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Executive Summaries Aug 23, 2021

Cannabis Industry Still Growing Strong

In 2018, Canada legalized cannabis for recreational use. Since then, many Canadian companies have seized the opportunity to enter the industry. A few years later, the buzz is still going strong.

Indeed, while 2018 saw the largest increase in trademark applications for cannabis-related goods and services, growth has continued significantly in 2019 and 2020. Today, Canada is second, just behind the United States in the ranking of countries with the most trademarks registered or to be registered in this industry.

It appears that the Canadian Intellectual Property Office has taken note of this strong growth, as many goods and services descriptions, notably in the fields of cosmetics, drugs, food as well as scientific and legal research, have been added to the Goods and Services Manual, which lists the acceptable descriptions of goods and services in Canada. In 2018, only dried cannabis and live cannabis plants were listed in the Manual, whereas, today, more than 100 acceptable descriptions are cannabis-related.

Avoid Conflict

With the growing number of registered or applied-for trademarks, it is becoming essential for cannabis businesses to ensure that their trademark is available before starting to use it, in order to avoid infringing any third-party’s rights. If the mark is available, it is strongly recommended to register it. In this regard, we remind you that a strategy for developing and protecting a brand in the cannabis industry is of the outmost importance since the Cannabis Act and its regulations are very restrictive. For example, it is not permitted to display on a package or label or to promote cannabis, a cannabis accessory or any service related to cannabis:

  • an element that would be appealing to a person under 18 years of age;
  • depicts a person, character or animal, whether real or fictional; or
  • associates it with or evokes a positive or negative emotion or image about a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.

In addition, since the Cannabis Regulations tend to dehumanize packages, labels and the promotion of products and services related to cannabis, you should verify the leeway you will have in the deployment of your trademark, particularly when it comes to the associated logo and colours. We addressed this topic in more detail in our article: Trademarks and Cannabis: Tailoring a Strategy.

It is also important to note that, because cannabis goods have a wide area of natural expansion, a mark associated with them could be likely to cause confusion with a mark that appears, at first glance, to be in another field. For example, a lot of cannabis companies offer both smokers’ accessories and food products.

Also, it is not advisable for cannabis businesses to use marks that allude to other more well-known brands, even for purposes of parody. For example, in a recent case involving the SUBWAY restaurant chain and a cannabis store using the BUDWAY mark, the Federal Court ruled that the use of the BUDWAY mark was likely to create confusion and reduce the value of the goodwill attached to the SUBWAY mark.

Different Rules for Different Territories

Moreover, owners with expansion plans outside of Canada will want to ensure that their trademarks are protected in the various targeted territories. However, each territory is governed by its own rules, which may differ considerably from one country to another and even from one state to another in the United States.

Indeed, in the United States, federal registration of trademarks in association with cannabis-related services is possible. However, trademark registration in association with cannabis goods is not permitted at the federal level. Nevertheless, it is permitted in certain states where cannabis use has been legalized, i.e. Alaska, Arizona, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Oregon, Vermont and Washington. An application for registration must thus be filed separately in each state, and such registration will not confer any rights to its owner outside the state in which it was obtained.

In the European Union, the registration of trademarks is permitted for medical goods or live and dried plants. However, registration of trademarks for processed goods is not allowed as of today.

In some countries, such as China and Korea, it is simply impossible to register such trademarks, while some other countries in Asia, like Japan, are more permissive.

With its expertise in Canada and internationally, our trademark team can help you obtain the best possible protection so that your company can establish an enviable place in the promising cannabis industry.

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