California Secretary of State Launches Cannabizfile: One-Stop-Shop For Business Side of Canna-Businesses

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© 2016 California Secretary of State

Just in time for the holidays and during the final countdown to California’s cannabis legalization, Secretary of State Alex Padilla launched Cannabizfile, an online portal that provides information regarding the nuts and bolts for the business side of setting up a canna-business.

Cannabizfile provides links for searching and reserving company names, trademark registration forms, tips for starting a cannabis business, a link to licensing and taxation information and even a FAQ with a checklist of steps to start a canna-business in California.

I previously wrote that as of January 1 (actually January 2), for the first time, California cannabis companies will be able to obtain trademarks and service marks for their goods and services. Now that the recreational cannabis industry is coming into the day light, canna-businesses need to put their ducks in a row, following the same business practices that non-canna-businesses follow.

Entity Creation

Cannabis entities must decide if they want to operate under a fictitious business name, i.e. Bob Smith doing business as Smith’s Olde Weed Shop, or as a limited liability company, a corporation, a cooperative or a limited liability partnership. The Cannabizfile allows businesses to search their potential company name against existing names and to register their names.

But there’s more to creating an entity than picking a name.  Your entity needs bylaws, operating agreements, buy-sell agreements and other documents that spell out who owns what, and how the company will be run.  Taking the time to identify the company owners’ rights and obligations up front will save endless debate, arguments and litigation down the road.

What’s In a (Trade) Name?

The Cannabizfile includes a link to information to how canna-businesses can register their trademark or service mark. Unlike registration with the United States Patent and Trademark Office, the California Secretary of State’s office only grants rights within the State of California.  Given the projected massive size of California’s cannabis industry, obtaining trademark protection within California still confers huge benefits, including the right to prevent others from selling goods or services that are similar to your registered marks and the right to collect damages from those infringing your registered marks. The Cannabizfile provides that beginning January 2 customers may register their cannabis-related trademark or service mark and that in case of a tie (two or more applicants seeking the same or confusingly similar marks) priority will be given to the first filed.  Applications received by mail will be labeled received at 5:00 p.m. on the date received and applications received in person over the counter in Sacramento will be labeled at the actual time and date received.

Just Like Buying Concert Tickets Before the Internet

So if there’s a trademark that is so good you absolutely positively must have it, I suggest that on January 2, you set your alarm clock, drive to Sacramento and get in line for when they open at 8:00 a.m. as there is no mail service January 1 and it’s a state holiday so the Secretary of State’s counter will also be closed.

So get on your bad motor scooter and ride.

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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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