Cannabis Law Prof Blog

Editor: Franklin G. Snyder
Texas A&M University
School of Law

Thursday, October 18, 2018

Aiding and Abetting: Broadcasters Take a Gamble When Accepting Cannabis Advertisements

AaaBroadcasters should not rely on the fact that prosecutors have previously focused on the advertiser of the business, not the advertising medium, according to a lawyer who represents broadcasters.

Many broadcasters in states where marijuana is legal have accepted the business of both growers and dealers who have sought to advertise their products and services. Since rescission of the Cole Memorandum, which de-prioritized enforcement of federal marijuana prohibition against people and businesses who complied with state law, Attorney General Jeff Sessions went a step further by directing all U.S. Attorneys to pursue prosecutions related to marijuana activities. 

Lawyer Gregg Skall represents broadcasters and other parties in their regulatory dealings before the Federal Communications Commission ("FCC") and in their commercial business dealings. A few months after the release of the Cole Memorandum, Skall notes:

[W]hen dealing with criminal law, special considerations come into the analysis. For example, 18 U.S.C. § 2 provides that whoever aids or abets the commission of a crime is punishable as a principal. The DOJ Criminal Resources Manual states that acts of the perpetrator become the acts of the aider and abettor and the latter can be charged with having done the acts even when the principal is not tried, convicted or even identified. Therefore, while it is extremely rare for a publisher to be tried for the crime of an author or advertiser, the situation surrounding marijuana use might prove to be so high-profile and controversial that an aggressive U.S. attorney might consider prosecuting the advertising medium.

Skall's current view is that broadcasters who accept the business of growers and dealers are in danger of losing their federal licenses. Those inclined to think there is a First Amendment right to advertise marijuana products and services should, he warns, think again. Broadcasters cannot rely on the First Amendment when advertising products or services that are illegal under federal law.

States have sought to advertise their products and services with broadcasters, and many have accepted their business. That decision, however, has always been risky, given the uncertain effect of the Cole Memorandum and its many qualification requirements. Marijuana remains classified as an illegal drug under the Controlled Substances Act and in a case called Raich v. Gonzales, the Supreme Court ruled the federal government can prosecute medical marijuana patients, even in states with compassionate use laws. Some broadcasters took comfort in the fact that prosecutions have nearly always been of the advertiser business and not the advertising medium. Yet, as I have written before, taking cannabis advertising is at most a calculated bet and that bet just got a lot worse."

iven the current administration's views on marijuana and the Attorney General's direction to U.S. Attorneys to pursue prosecutions related to marijuana activities, the bottom line is that broadcasters should not accept cannabis advertising until there is further clarification or Congress acts to reverse the effect of the decision to rescind the Cole Memorandum. Skall further warns that, "[A]s federal licensees, a broadcast licensee could very well endanger their license renewal, or even risk license revocation and criminal prosecution . . ."

Obtaining a license from the FCC is no small feat. Broadcasters that have paid fees, submitted applications, and complied with specific FCC licensing requirements may not want to risk their business for the sake of an advertising slot purchased by a business that is illegal under federal law.

--Kindal Wetuski

October 18, 2018 in Advertising, Business, Federal Regulation | Permalink | Comments (0)

Thursday, October 11, 2018

Trademarks, Patents, and Copyrights, Oh My! Protecting Brand Logos in the Cannabis Industry

IMG_2755Cannabis-related business owners could find their brand name and logo designs at risk for imitation by competitors due to federal requirements that the trademark is related to items lawfully used in commerce. Marijuana remains illegal under federal law and its classification as a schedule one drug renders the substance unlawful for use in commerce and can create intellectual property nightmares for business owners in states that have legalized marijuana use.

In a recent article for the National Law Review, lawyer Gene Markin gave an overview of the complications those in the cannabis industry face in trying to protect their brand names and logos from hijacking competitors. Markin offers advice for overcoming the trademark prohibition that arises from marijuana’s schedule one status:

State trademark protection is one option. Where a federal trademark registration is protected nationwide, a state trademark registration has statewide protection. Of course, this depends on the state in which the business is being conducted. It is a lot easier to make “lawful use” of cannabis goods and services in states where it is legal to do so. Some states require the owner of the trademark to use the mark prior to registering. Common law trademark rights, however, are more easily attainable. To obtain common law trademark rights, one must simply use a mark in commerce. Under common law, the owner is given protection within the geographic area in which the trademark is used. Consequently, under common law, there is little to no protection against an infringer who uses the mark in a different territory.

