Trademark Infringement in the Cannabis Industry

Are you working on building your cannabis brand? The cannabis industry, currently valued at over $10 Billion, is one of the fastest-growing markets in the world, with revenue expected to reach $73.6 billion by 2027.

Undeniably, in an industry of this massive size, making your brand stand out is the key to both success and staying power. A big part of that is the visual imagery and colors that you use for your brand’s logo, products, and marketing materials.

The cannabis industry operates in an uncharted gray area where many states say it is legal but the feds still say it is illegal. This has set the stage for some unusual issues where things like cannabis trademark, intellectual property rights, and trademark infringement are concerned.

With this growth, there is a significant risk of trademark infringement in the cannabis industry. Trademark infringement occurs when someone uses a trademark that is identical or similar to another’s trademark without permission. This can cause confusion among consumers and harm the reputation of the original trademark owner. In the cannabis industry, trademark infringement is a growing concern as counterfeit products are becoming more common. In this blog post, we’ll explore whether retailers are liable for selling counterfeit products in the cannabis industry.

What is trademark infringement in the cannabis industry?

Pretty much everyone interacts with trademarked merchandise on a daily basis. From the clothes we wear to the foods we eat, we recognize these products when we see them because of their iconic colors, logos, and characters.

While we encounter trademarked merchandise on a daily basis, it’s easy to forget all those attributes that make our favorite brands recognizable are also protected intellectual properties. Think about your favorite soda’s logo or product package. Consider the catchphrase you associate with your favorite restaurant. Even certain color combinations can conjure up thoughts of a certain brand, such as the iconic red and white on a Coca-Cola can or the telltale royal purple and gold on a Cadbury chocolate bar.

Trademark infringement in the cannabis industry is when you use trademarked intellectual property from another brand as part of your own strategy. This sounds easy to avoid, but it can really get complicated. For example, you can’t create a weed soda and package it with anything that looks remotely similar to a Coke or any of its more than 300 trademarks. You also can’t use any slogan or terminology that is the same as another brand, in or out of the cannabis industry.

Why is trademark infringement a problem in the cannabis industry?

Trademark infringement is a growing problem in the cannabis industry because of the lack of federal regulation. Unlike other industries, there is no federal law governing trademarks in the cannabis industry, which has resulted in a fragmented legal landscape. Additionally, many states have limited resources to enforce trademark laws, making it easier for counterfeit products to enter the market. This is particularly problematic in the cannabis industry, as consumers rely on trademarks to ensure they are purchasing safe and high-quality products.

Are retailers liable for selling counterfeit products in the cannabis industry?

The answer to this question depends on several factors, including the laws of the state where the retailer is located and the specific circumstances of each case. In general, retailers can be held liable for selling counterfeit products if they knew or should have known that the products were counterfeit. This means that retailers must exercise due diligence in selecting products to sell and must take steps to verify the authenticity of the products they sell.

Retailers can also be held liable for selling counterfeit products if they benefit from the sale of those products. For example, if a retailer profits from the sale of counterfeit products, they may be held liable for trademark infringement even if they did not know that the products were counterfeit.

What can retailers do to protect themselves from liability for selling counterfeit products?

Retailers can take several steps to protect themselves from liability for selling counterfeit products in the cannabis industry. Some of these steps include:

1. Conducting due diligence: Retailers should conduct research to determine the authenticity of the products they sell. This includes verifying the source of the products and checking for trademarks that have been registered with the U.S. Patent and Trademark Office (USPTO).
2. Establishing policies and procedures: Retailers should establish policies and procedures for verifying the authenticity of the products they sell. This includes verifying the source of the products and checking for trademarks that have been registered with the USPTO.
3. Monitoring the market: Retailers should monitor the market for counterfeit products and take steps to remove those products from their shelves. This includes working with law enforcement and other organizations to identify and remove counterfeit products.

What does a brand’s trademark protect?

A trademark can protect a long list of intellectual property types, including a brand’s:

• Name or product name
• Tagline or slogan
• Packaging design
• Colors or color combinations
• Sounds
• Smells or flavor names

Direct vs Secondary Trademark Infringement

There is more than one way to infringe on a trademark owner and their protected properties. Direct trademark infringement involves violating an exclusive, registered right that belongs to the trademark owner in a way that is likely to cause confusion among consumers. For example, a weed edible packaged like a popular candy with a similar logo could easily infringe a trademark because it would be easy for a consumer to confuse the edible with a legitimate product or assume brand affiliation.

Secondary infringement can be either vicarious or contributory liability that can come into play with e-commerce in the cannabis industry. These types of infringement can get pretty murky, and dispensaries have to take note. For instance, if a product manufacturer creates a product with trademark-infringed attributes and then sells that product to a retailer, the retailer could be held accountable for secondary infringement.

Recent Examples of Trademark Infringement in the Cannabis Industry

You don’t have to look far to find some major examples of cannabis brands landing in hot water with their branding directions. For a few years, brands operated somewhat under the radar in terms of using familiar imagery from big-name brands in order to sell and market their products.

In 2021, Mars Wrigley filed a multimillion-dollar lawsuit against several cannabis companies that were using the Skittles brand imagery, colors, and even logo in some cases. Mars Wrigley did win this lawsuit in 2022. At the start of 2023, one hemp company was even sued by Nike for attempted trademark infringement for using the slogan “Just Hemp It” in its marketing materials. Other noteworthy cannabis trademark lawsuits have included big names like:

• Sour Patch Kids
• Cinnabon
• Hershey
• Gorilla Glue

Trademark infringement cases can be notoriously difficult to beat in the event you find your brand in hot water, but there can be exceptions. One lawsuit was filed by Edible Arrangements in 2021 against Green Thumb Industries (GTI) for using the “Incredible Edible” name for its products. That lawsuit was eventually dropped after GTI countered the claim stating that the term “edibles” had long been used in the cannabis industry. Edible Arrangements dropped its suit in 2022, due to the “fast-shifting economic and legal landscape of cannabis.”

Can you obtain a cannabis trademark for your brand?

It depends, which can make protecting your own intellectual branding property tricky. Normally, trademarks are issued by the U.S. Patent and Trademark Office (USPTO), which is a federal governing entity. The USPTO does not offer trademarks for “marijuana” because, under federal law, these products are still illegal. But, the USPTO does offer a trademark registry for hemp-based products that meet the limitations set forth by the 2018 Farm Bill (less than 0.3% THC).

Other limitations can apply as well, even with hemp. For example, products that are deemed edible may be hard to obtain trademarks for because these products are deferred to the U.S. Food and Drug Administration, which still states it is not legal to use hemp-derived cannabinoids in food.

What is the difference between trademark infringement and counterfeit products?

Trademark infringement means you use another brand’s trademarked intellectual property to market your own brand or products. Counterfeit products are products that are designed to look exactly like another product for a profit. For example, the cannabis vape industry has had an ongoing issue with counterfeit products that look a lot like vapes from big brands but contain harmful ingredients.

Need Help Growing your Brand without Trademark Infringement?

In conclusion, trademark infringement is a growing problem in the cannabis industry, and retailers can be held liable for selling counterfeit products if they knew or should have known that the products were counterfeit. Retailers can protect themselves from liability by conducting due diligence, establishing policies and procedures, and monitoring the market for counterfeit products. With these steps, retailers can help ensure that consumers receive safe and high-quality products and help protect the reputation of the original trademark owner. The cannabis business is steadily becoming one of the largest in the country, but it remains one of the most complex. If you’re in the process of growing your brand, you may need some guidance along the way. CannaPlanners can help with things like identity design, packaging design, and more to make sure your brand has a look that’s all its own.

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