How federal marijuana rescheduling changes the game for cannabis trademarks and IP protections

Key points:

• Federal marijuana rescheduling creates new opportunities for Schedule 3-compliant medical cannabis operators to protect their intellectual property.
• Adult-use cannabis operators, still dealing in Schedule 1 drugs under federal law, may seek protections under state law.
• Operators should consider existing legal avenues, such as medical cannabis and Farm Bill-compliant hemp, to protect cannabis-related marks.

(This is an opinion column reflecting the analysis of the author.)

As in any other industry, trademark protections under both federal and state law generate value for cannabis companies by establishing a recognizable brand in a saturated market.

However, there have historically been limitations on what IP cannabis companies can protect. These are now changing thanks in part to federal marijuana rescheduling.

Trademarks eligible for national protections must conform with United States Patent and Trademark Office standards and must be a lawful use in commerce. Because adult-use cannabis is still federally illegal, it cannot registered on the principal registrar with the USPTO.

That said, businesses can still leverage state trademark laws to generate similar intellectual property protections.

And April’s reclassification of medical cannabis as a Schedule 3 drug may both impact this interplay and create new avenues to guard their IP. And look for more developments if adult-use cannabis is rescheduled.

Can cannabis be trademarked?

As a Schedule 1 drug, the federal government criminalizes cannabis. Schedule 1 drugs have no acceptable medical uses.

However, the 2018 Farm Bill created legal protections for hemp, defined as cannabis sativa with 0.3% or less of delta-9-THC by dry weight. (As of now, that definition is due to change in November, though there’s a strong movement afoot in Congress to keep some hemp products legal.)

Starting in June, the U.S. Drug Enforcement Administration’s chief administrative law judge heard arguments for and against moving all marijuana as defined under federal law to Schedule 3. Schedule 3 drugs may be lawfully dispensed via a standard prescription, though it remains to be seen how that might affect botanical cannabis.

But what’s important here is that due to this change in classification, the federal government acknowledges that there may be some lawful use of cannabis.

While much attention has been paid to the tax implications as Internal Revenue Service Code 280E will no longer apply, this also changes the trademark world.

How the Farm Bill affected hemp THC trademarks, and how it could help cannabis

The distinction between hemp and marijuana, a legal difference for products that derive from the cannabis plant, is critical for IP purposes.

Through the 2018 Farm Bill, Congress decriminalized hemp and hemp-derived CBD products, which opened the doors for USPTO brand protections. While this does not mean open registration for hemp or hemp-derived products and services, it allows some form of lawful use that will at least permit some registration.

These products will still undergo increased scrutiny for their lawful use and must comply with other federal laws such as the Federal Food, Drug and Cosmetic Act, and other laws and regulations that govern the industry.

The USPTO’s guidance is clear: marks for products that violate federal law, or the USPTO’s interpretation of federal law, will not register.

This means they will refuse registration of marks for food, beverages, dietary supplements, or pet treats containing CBD as unlawful under the Federal Food, Drug and Cosmetic Act, even if derived from hemp.

How has federal marijuana rescheduling affected cannabis trademarks?

The legal status of both hemp and adult-use cannabis are moving targets. But as it stands, the USPTO has offered guidance as to how cannabis and cannabis-related products are reviewed.

The examination guide, while not binding law, provides an insight as to how the USPTO will generally review cannabis-related marks.

Examination Guide 1.19 explains that hemp derived products, so long as it complies with the 2018 Farm Bill, may be trademarked on the principal registrar. The examination guide specifies that cannabis cannot be trademarked because, as a Schedule 1 drug under the CSA, there are no lawful uses of cannabis.

Federal marijuana rescheduling may change that.

While a new examination guide cannot be predicted, the justification for refusing all cannabis related trademarks is now defunct assuming the rescheduling happens. As a Schedule 3 drug, there are now acceptable lawful uses.

Therefore, so long as the cannabis product is lawfully produced and used as a Schedule 3 drug to differentiate itself, the trademark may be registerable for medical cannabis companies.

Can pharmaceutical companies trademark cannabis strains?

This doesn’t mean a monopoly on well-known strains. How cannabis might qualify for lawful use can be understood by looking at other Schedule 3 drugs and how they are lawfully used in commerce.

Schedule 3 will allow cannabis to be used in prescription products which require their own regulations. As a result, cannabis-related trademarks will likely not be the focus.

Rather, the pharmaceutical medication that is derived from cannabis could be trademarked. The difference is whether the final product refers back to the specific cannabis producer— which is unlikely and unusual in the pharmaceutical industry.

However, if a particular formula with cannabis is patented, a producer may establish exclusive use over that formula.

When that formula is mass-produced, the source manufacturer may attempt to associate themselves with the medicine itself. An example would be Tylenol for acetaminophen.

Tylenol indicates the source-producer of the acetaminophen, functioning as a trademark. The major difference is that Tylenol is available as an over-the-counter drug because acetaminophen is not Schedule 3.

When will adult-use cannabis get trademark protections?

The real benefits of trademark protections are through recreational purchases.

So although there may now be some lawful use of cannabis and it may be eligible for trademark registration, obtaining practical protections may be difficult.

There may be creative arguments for use of medical marijuana as it may be prescribed via prescription. However, the DEA, with rescheduling, seeks to establish a licensing scheme for medical marijuana. This may be an additional barrier to obtaining trademark protections. Without a license, there would still be no lawful use.

Therefore, obtaining a DEA license would be a prerequisite to establishing trademark protections.

How hemp could be the solution for cannabis IP protections

Despite these restrictions, there are still valid ways to create trademark protections for cannabis related products.

Trademarks are and have been an available avenue for cannabis companies to create smart business investments. The USPTO has allowed registration for cannabis adjacent products and marks, allowing companies to seek trademarks for related goods and services. Rescheduling does not change that.

Instead, rescheduling allows some companies to engage in additional activities where trademarks could still be useful. However, there are significant risks of doing so because cannabis trademarks may not be as strong in the pharmaceutical industry.

Creating trademarks relating to hemp and other lawful products related to cannabis may be a better investment for companies.

Keaton Silver is a JD candidate at the University of Washington School of Law.