBD is often extracted from high-CBD, low-THC hemp in the form of an oil. Hemp oils by itself or used as an ingredient within a product such as lotions, balms, and salves are legally available to consumers to experience the physical benefits of CBD. While certain forms of CBD oil extracted from imported industrial hemp are legal in the United States, the Food and Drug Administration (FDA) has disallowed the sale of any products containing CBD oil as a dietary or health supplement.
With growing support for marijuana legalization across the country, the FDA has begun conducting clinical investigations on the safety and side effects of CBD as a dietary or health supplement. Even so, the USPTO has stated that sales of CDB oils shall not constitute “lawful commerce” under the Food, Drug & Cosmetic Act until the FDA’s findings are conclusive.
On December 20, 2018 the Farm Bill was signed into law and consequently excluded “hemp” from the CSA’s definition of marijuana. In turn, this bill has taken hemp off the list of controlled substances under the CSA and has created an opportunity for companies dealing in hemp derived goods with less than a 0.3% THC concentration to become registered federally.
However, the goods must explicitly state that it contains less than 0.3% THC. Only those applications for trademarks concerning hemp goods or services filed after December 20, 2018 can be considered in relation to the Farm Bill. Additionally, the USPTO will continue to refuse applications for goods or services that involves marijuana and activities prohibited under the CSA. In 2019, the USPTO released an examination guide relating to the passage of the Farm Bill.
Controlled Substance “Paraphernalia”
In addition to marijuana and its derivatives, the sale of paraphernalia or any products meant to facilitate the consumption of marijuana or other controlled substances, also run afoul of the “lawful commerce” requirement. Paraphernalia is defined by the CSA as “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.”
The analysis of what is considered “paraphernalia” often revolves around the intent of the product’s use rather than its mechanical properties. For example, a trademark for vaporizers meant for cannabis consumption, would be prohibited while a trademark for electronic cigarettes designed for vaporizing liquids containing nicotine, would likely be allowed.
Currently, there is no way around the USPTO’s refusal to grant trademark registration for marks or goods associated with marijuana. While the future sale of products containing lawful marijuana derivatives in the form of CBD oil may be possible, pending FDA guidance, obtaining a trademark relating to the marijuana plant will still be met with the restrictions imposed by the current statement of the CSA.
However, marijuana-related businesses may be able to register some goods or services if accepted under certain classifications. For example, some companies, like TÖKR, have been able to register for trademarks under the “software” class. Despite the fact that the software provides consumers a means to compare dispensary prices and marketing services for medical and recreational marijuana dispensaries, they are not engaged in the sale of the controlled substance.
As more states are implementing laws legalizing medical and recreational marijuana and are loosening the current restrictions of the marijuana, there is an increasing urgency to amend the CSA. Additionally, as societal attitudes and enterprises seemingly embrace legal marijuana, a reevaluation of the longstanding federal drug policies of the CSA may be inevitable.
State Trademark Registration
Given the current federal laws, one possible solution for cannabis businesses may be state trademark registrations. Beginning January 1, 2018, applicants may register cannabis-related trademarks with the California Secretary of State’s office so long as they meet two basic requirements:
- The mark is lawfully used in commerce within the state of California
- The mark matches the classification of goods and services adopted by the United States
In California, the trademark filing fee per classification of goods or services is significantly less expensive than the fees required for a federal trademark. Once the state trademark is registered, it is valid for five years and renewable so long as the trademark remains in use.
Obtaining a state trademark registration will also afford the registrant with protection like that of a federal mark, but limited to within the jurisdiction of the state. This protection prevents others from using confusingly similar marks or unauthorized imitations of the trademark. It is important to realize that the state trademark registration only affords protection within the geographic confines of that state. Federally registered trademarks, on the other hand, are national in scope and protection is not limited to the geographic region of where the mark is actually used. For example, unlike a trademark recognized federally, a state trademark cannot utilize U.S. Customs and Border Protection to stop the importation of goods that infringe on the mark or are counterfeit.
Furthermore, the right to use the ® symbol is only afforded by a federal mark, and as such, is inappropriate to place this symbol next to a mark only registered in the state. However, the trademark superscript (™) remains available for state registered trademarked. Given the limited options in the current climate within the cannabis industry, a state trademark may be the best option to further embark on your legal marijuana endeavors.
Wang IP Law Group, P.C. is a Los Angeles based full service legal firm that specializes in intellectual property law (patent, trademark, copyright, and licensing agreement), business and commercial litigation, and a wide range of other legal matters including immigration, real estate, and landlord/tenant cases. Our multilingual attorneys represent clients from all over California and internationally from China, Taiwan, Hong Kong, Japan, and Israel.
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