[Acapulco] Gold* Rush for California Cannabis Trademarks Countdown to January 1, 2018

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Last week the California Assembly passed Assembly Bill 64 (AB 64), an omnibus bill regarding medical and recreational marijuana, sending it to the State Senate for review.

Pot leaves trademark image

Federal cannabis trademark registration appears unlikely under the current administration. The California cannabis industry and intellectual property lawyers are anticipating a trademark filing frenzy on January 1, 2018, when the California Secretary of State is scheduled to begin accepting trademark applications for cannabis goods and services.

Current Status: California Follows Federal Lead — No Cannabis Trademarks

Currently, the California Secretary of State will only register marks that are “substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. §1051 et seq.) as amended. To that end, the construction given the federal act should be examined as non-binding authority for interpreting and construing this chapter.” Cal. Bus. & Prof. Code §14272.

The United States Patent and Trademark Office (USPTO) will only register trademarks relating to commerce “which may lawfully be regulated by Congress.” 15 U.S.C. §1127, and specifically the USPTO, requires that “use of a mark in commerce must be lawful use to be the basis for federal registration of the mark.” Trademark Manual of Examining Procedure §907.

AB 64 Untethers California from the USPTO Limitations

The Legislative Analyst’s Digest for AB 64 identifies the conflict between California and Federal law relating to marijuana’s legality and clarifies AB 64’s intended effect on marijuana trademarks:

(6) Existing law, the Model State Trademark Law, provides for the registration of trademarks and service marks with the Secretary of State and requires the classification of goods and services for those purposes to conform to the classifications adopted by the United States Patent and Trademark Office.

This bill, for purposes of marks for which a certificate of registration is issued on or after January 1, 2018, would, notwithstanding those provisions, authorize the use of specified classifications for marks related to medical cannabis and nonmedical cannabis goods and services that are lawfully in commerce under state law in the State of California. (Emphasis added).

Specifically, Section 2(a) of AB 64 adds Section 14235.5 to the Business and Professions Code, which will establish two new cannabis trademark and service mark classifications:

Classification “500 for goods that are medical cannabis, medical cannabis products, nonmedical cannabis, or nonmedical cannabis products;” and

Classification “501 for services related to medical cannabis, medical cannabis products, nonmedical cannabis, or nonmedical cannabis products.”

Countdown to January 1, 2018

In plain English, on January 1, 2018, cannabis businesses will finally be able to register trademarks and service marks for cannabis goods and services, including trademarks for specific cannabis strains, assuming the proposed marks satisfy the other registration requirements (i.e., distinctiveness, lack of likelihood of confusion with existing registered marks, etc.).

Given that California is the most populous state, that the California cannabis market is projected to reach $6.5 billion by 2020, and that it is currently impossible to obtain a nationwide trademark for cannabis products, the California Secretary of State may be overwhelmed with cannabis related trademark applications on January 2, 2018 (January 1 is an official  State holiday).

Unlike the USPTO, which does not require an applicant’s prior use of a mark to file an application (though proof of use is eventually needed for registration), California requires proof of actual use in commerce to file and register a trademark. Cal. Bus. & Prof. Code 14202(h). While existing cannabis trademarks already used in California may currently have common law trademark protection, registration with the Secretary of State will confer statewide rights and additional remedies.

Smart cannabusinesses should begin finding and using marks that will ultimately qualify for trademark registration well in advance of the January registration date.

* A Californian cannabusiness would have zero chance of obtaining Acapulco Gold trademark because it would be geographically misleading and because the strain is already widely used.

Photo credit: Image is a derivative of “Trippy Multi Pot Leaves” by Weedpad.com/Weedpad_Papers

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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