For legislators, consumers and the industry itself, the banking challenges that cannabis companies contend with are fairly well understood.
But there’s another challenge that Abigail Remore, leader of Chiesa Shahinian & Giantomasi‘s trademarks and copyrights practice, is regularly called on to help clients work through: Cannabis brands can’t get highly protective trademarks for their products.
That problem stems from the same central issue as the trouble cannabis companies have with the financial sector. Namely, it’s the products’ illegal status on the federal level. While the implications that has for banking have earned attention and proposed legislative fixes, there’s also the matter of how it conflicts with federal trademark rules.
“Whether these companies can benefit from federal trademark rights isn’t going to take the same priority as whether someone can even use a credit card to pay for the products,” Remore said. “But this is creating a market of gray market goods and counterfeit products.”
Among the benefits of having a federally registered trademark, established by the Lanham Act, is the protections that offices such as the U.S. Customs and Border Protection offer to intellectual property right owners from counterfeits. New Jersey’s version of trademark registration is much more limited in scope, Remore said.
“For the vast majority of clients — at least those outside cannabis — we almost exclusively rely on those federal laws,” she explained. “There are state registries for trademarks, but most companies don’t even bother with them. Cannabis companies, which are often savvy enough to understand they can’t get federal (trademark) registration of marijuana products, have no other choice.”
Because relying on a state trademark registry alone doesn’t do a company much good when it comes to legal prosecution of those infringing on trademarks, even most cannabis companies don’t bother, Remore admits.
Their only option is to find a loophole in what’s sometimes referred to as a “tobacco exception.” That’s when a product is presented as being intended for use with tobacco products, even if it might not be purchased just for that purpose. Remore has seen that used for rolling papers and other products, in an attempt to not flag objections from federal trademark authorities.
Remore said the alternative is waiting on action from Congress.
“And I’d like to think something will change,” she said. “Right now, we’re bound by current regulations and statutes, but we’ll be watching this closely.”
