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California Emergency Cannabis Regulations

What’s New? The California Bureau of Cannabis Control (BCC) along with the Departments of Public Health and Food & Agriculture issued emergency regulations to fully implement the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) and provide guidance for California cannabis businesses heading into 2018. We have focused on the select regulations to generally determine how cannabis businesses will be affected as to: Packaging/Labeling Branding Advertising Product Recall Packaging/Labeling: Packaging and labeling requirements included in the regulations issued by the Department of Public Health require two types of labels for all cannabis products: primary panel and informational panel. Primary Panel The “primary panel” is defined as the part of a label that is most likely to be displayed, presented, shown, or reviewed by a customer at the point of retail sale. The primary panel requires multiple data points, for example: the type of cannabis/cannabis product, total milligrams of THC and/or CBD, and the universal symbol for cannabis: All text on the primary panel must be at least size 6pt font, but may require a larger font size so the primary panel is “in relation” to the size of the container.  Informational Panel The “informational panel” means any part of the label that is not the primary panel. The informational panel must present the requisite warning language as well as other required labeling information, including nutritional information for edibles. Information required by MAUCRSA or by the emergency regulations not specifically designated to the primary panel belongs in the informational panel. All text in the informational panel must be at least size 6pt font, but may require a larger font...

Global Cannabis Marketplace

The United States is viewed as the land of opportunity, prosperity, and innovation. Americans take pride in the country’s historically progressive policies and contributions to advancements in medicine, technology, and science. However, when it comes to cannabis, the U.S. federal government is lagging behind the international marketplace. Over the past decade, individual states have made great progress in creating momentum for legalization of cannabis in America. Currently, 29 states and the District of Columbia allow access to medical cannabis, and more will follow suit. Yet, for the next four years (at least), the outlook on federal legalization is extremely bleak, especially given the key players in the Trump administration, specifically, Attorney General Jeff Sessions. On multiple occasions, Sessions has consistently re-affirmed he is not in favor of legalizing cannabis and has stated that he does not want the Department of Justice (DOJ) restricted from enforcing the Controlled Substances Act. But the administration has not explicitly overturned the Cole Memo . . . at least for now. Bottom line—despite best efforts, federal legalization in America is not likely coming anytime soon. The inability to transport cannabis across state lines and national borders stifles the development of national cannabis brands, and also puts American cannabis businesses at a significant disadvantage internationally. International medical cannabis trade has already begun, and is expected to expand rapidly. In 2017, Germany, Greece, and Poland joined Austria, Britain, Croatia, the Czech Republic, Denmark, Finland, France, Ireland, Italy, Macedonia, the Netherlands, Portugal, Romania, Slovenia, Spain, and Sweden on the list of European countries to have legalized medical cannabis in some form. Additionally, the Prime Minister of Luxembourg...

How to Deal with a Cease & Desist Letter

Receiving a cease and desist letter can evoke a flurry of emotions. Fear of litigation, defensiveness of your brand, concern for the future of your business, etc. But, taking a step back, it is important to understand what a cease and desist letter is, how it is used as a strategic enforcement tool, and what you should do if you are the recipient. What is a Cease and Desist Letter?  A cease and desist (C&D) letter, or a “demand” letter, is correspondence, typically written by a lawyer on behalf of another business or person, who wants you to stop doing something that allegedly violates their rights. In the trademark context, the letter typically demands that you cease using a trademark that is identical or similar to a mark owned by the other party. When these letters are written by lawyers, they can often be several pages long and contain confusing legal references, making it seem that you are clearly in violation of the law and must accede to their demands . . . or else. Conversely, when the letter is written by a non-lawyer using a template letter from the Internet, the letter may not provide enough substance for you to adequately assess your legal position. Regardless of who sent the letter, it is important to remember that the statements are merely allegations. That said, a C&D letter should be treated with the utmost concern until you are able to determine whether the alleged claims have any merit. What to Do (and Not to Do) If you Receive a Cease and Desist Letter? DO’s (1) Take a deep breath...

