The marijuana industry has exploded since the legalization of the plant for medical use (and recreational use in states like Colorado and Washington). There are currently twenty eight states that have legalized the use of marijuana for medical purposes and eight of them and Washington, D.C. have also approved recreational use. The rush to enter this vast new market has resulted in an explosion of dispensaries and the market value in 2016 was estimated at 7.1 billion dollars. In 2015 in Colorado alone, sales of recreational and medical marijuana totaled 996 million dollars.
Yet, the industry is hamstrung. On a federal level, marijuana is still classified as a Schedule I drug, meaning that the Controlled Substances Act considers it to be void of any medical benefits. This has caused legitimate marijuana businesses in legalized states to encounter branding issues as they attempt to act like legitimate businesses. Federal trademarks, for example, cannot be awarded to businesses that grow or distribute marijuana. Yet the ability of firms in this market to distinguish themselves from their competition and protect their unique image in an ever-growing throng of dispensaries is crucial. So, in an industry that is only going to grow faster as more states move towards legalization, how can firms take the important steps to branding themselves?
Some have taken the route of deception. In a 2016 Trademark Trial and Appeal Board decision, a Washington-based retailer attempting to secure a federal trademark for the name “Herbal Access” was denied on the grounds that it sold marijuana. Yet the retailer did not come clean about that. Instead, it tried to conceal the fact that it sold marijuana and labelled itself as an “herb store”. This was seen through immediately and the retailer did not obtain the desired trademark. Furthermore, more legal issues emerged later on because of the store’s insistence on lying about its true nature despite advertising the sale of marijuana on its official website. Trademarks have been denied based on implications made that either there is no sale of marijuana when there actually is, or even that there is sale of marijuana when there really isn’t.
For entrepreneurs attempting to tap the marijuana market, the short run is important to consider. For now, marijuana is not legalized at the federal level, and so marketing must be contained within states where it is. It is advisable that businesses simply register marijuana-related aspects of their brand under state law.
Connors, Tiffany Scott, and David Spellman. “Branding Marijuana Businesses: Lessons Learned From In Re Morgan Brown.” The Licensing Journal. Vol. 36. New York: Aspen, 2016. 5. Web. 22 Mar. 2017.