Despite the fact that the commercial cannabis industry in the United States is projected to soar above $50 billion by 2026, there is a great deal of misinformation and confusion with regard to intellectual property protection and the industry at-large — and to some degree, this confusion is justified. Though a number of states have implemented smart regulatory frameworks to introduce medical and recreational marijuana, federal policy and regulation is suffering from gridlock induced by the continued illegality of marijuana on a national level.

Intellectual Property and Cannabis

The illegality of marijuana manufacturing and distribution on a federal level (pursuant to the Controlled Substances Act) has led to some confusion in the context of intellectual property. As a marijuana business, for example, you may be prevented from obtaining federal trademark protection for your cannabis-related products due to limitations that only allow such protection for items that are “legal” in commerce. However, these limitations do not apply across the board to all intellectual property protections.

Basics of Trade Secret Protection

State intellectual property protection may, of course, be the easiest path to securing intellectual property protection for cannabis and cannabis-related products, particularly given the Trump administration’s mixed messages with regard to the future of marijuana regulation on the federal level.

Trade secret protection falls under state law, though most states have implemented some version of the Uniform Trade Secret Act (and as such, each state has somewhat different rules). Generally speaking, trade secret protection is granted to information that gives the owner a competitive advantage in the commercial context if the owner has taken measures to protect the confidentiality of the information. Trade secret protections covers a variety of intellectual property, including but not limited to customer lists, processes, recipes, and formulas. For example, if you are a cannabis cultivator, your particular methodology for growing cannabis may be protected pursuant to trade secret law.

Trade secret protection is extended when:

  1. The information is not known or ascertainable to competitors;
  2. The information grants the owner a competitive commercial advantage; and
  3. The owner has exerted efforts to prevent competitors from knowing or ascertaining the trade secret.

Suppose, for example, that you intend to protect your particular cultivation process from competitors. If you invite the general public to your farm to learn about your methodology for growing cannabis, then it cannot be reasonably said that you have maintained the “secret” or that you exerted reasonable efforts to prevent competitors from learning about your methodology.

Once you have an enforceable trade secret, you can prevent others (typically employees and consultants with access to your trade secrets) from misappropriating your trade secrets — in other words, from acquiring them through improper means. This gives the owner a mechanism of intellectual property protection.