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    • Cannabis Industry Licensing Trademarks

    Value Discovery Dec 12, 2018 - 3 min read

    The explosive growth anticipated in the cannabis industry results from recent legalization. Such action has spurred both trademark and technology development and licensing.

    Trademark Development
    The race to trademark medical, recreational and other cannabis products has intensified over the years. In 1996, California became the first state to legalize medical cannabis. By 2018, over half of the other U.S. states have joined California. Activity continued to increase after Colorado and Washington became the first states to legalize recreational use in 2012. Since that time, eight more states (plus Washington DC) have followed.

    A recent search of the U.S. Patent and Trademark Office (USPTO) Trademark Electronic Search System shows a substantial increase in trademark registration activity.

    Using the 1996 to 2012 Filing Dates, or the date the complete application was received by the USPTO, range and the keyword “cannabis” returned 297 filings over 15 years. Changing the range to 2013 to 2018 returned 2,369 filings in six years, or an increase close to 700%. Further, this count may be understated since not all trademark owners choose to register their marks. They simply use them in commerce to establish valid and protected rights. Discover more value insights here

    Celebrity Trademarks
    Entertainment celebrities have also entered the industry with their own trademarks. These focus primarily on recreational and medical products, but other products and services are not out-of-bounds.

    For example, among those are Snoop Dog’s marijuana media company, Wiz Khalifa’s Weed Farm game app, Margaret Cho’s pot-themed show and Tommy Chong’s Colorado dispensary. Other celebrities include Willie Nelson, Melissa Etheridge, Band of Heathens, The Marley Family, Whoopi Goldberg, Kevin Smith and Thievery Corporation.

    Licenses
    We identified a sample of four cannabis trademark licenses. Two licenses focus on the following products.
  • Edible marijuana-infused products
  • Marijuana concentrates products
  • Marijuana and hemp oil-infused products
    • The median royalty rate calculated for these two licenses is 10% of sales and both grant the use of personality rights of deceased musicians. It is interesting to note one license includes not only personality rights, but rights to lesser known marks. Each right details a royalty rate leading to a premium of 5% attributable to the personality rights. Further, the indicated median royalty rate is 11.25% for personality rights only. All else being equal, a “popularity” premium of 2x is observed between the musicians.

    The two remaining licenses focused on branding apparel and accessories and a web domain name, both having a royalty rate equal to 12% of sales. The reported license agreement dates range from 2015 to 2018.

    More Information
    https://en.wikipedia.org/wiki/Timeline_of_cannabis_laws_in_the_United_States
    https://www.vox.com/identities/2018/8/20/17938336/marijuana-legalization-states-map
    https://www.uspto.gov/trademark
    https://www.newsweek.com/marijuana-pot-wiz-khalifa-weed-farm-app-game-587107
    https://www.forbes.com/sites/monazhang/2018/04/19/thievery-corporation-are-the-latest-musicians-to-get-into-the-weed-business/#724b019e2b3b
    RoyaltySource Royalty Rates database www.royaltysource.com and www.ipscio.com
    Copyright© AUS Consultants, Inc.