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WINTER LLP Update: Guidance On Commercial Cannabis Activity

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You will note some very important clarifications on interactions between LICENSEES and NON-LICENSEES. One of the most noteworthy clarifications in our opinion, is the ability to license intellectual property to a LICENSEE from a NON-LICENSEE. As many of you who use our corporate structures know, this is a huge break and departure from the written regs, and one we thought would be the case all along. Now, it appears to be settled in our favor.There are many other important clarifications, so please review carefully. And, as always, please let us know if you have questions or need assistance with anything.

Take good care out there, WINTER LLP

GUIDANCE ON COMMERCIAL CANNABIS ACTIVITY

• Under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), all commercial cannabis activity shall be conducted between licensees. The employees of a licensee may engage in commercial cannabis activity on behalf of the licensee.
• Commercial cannabis activity includes activities that are plant touching such as cultivating, manufacturing, and transporting cannabis, as well as activities that are not plant touching such as procuring and selling cannabis.
• Below are examples of activities that are provided for informational purposes only to assist licensees by providing some general, generic examples. However, whether or not an activity is compliant with statute and regulation requires a case-by-case analysis and is determined by the specific facts and circumstances of the unique situation. Therefore, the examples below are not automatically allowable but rather provide a sampling of potentially allowable activities based on information derived from inquiries submitted to the Bureau.
Examples of Potentially Allowable Activities:
• Licensees may enter into intellectual property licensing agreements with unlicensed entities. However, the intellectual property holder cannot exert control over the licensee’s commercial cannabis operations. If the intellectual property holder is exerting control over the licensee’s commercial cannabis operation, then the intellectual property holder must be disclosed as an owner on the license.
GUIDANCE ON COMMERCIAL CANNABIS ACTIVITY
• Licensees may use the services of unlicensed entities such as consultants and brokers to conduct non-commercial cannabis activity such as renting property, purchasing packaging, or leasing equipment for use by the commercial cannabis business. Consultants or brokers that are engaged in commercial cannabis activity for a licensee, such as procuring or purchasing cannabis for a licensee, must be included as either an owner or financial interest holder on the license.
• Licensees may package and label cannabis with another licensee’s brand. For example, a licensed distributor may package and label cannabis with a licensed retailer’s brand on behalf of the licensed retailer.
• Licensees may use a referral service or agency to find a licensed distributor to distribute cannabis goods. The referral service or agency is not permitted to share in any profits or revenue from the agreement or have any direction or control over a license, unless the referral service or agency is disclosed as an owner or financial interest holder of the license.
• Licensees may procure or purchase cannabis on behalf of or at the request of another licensee, such as a licensed distributor procuring cannabis for a licensed manufacturer. Licensees may not procure or purchase cannabis on behalf of any person that is not licensed under MAUCRSA.
• Licensees may enter into rental agreement where the landlord takes a percentage of a licensee’s profits if the landlord is disclosed as an owner or financial interest holder of the license.
• Licensed retailers and licensed microbusinesses may contract with a service that provides a technology platform to facilitate delivery of cannabis goods to customers if the service does not share in the licensee’s profits.
• Licensees may hire an advertising agency or marketing firm to build and/or promote the licensee’s brand. The advertising agency is not permitted to share in any royalties or a percentage of profits or revenue of the licensee unless disclosed as an owner or financial interest holder of the license.
• Licensees may purchase the right to use a patent for cannabis extraction. The patentholder is not permitted to share in any royalties or a percentage of profits of the licensee unless the patent-holder is disclosed as an owner or financial interest holder on the license.
• Licensees may purchase non-cannabis materials such as empty cartridges, batteries, packaging, extraction equipment, grow lights, and transportation and delivery vehicles, from unlicensed businesses.
• Licensed cannabis event organizers may only coordinate cannabis events. Licensed cannabis event organizers are not authorized or licensed to engage in commercial cannabis activity governed by manufacturing licenses, cultivation licenses, distribution licenses, or retail licenses.
This informational document is not meant to implement, interpret, or make specific any existing laws or regulations.
REVISED: 03/19
Bureau of Cannabis Control
2920 Kilgore Road
Rancho Cordova, CA 95670
E bcc@dca.ca.gov | P (833) 768-5880
For the latest updates, follow the Bureau on social media
WWW. B C C . C A . G OV

[WINTER LLP WARNING] Breaking News: SOS now accepting trademark applications for cannabis products

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Hello all,

As you may have seen announced, California is now (allegedly) accepting trademark applications for cannabis products.

PLEASE BE ADVISED, we have been in constant contact with the CA Secretary of State and it is painfully clear that they have no idea what they are doing. None whatsoever. So, although it may seem tempting to apply for these state based trademarks, we are not recommending clients proceed with the California based trademarks at this time. Rather, we are advising on a wait and see approach. It’s going to be very messy…

However, if you want to proceed, please see the following:

State CA Trademarks:

Through our internal office discussion, we still believe that federal trademarks offer the strongest brand protection for your cannabis-related goods/services. That is because only with federal registration you are allowed to use ® (only can use ™ for State registration), and federal registration preclude later filed state registrations.

