By Andrew Dominy and Mark Mielke
With the anticipation surrounding the upcoming legalization of cannabis in Canada, it comes as no surprise that companies have been quick to take advantage of this budding industry. More than 70 corporations have been issued licenses from Health Canada to produce and sell medical marijuana, with greater than half of these issued in 2017 and 2018.1 At the same time, equity offerings by Canadian marijuana companies hit nearly $1 billion USD last year and the global market for cannabis products is expected to expand to $31.4 billion USD by 2021.2
Along with many other challenges, one of the most important for future growth and market establishment will be branding efforts by new cannabis companies. Brand establishment may be difficult given the already crowded marketplace, which is only expected to get larger and make the ability to distinguish a product more difficult.
Restrictions on Promotions
A corollary to the first difficulty relates to the federal government’s legislative restrictions on branding. While designing distinctive packaging and trademarks is a classic and effective way to distinguish a product, the ability to do so will be severely restricted by the provisions of the federal Cannabis Act3 (the “Act”) once it comes into force. The federal government appears to have taken a page out of its tobacco legislation handbook when creating the Cannabis Act, severely restricting branding and packaging for cannabis products.
The Act looks to create a prohibition on the promotion of cannabis, cannabis accessories, or any services related to cannabis. Only those producers authorized to do so may engage in informational or brand-preference promotion. Even when authorized to promote their products, any promotion must be:
- in a communication that is addressed and sent to an individual who is 18 years of age or older and is identified by name;
- in a place where young persons are not permitted by law; or
- communicated by means of a telecommunication, where the person responsible for the content of the promotion has taken reasonable steps to ensure that the promotion cannot be accessed by a young person.
The new Act specifically addresses packaging and labelling requirements. Any packaging cannot:
- be made appealing to young people;
- set out a testimonial or endorsement;
- depict a real or fictional character;
- promote a particular way of life; or
- contain misleading information.
Health Canada has also proposed strict limits on the packaging, which again model those placed on tobacco products. Some of the suggested packaging below gives an idea of what to expect should Health Canada’s suggestions be implemented4:
Three aspects of the packaging are immediately noticeable:
- the large warnings and THC symbol;
- the monotone colour scheme; and
- the correspondingly small areas for logos and brand names.
Given the limited space assigned to logos and brand names, it will become even more important to create a mark which is immediately distinguishable.
Once a cannabis producer or retailer has created their mark, they may look to trademark it. Despite the packaging and promotion restrictions in the Act, this will not affect the overall ability of producers and retailers to register a cannabis-associated trademark in Canada. In fact, a quick search of the Canadian Trademarks Database returns over 170 pending or granted trademarks containing the word “cannabis”. However, when filing a trademark, any producer or retailer will need to be aware of the need to avoid marks which would fall afoul of the Act.
As noted above, promotion of cannabis products cannot appeal to young people and cannot depict a real or fictional character. These restrictions may therefore have a bearing on the nature of marks which can be registered. Even if they were registrable, any such marks would be pointless from a branding perspective due to the inability to actually use them for promotional purposes.
Otherwise, registration of cannabis-related trademarks must conform to the normal requirements. Importantly, a trademark cannot be confusing or mistaken with a pre-existing trademark. To prevent issues of trademark confusion, a search of the Trademarks Database available online will provide a list of marks in an area of trade. Comparing them to a mark you wish to register will help determine whether the new mark is distinctive enough. Trademarks also cannot include certain government designs, coats of arms, and other similar official designs.
The situation is different in the United States. Despite several states legalizing cannabis, the prohibition on its production and distribution continues at a federal level. As trademarks are also regulated federally, the United States Patent and Trademark Office (the “USPTO”) has taken the position that any cannabis-related trade names or trademarks are not registrable. What this means for cannabis corporations in Canada is that even if a cannabis-related trademark is registered in Canada, these marks will not have legislative protection in the United States.
Resources for Businesses
Want to register a trademark for your cannabis business? Our cannabis group has experience advising cannabis producers on financing and corporate governance, packaging, zoning and intellectual property. We also have experience preparing applications for cannabis trademarks.
Interested in branding your cannabis business? Contact Mark Mielke at 780-423-7645 or email@example.com for assistance in Alberta and the Northwest Territories.
More to Come
Field Law’s Cannabis Industry Group will continue to countdown to the implementation of the legislation during the summer of 2018. Stay tuned for more information on labour and employment, occupational health and safety, intellectual property and business-related issues that may arise following the legalization and regulation of cannabis in Alberta and the Territories.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.