Protecting Your Trade Secrets

By definition, a trade secret can be almost anything that has economic value and provides a competitive advantage. A well-known example of a well-kept trade secret is the Coca-Cola formula. Since 1891, founder Asa Candler maintained strict policies to keep and protect the formula from the public. Each state has its own laws for protecting trade secrets, but all require that an owner take “reasonable steps” to safeguard the secrecy and confidentiality of the trade secret information; otherwise, the legal protections are lost. Additionally, federal law allows a trade secret owner to bring an action in federal court for trade secret theft: Defend Trade Secrets Act of 2016 (DTSA). The subject matter of trade secrets is broadly defined and includes recipes, formulas, technology, sales and distribution methods, consumer profiles, client and supplier lists, manufacturing processes, etc. TRADE SECRET v. PATENT Trade secrets may concern inventions or manufacturing processes that do not meet the patentability criteria and therefore can only be protected as trade secrets. For example, customer lists or manufacturing processes are not entitled to patent protection. However, trade secrets may concern inventions or processes that fulfill the patentability criteria, but there may be an advantage to protecting them as trade secrets. Some notable advantages of trade secrets include: Patents have a finite period for protection; but, trade secrets last for as long as they are kept secret. Securing a patent can be resource intensive, whereas trade secrets have immediate effect and no registration costs. Under trade secret law, no disclosure to a government authority is required. KEEPING TRADE SECRETS, SECRET The key to maintaining trade secret protection is...

Summary of Pending California Cannabis Legislation

As the California state legislature is back from summer recess, it is an apt opportunity to provide an overview of the pending legislation relating to cannabis trademarks, advertisement, packaging, and labeling. Unsurprisingly, child protection from cannabis products is one of the major drivers in these proposed bills. Additionally, the legislature’s regulations are designed to promote consumer safety and prevent overconsumption, require truth in advertising, and of course, preventing illegal distribution. AB 64 — Licensure, Regulation, & Trademark AB 64 creates the ability for cannabusinesses to obtain California state trademark registrations. As we discuss in our article “Cannabis IP Myths,” federal trademark registration is not permitted for products that violate the Controlled Substances Act, but federal protection is available for ancillary cannabis services that do not “touch the plant.” Even with this limitation, it is worth federally registering your brand. A federal registered mark appears on the United States Patent and Trademark Office database, where its very presence serves as a deterrent to others contemplating adoption of the same or a similar mark, and can be leveraged in enforcement efforts. Aside from national federal protection, state trademark registrations grant rights to a particular mark within an entire state. This differs from common law (unregistered) rights, which only protects a mark in the specific geographic in which it is used. Most states where cannabis is regulated will grant state registrations for marks covering cannabis goods or services that touch the plant. Though California voluntarily follows the federal regime and will not register marks for cannabis goods or services. AB 64 would lift this ban and create two specific classes: Class 500 for...

Famous Trademarks & Cannabis Branding

By definition, trademark infringement is the unauthorized use of a mark on goods or services in a manner that is likely to cause confusion, deception, or mistake as to the source of the products. However, all trademarks are not created equal and stronger marks enjoy a broader scope of protection. In fact, trademark owners of U.S. registrations for strong marks may assert rights against confusingly similar and identical marks, for related and identical products. And, famous marks enjoy an even broader scope of protection and can be enforced against confusingly similar marks even as to unrelated products. In contrast, owners of weak marks are only able to enforce their rights against identical marks for identical goods and services. Simply put, famous trademarks are in a category of their own, because they are household names that are more likely to be associated with a specific brand and remembered in the consuming public’s mind. Examples of famous trademarks are GOOGLE, NIKE, GATORADE, STARBUCKS, HERSHEY’S, and K-MART. Determining “fame” is not always clear, and this principal does not extend to marks that are merely well-known or only has “niche fame,” i.e., fame in a particular sector of goods/services. Factors considered in ascertaining whether a particular mark is famous include the volume of sales, duration of use, advertising expenditures, and lack of third party use. Cannabis products are no strangers to playing on famous marks, e.g., Pot-Tarts, KeefKat, Twixed, Rasta Reeses, Candyland, Girl Scout Cookies, Bubblelicious, etc. But misappropriating a powerful, famous brand expecting that some of the luster could rub off has consequences. That is, famous brands are not just heavily promoted, they...