Another suggestion is to file for federal trademark protection for goods and/or services ancillary to cannabis sales, provided those are federally legal. For example, one could file a federal trademark application to protect the use of his or her mark on apparel or accessories. Clothing, smoker’s articles, or products that cultivate and package cannabis can be federally protected. This way, such products can sufficiently support an infringement claim against future businesses that use a similar mark on their own goods/services. While ancillary registration cannot be used to protect the core cannabis products, it would at least protect the brand name or logo from infringement and allow the trademark owner to expand the registration to cannabis products and services once the federal law changes.

Markin explains that copyrights and patents are also potential solutions:

Unlike trademark law, copyright law does not require “legal use” in order to obtain intellectual property protection. To obtain copyright protection, the content, such as logos, advertisements, product descriptions, photos, website layouts, etc., must (1) be original to the author, (2) have a minimal level of creativity, and (3) be fixed in tangible form that is sufficiently permanent to be reproduced. Registration is not required but doing so would afford the copyright holder significant benefits, particularly the right to sue an infringer.

Patent protection is another viable option. The fact that marijuana is a Schedule I controlled substance is not a bar to obtaining a patent, whether a utility patent or a design patent. For utility patent protection, the invention that is to be protected must be new and useful. A design patent, on the other hand, protects a manufactured object or product’s original ornamentation that is visible when the product is engaged in its intended use.

With some clever maneuvering, marijuana businesses can likely find ways to protect its brand designs and reputation now and be prepared to expand protections of their intellectual property if and when federal decriminalization of marijuana takes place.

--Ashley Goldman

October 11, 2018 in Advertising, Commercial Law | Permalink | Comments (0)

Monday, September 10, 2018

Advertising for Addiction: Cannabis Advertising in need of Regulation?

Bilboard CroppedThe marijuana legalization train is full steam ahead as more than half of the states have passed legislation legalizing marijuana for medical use and more than a handful allowing recreational use among adults. In states that have allowed recreational adult use, dispensary advertisements are relentlessly marketing the product to all parts of the adult population.

The Atlantic recently published an article by Annie Lowrey, America's Invisible Pot Addicts, describing the often mocked or ignored position that marijuana addiction is real, is prominent, and needs to be addressed.

For Keith Humphreys, a professor of psychiatry and behavioral sciences at Stanford University, the most compelling evidence of the deleterious effects comes from users themselves. “In large national surveys, about one in 10 people who smoke it say they have a lot of problems. They say things like, ‘I have trouble quitting. I think a lot about quitting and I can’t do it. I smoked more than I intended to. I neglect responsibilities.’ There are plenty of people who have problems with it, in terms of things like concentration, short-term memory, and motivation,” he said. “People will say, ‘Oh, that’s just you fuddy-duddy doctors.’ Actually, no. It’s millions of people who use the drug who say that it causes problems.”

Users or former users I spoke with described lost jobs, lost marriages, lost houses, lost money, lost time. Foreclosures and divorces. Weight gain and mental-health problems. And one other thing: the problem of convincing other people that what they were experiencing was real. A few mentioned jokes about Doritos, and comments implying that the real issue was that they were lazy stoners. Others mentioned the common belief that you can be “psychologically” addicted to pot, but not “physically” or “really” addicted. The condition remains misunderstood, discounted, and strangely invisible, even as legalization and white-marketization pitches ahead.

Despite medical professionals’ concerns and actual users’ testimony that marijuana addiction is real and has the potential to seriously damage the lives of addicts, advertisements continue to tout marijuana’s many uses and proclaim that it is safe. 

Advertisements for delivery, advertisements promoting the substance for relaxation, for fun, for health. “Shop. It’s legal.” “Hello marijuana, goodbye hangover.”

Sellers are targeting broad swaths of the consumer market—soccer moms, recent retirees, folks looking to replace their nightly glass of chardonnay with a precisely dosed, low-calorie, and hangover-free mint. Many have consciously played up cannabis as a lifestyle product, a gift to give yourself, like a nice crystal or an antioxidant face cream.

Lowrey addresses many other concerns about the growing support for marijuana legalization at the state level without federal involvement including: lack of food and drug testing and regulation, medical advice being issued by growers and retailers that are not medically trained, the ever-increasing potency of different strains of cannabis, and the potential consumer abuse that arises from business goals of maximizing profit regardless of whether heavy use by certain customers is actually safe.  She does not suggest that prohibition is a viable alternative. The strain on government budgets created by marijuana-related enforcement is not necessarily proportionate to the potential harm legalized marijuana use presents.

