Trademark and Patent Challenges Loom for Minnesota Cannabis Businesses as Legalization Approaches

As Minnesota gears up for the legalization of recreational cannabis next year, businesses across the state are preparing for a surge of activity. While retailers like dispensaries will be focused on obtaining the necessary licenses to operate, cannabis manufacturers are facing their own set of challenges, particularly concerning trademarks and patents.

Federal vs. State Trademark Dilemmas

The crux of the issue lies in the conflict between state and federal laws regarding cannabis. Under the federal Controlled Substances Act, cannabis remains illegal, which complicates the process of securing federal trademark protection. Tim Sitzmann, a shareholder with Winthrop & Weinstine in Minneapolis, emphasizes the significance of this legal tension.

“The interplay between state and federal law is one of the biggest concerns when it comes to trademarks,” said Sitzmann. “A federal trademark registration is usually the best way to have protection for your trademark, but cannabis is still illegal under federal law. You can’t get a federal registration for a product that’s unlawful.”

Given this, Sitzmann suggests that state trademark registration is the most viable option for cannabis businesses in Minnesota, as the federal route is currently unavailable.

The Challenge of State-Level Trademark Classification

Even at the state level, businesses face hurdles. Establishing a trademark classification code for a product that isn’t yet legal to sell is a significant challenge. Aaron Pelley, a partner at Harris Sliwoski’s Seattle office, highlighted this issue during a recent presentation at the Cannacon convention in St. Paul.

“Legalization happens, but the secretary of state hasn’t quite caught up with the issue when it comes to state trademarks,” Pelley noted.

Pelley advises manufacturers to prioritize applying for state-level trademark protection, as the process is quicker and more straightforward compared to the lengthy and costly federal process. In Minnesota, state applications are generally processed within 60 days, a stark contrast to the six months or more required by the U.S. Patent and Trademark Office (USPTO).

Navigating the Trademark Application Process

Minnesota follows the USPTO’s classification system for goods and services, using numbers 1 through 45. However, as Pelley pointed out, there is a need for the state to adapt to the unique requirements of cannabis products.

“What ends up happening — and hopefully Minneapolis’s secretary of state will get this together before people start putting things out on the market — is that they add a classification at the state level,” Pelley explained.

Despite these challenges, Sitzmann highlighted a crucial limitation: businesses can’t secure a product trademark until they’ve entered the market. This means that companies need to be actively selling their product before they can protect it with a trademark.

“You can’t protect yourself until you’re in the marketplace,” Sitzmann said. “But you have to show proof that you’ve sold something in the marketplace before you can get a trademark.”

Federal Options and the “Intent-to-Use” Strategy

While state-level protection is currently the best option, Pelley mentioned that an “intent-to-use” application at the federal level is another potential strategy. This allows businesses to reserve a trademark for up to three years, with the hope that cannabis will become legal during that period.

“It’s a gamble, because legalization isn’t certain in a lot of states,” Pelley warned. However, for businesses planning to expand across multiple states, this could be a worthwhile investment.

Patent Considerations for Cannabis Varietals

In addition to trademarks, cannabis businesses developing new strains of the plant must consider patent protection. Sitzmann advised caution in how these new varietals are described, particularly in relation to trademarks.

“If you say your new plant is called Circus, that can become its generic name,” Sitzmann explained. “Even if it’s just a designation, it can make it really hard to use that name as a trademark, and can even cause you to accidentally give up your trademark protection.”

As Minnesota’s cannabis industry prepares for legalization, these trademark and patent challenges will require careful navigation to ensure that businesses can protect their brands and innovations in a rapidly evolving legal landscape.