Cannabis Appellations and Intellectual Property: What a Hopeful Appellation Needs to Know. Now.

Co-authored by Heather Burke and Shabnam Malek from Brand & Branch LLP (!!!) 

Intellectual property is a type of law that sets the rules for laying claim to the creations of your mind. Cannabis appellations, i.e. the program which communicates to a consumer that a product’s essence is due to its unique region of production, falls under the ambit of intellectual property.

Intellectual property is one of the most complex, fascinating, and critical areas of law, particularly in today’s zoom-call driven world where internet and electronic connection rule the day.  Cannabis farmers looking to start a cannabis “appellation of origin” in their region must take the time to develop a thoughtful strategy for the ownership and use of their most precious intellectual property (“IP”) asset: the appellation name. Here’s a quick overview of the IP assets in play in cannabis appellations:

Ownership of Cannabis Appellation Intellectual Property

While no two situations are ever identical, it is likely that the appellation ownership will be structured as an entity (an LLC, a corporation, a Mutual Benefit Corporation, a B corporation, a Social Purpose Corporation, a state nonprofit, etc.).  The founding members of the appellation (the three or more unique businesses as dictated by the draft regulations) will likely be the owners of the appellation name. It is also likely that the ownership of the entity will be the respective farmers’ operating companies, though not necessarily.

There is an open question as to how newcomers to the appellation will be authorized to use the appellation name.  In any event, once compliance with the appellation’s standards is established in the appropriate manner, a seal or certification mark could be used, and/or the appellation name could simply be used on the label. These very important procedural question may be up to the appellations themselves depending on their goals.

Lack of Certification Marks

In a perfect world, an appellation entity would also seek a certification mark for the appellation’s standards and practices from the state or federal government. Certification marks, however, do not currently exist in state law, and cannabis farmers can’t access federal certification marks because of cannabis’s Schedule 1 status.

For now, farmers seeking to use an appellation name will need to establish that they meet the appellation standards. The specific process for proving that the farmer meets the appellation’s standards will depend on how the request to use the appellation name is made and whether meeting the appellation’s standards is acknowledged by contract or simply by use of a certification mark or seal.

While the lack of certification marks does present logistical issues for cannabis appellations, the example of Napa Valley may be helpful. Napa Valley is a different type of appellation that was granted by the government in 1980. However, Napa Valley did not seek a certification mark until 2011, over two decades later, and even then, the certification mark was not successfully granted until 2015. The implication is that, while certification marks are important, cannabis appellations will be able to build the appellation’s brand using the appellation name only, so cannabis appellations should not be substantially held back by the current lack of complimentary certification marks.

Thankfully, numerous appellation policy groups are working to include cannabis-certification marks in further statutory or regulatory cleanup packages, so we should see certification marks applied to cannabis far sooner than they were applied to wine, at least in the Napa Valley.

Use of the Intellectual Property

In any event, once the farmers meet the appellation’s standards of use, that farmer may use the appellation name on their products.  The farmers’ will presumably be tasked with protecting their own farm-specific name and logo through trademark or copyright protection, as applicable.

Due to the anticipated use of both an appellation name and a farm name on a product’s label, we can expect to see regulations or agreements arise regarding “conjunctive labeling,” which is labeling where the county, appellation, and any smaller appellation may or must also be listed in addition to the farm’s name.

Defining Other Terms Used in Labeling

Finally, it is unclear whether common labeling terms such as “regenerative” or “single batch” will be included in the name of the appellation, or will arise from certification marks, or from policy changes, but we can expect to see exciting developments in that area in the coming years.

What You Can Do

In closing, cannabis farmers seeking to start an appellation need to be thinking about the following IP assets, who owns them, and how they should be used in labeling or marketing the cannabis: (1) an appellation  name or the name of a geographic region that is likely to become an appellation, (2) the farmer’s farm-specific name or logo, and (3) labeling terms such as “regenerative,” or “estate grown.”

Wise farmers hoping to start an appellation should have a comprehensive plan to address each of these critical components of a successful intellectual property strategy before filing for their appellation petition.

As the state’s 15-day comment period for its current round of cannabis appellation regulations draws to a close today at midnight, please get involved! One of the biggest concerns seems to be the state’s favorable characterization of reputational-based appellations, which works against the terroir-baseline recently imposed by statute. We thank the following trade and/or policy organizations for taking a front seat in this quick-moving policy development and ask interested parties to reach to the following groups for further information and to assist with comments:

Thank you to Shabnam Malek, one of the best intellectual property lawyers in the cannabis space, for co-authoring this blog with me. Please stay safe all!

Heather Burke (Origin Group Law LLP)

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Shabnam Malek (Brand & Branch LLP)

To sign up for Brand & Branch’s blog list, please go HERE.

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