Billions of dollars are spent on the war on drugs and millions of individuals are prosecuted for petty marijuana offenses on the government’s dime while local, state, and the federal government bodies stand to generate billions of tax dollars in legalization. The savings in marijuana-related expenditures and potential tax gains means a great deal of revenue is at stake. But Lowrey suggests there should be limits imposed on advertising to prevent mass addiction that could prove detrimental to the welfare of consumers in the long run.

The tobacco industry has been down this road and its tale may be telling with regard to what the marijuana industry can expect in the future. Mandates to restrict advertisement activities, requirements for payments into compensation funds for injured consumers, and demands for FDA testing on products may be on the horizon if and when the federal government decides to step in and regulate the exploding cannabis industry.

- Ashley Goldman

September 10, 2018 in Advertising, Business, Drug Policy, Medical Marijuana | Permalink | Comments (1)

Saturday, January 9, 2016

No Trademark for “THC Tea” . . . Because It Does Not Contain THC

AIt’s well known that applicants have stuck out repeatedly with the U.S. Patent & Trademark Office in trying to register trademarks for cannabis products.  The PTO reasons that because marijuana is illegal under federal law, that same federal law shouldn't be use to protect band names in an illegal product.  (Think of it like getting an actual trademark on "Murder, Inc.")

But marijuana culture is cool and edgy, so what about applicants who sell legal products but want to capitalize on the coolness of marijuana?

Well, they lost a round last fall in front of the Trademark Trial & Appeals Board, in a case involving something called "THCTea." The product itself had no THC in it, and therefore didn’t run afoul of the rules prohibiting trademarks for illegal substance. But because (again) it had no THC in it, the product ran afoul of the rules banning deceptive trademarks. The net result seems to be that you can’t get a trademark for a cannabis product, and you also can’t get a trademark for a non-cannabis product that pretends to be one.

Trademarks in this area are confusing, but Chicago lawyer Scott Slavick of Brinks Gilson & Lione has a very nice piece in Inside Counsel (free registration required) on the nuances of the THCTea case and the problems of deception in this area.  Recommended.

January 9, 2016 in Advertising, Business, Commercial Law | Permalink | Comments (0)

Friday, October 10, 2014

Daily News Roundup: Friday, October 10, 2014

Daily RoundupProsecutors Seek to Revoke Adrian Peterson Bail for Marijuana Use "Presumably, someone close to Adrian Peterson told the embattled Minnesota Vikings running back to lay low while his felony child abuse case was ongoing and his NFL future was up in the air.  The opposite of laying low would be to smoke some marijuana before a court appearance, then tell a court employee during a urine test that you "smoked a little weed," as Peterson allegedly did on Wednesday according to Fox 26 in Houston."

DEA Taking Close Look at  Marijuana Industry Investors: "U.S. investors in Canada's medical marijuana industry are betting they will not fall under the scrutiny of U.S. law enforcement officers -- but it is a risky bet.  The U.S. Drug Enforcement Administration has already been tracking investments made in state-sanctioned marijuana business in the United States. When asked by Reuters about the DEA's view of U.S. investments in Canadian marijuana, DEA spokesman Rusty Payne said the agency is 'most interested in those types of activities.'  After the Reuters report, shares in Canadian medical marijuana companies fell sharply . . . ."

Marijuana Sales Up in Colorado: Marijuana sales in Colorado saw a 10 percent bump in August — and industry leaders don't expect that growth to slow anytime soon.  The sales of recreational and medical marijuana in Colorado each jumped more than 10 percent from July to August 2014, according to numbers released Thursday by the Colorado Department of Revenue."

Roof Explodes in Florida Grow House Fire:  "A suspected marijuana grow house caught fire in Orange County on Thursday morning . . . .  About $3.2 million worth of marijuana was removed from the home after the fire, according to deputies.  The residents of the home are nowhere to be found.  Neighbors said they've lived in the home for a month or two, and were secretive.  Investigators said the sloppy grow house rigging likely contributed to an electrical fire upstairs."

Analyst:  Marijuana Use Increases Beer Sales:  "Beer has no need to fear weed.  The legalization of medical marijuana has helped beer sales, contrary to previous research that pointed to a decline, according to a note from Sanford C. Bernstein analyst Trevor Stirling."

October 10, 2014 in Advertising, Banking, Business, Law Enforcement, Really Stupid, Stocks | Permalink | Comments (0)