Intellectual Property Law Knowledge Center

As Cannabis Industry Moves Toward Full Legalization, IP Protection Becomes a Crucial Business Strategy

December 9th, 2020

By Travis W. Bliss, Ph.D

On Election Day in the United States, one winner was clear: cannabis.

Cannabis legalization in one form or another was on the ballot in five states – Arizona, Mississippi, Montana, New Jersey, and South Dakota – and passed in all of them. Now, the majority of states have legalized cannabis for medicinal purposes and more than a quarter of states have legalized it for adult recreational use.

Moreover, on Dec. 2, the World Health Organization voted to remove cannabis from Schedule IV, which is the category that includes some of the most dangerous drugs such as heroin. This comes at a time when many countries already have legalized cannabis use in some form. So, cannabis is clearly moving rapidly toward legalization both in the United States and throughout the world.

As cannabis barrels toward full legalization, one industry trend is becoming clear: as the industry matures, intellectual property (IP) protection is becoming a major driver. This should come as no surprise, as IP has been a major driver in related industries for years. Whether you liken the cannabis industry to the pharmaceutical industry, a vice industry (like tobacco and alcohol), or the agriculture/horticulture industry, IP protection has been a major driver for those industries for decades.

The most savvy cannabis companies recognized this truth years ago and started seeking IP rights to protect their valuable assets. Today, the trend toward securing IP rights for cannabis is clear, as illustrated in the chart below, which shows the number of published applications and issued patents that include the word cannabis in the title or abstract for the last 20 years. This trend is not limited to patents, however, as trademark filings also have seen a similar increase and the industry also is seeing an increase in the number of federal court cases being filed to enforce these cannabis IP rights.

Because cannabis is not fully legalized in the United States, some special considerations must be kept in mind when seeking IP protection. As one example, trademark protection may not be available for goods that are not able to be sold legally in commerce, so there may be some challenges in securing federal trademark protection for certain high-THC cannabis products. But that does not mean that trademark protection should be forgotten. Instead, companies simply need to put more effort into developing a trademark strategy so that the available trademark protections can be maximized.

Cannabis companies also need to look at patent and trade secret rights from both an offensive and defensive position to ensure that they are securing protection for their own innovations while avoiding the growing minefield of patent rights of their competitors. Taking an active approach toward IP will become increasingly necessary as the industry continues to mature and IP becomes the real driver of profit for many cannabis businesses.

The attorneys at Panitch Schwarze advise cannabis companies on effective IP strategies to protect and monetize their assets. Contact one of our attorneys today to learn how we can help you and your cannabis business.

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