By Eric D. Morton
With the legalization of recreational marijuana, companies that sell cannabis or provide services related to cannabis companies, are organizing and getting their licenses from the State of California. These companies are also trying to protect their trademark rights by registering them. However, there are some unique challenges in obtaining trademark registrations for cannabis companies.
Cannabis is a Class 1 controlled substance under the Federal Controlled Substances Act. Since the use, possession, and distribution of cannabis is illegal under Federal law, the U.S. Patent and Trademark Office (“USPTO”) will not issue registrations for trademarks that are used to sell cannabis. The USPTO will issue trademarks to companies that provide ancillary services or goods to cannabis companies, such as companies that sell hydroponic supplies.
The State of California also registers trademarks. Many business owners are unaware that individual states register trademarks. State registrations are useful in protecting trademark rights even if those registrations are only enforceable in that state of registration. As of January 1, 2018, companies can apply to register cannabis-related trademarks with the California Secretary of State’s Office.
There are two requirements for California registration.
- The trademark mark is lawfully in use in commerce within California; and
- The description of goods or services for which the trademark is used matches one of the classifications of goods and services adopted by the USPTO.
The first requirement — that a business must be making lawful use of the mark in California state commerce at the time of the application – carries with it the requirement that the company must be licensed by the state and hence using the mark legally. As many people are discovering, the licensing process is expensive and time consuming. Many companies and individuals are operating without the necessary licensing or are operating beyond the limits of their licenses. If an illegally operating company files an application for trademark registration, the application can be denied. If the company obtains a registration, it will be unenforceable and can be cancelled. Another point to remember is that, in California, the trademark must be in actual use. It must have sold goods or services at the time of an application. There is no intent to use application.
The second requirement is a technicality of trademark registration law. The USPTO has an Identification of Goods and Services Manual which lists pre-approved descriptions of goods (e.g. “clothing, namely, hats and footwear”). The California Secretary of State will only accept applications with descriptions that fit within existing classification codes from the USPTO’s Identification of Goods and Services Manual. This can be a conundrum for cannabis trademarks in California because there are no descriptions for cannabis products in the manual. Finding a description that fits for cannabis related company can be challenging, but more and more companies are filing state trademark registrations so you can determine what codes are in use by similar or competing products.
For companies who can’t file a Federal registration, I always recommend that they explore a state registration. State registrations appear on standard trademark searches which most companies conduct before launching new brands. Of course, the best protection of a trademark is to use the trademark consistently and continuously.
Eric D. Morton is the principal attorney of Clear Sky Law. If you have any questions about trademarks or business related legal issues, he can be reached at 760-722-6582, 510-556-0367, or emorton@clearskylaw.com.