If you are still reading, and still want to proceed, we spoke with the Secretary of State’s Office earlier today and they indicated that cannabis-related marks may be registered with the CA Secretary of State so long as (1) the mark is lawfully in use in commerce within California; and (2) matches the classification of goods and services adopted by the United States Patent and Trademark Office. Additionally, only cannabis products that are allowed in CA regulations will be trademarked.

Currently prohibited items include but are not limited to:

  • Products that contain alcohol, nicotine, or added caffeine
  • Products that must be held below 41 degrees Fahrenheit
  • Vacuum packed products
  • Canned cannabis products
  • Cannabis-infused juice
  • Products that are easily confused with non-infused products
  • Edibles in the shape of human, animal, insect, or fruit
  • Most dairy and meat products
  • Cannabis related products that are attractive to children
  • Products that resemble traditionally available food packages
  • Products that exceed the maximum of 10 mg of THC per serving and 100 mg of TCH per package.

PLEASE BE ADVISED, there is NO classification of goods and services for cannabis in the USPTO system!! The State Office said we would have to use the “most appropriate USPTO class” for the cannabis product/service. Our most commonly used trademark classes have historically been in Class 003 (essential oils); Class 005 (herbal supplements) and Class 34 (smoking articles, cartridges, oils), and other food or candy related classes in applying with the USPTO. So our likely strategy with applying with the State will be to add THC/CBD to the description of goods in the aforementioned classes, i.e. “essential oils containing THC; herbal supplements containing THC; cartridges infused with THC/CBD, etc.”

Please contact our office if you are still interested in proceeding, and we will help you as best we can. But please note, we will probably try to convince you to file directly with the USPTO instead.

Thank you. Todd Winter, WINTER LLP.

URGENT – California Cannabis-Related Trademarks (Cannabizfile Online Cannabis Business Portal)

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Dear All,

Many of you have contacted us regarding California Cannabis-Related Trademarks. As you know, California Secretary of State’s Office released a press statement this month containing information about registering a cannabis-related trademark or service mark with the Secretary of State’s Office.

The State Trademark Unit has confirmed with us that the CA State Legislature will be voting on the State Classification Code for cannabis-related trademarks as early as January 2, 2018. Once the cannabis Classification Code is released, we will be able to assist you with applications for registration of a cannabis-related trademark with the State.

The basic requirements to file a Trademark or Service Mark in CA are as follows:

  • The mark must be available on the USPTO trademark database and in California (for all similar or related goods and services). This means YOU CANNOT INFRINGE ON AN EXISTING FEDERAL OR STATE (COMMON LAW OR REGISTERED) TRADEMARK.
  • You must be using the mark in commerce in California. Please note that for State Trademarks/Service Marks, you cannot file based on “Intent-to-Use” (Future Use).
  • If the mark is merely descriptive (i.e. the mark describes an ingredient, quality, characteristic, function, feature, purpose or use of the goods or services), it may not be registrable.
  • You must have a drawing of your mark on an 8 ½” x 11” sheet of paper.
  • If any part of your mark is not in English, you must submit a certified translation in English.
  • You must submit Three (3) Identical (three of the same) Specimens that show the mark in use in commerce. If the Application is signed by an individual on behalf of the Owner (Registrant), you must include a copy of the agreement signed by the Owner (Registrant) authorizing the individual to sign the Application on behalf of the Owner (Registrant).

PLEASE BE ADVISED, FEDERAL TRADEMARKS (REGISTRATIONS) ARE SUPERIOR TO STATE REGISTRATIONS. If a federally registered trademark was in use before a State registered trademark, the federal registrant can stop the State trademark owner from using the mark. Moreover, State trademark registration does not give you the right to use the symbol ®. You may use either TM for a State trademark or SM for a State service mark.

The benefit of the CA State trademark or service marks, however, is that it will protect your cannabis-related trademarks in California. Therefore although State registration is not required, we would recommend federal registrants (and non-registrants) to apply for a State trademark/service mark for cannabis-related goods and services.

Our Flat Fees for filing are as follows:

  • $250.00 for Trademark Clearance Search and Report.
  • $500.00 Legal Fees for preparation and filing, plus $70.00 filing fee per classification code. If more than one classification code is listed, then a $70.00 filing fee is required for each classification.

Please also note, along with some of our most entrepreneurial clients, we pioneered cannabis-related trademarks in the United States. There will be many attorneys and consultants with no trademark experience marketing their services to you for these California cannabis trademarks. Do not trust your state level filings with just anyone. Trademarks are much more complex than you realize. And if filed incorrectly, you run the risk of your brands being shut down and you being sued for profits and damages. We are experienced trademark attorneys, and have a state of the art trademark docket system (database) where we track and manage over 300+ trademarks for our clients throughout the world

We will keep you notified of any updates from the State as soon as they are released. Should you have any questions on any of the above, please do not hesitate to contact us.

Thank you. Todd Winter, WINTER LLP.