Alison Malsbury
by
False advertising claims against cannabis businesses will be coming soon to a court near you. Art by AccordingtoSheBlum (www.accordingtosheblum.deviantart.com)
False advertising claims against cannabis businesses will be coming soon to a court near you. Art by AccordingtoSheBlum (www.accordingtosheblum.deviantart.com)

In Miller/Coors Sings the Blues over Craft Beer Lawsuit, All About Advertising Law discusses a recent deceptive advertising lawsuit against Miller/Coors. The lawsuit alleges Miller/Coors seeks to mislead the public into believing that its Blue Moon beer is a “craft” beer, in part through its intentional omission of the Miller/Coors name from product labels. The article discusses how the “alcohol industry has been a prime target” for such lawsuits, noting cases against Tito’s Handmade Vodka, Maker’s Mark, Jim Beam and Templeton Rye.

The cannabis industry is next.

Cannabis companies and their brands are coming under the same sort of competitive pressures faced by the alcohol industry. In newly legalized states, companies are fighting to establish cannabis brands they hope will dominate the industry for years to come. Perhaps most importantly, the brand you build up now in states like Washington and Oregon could — if you play your cards correctly — propel your business (and the brand reputation you have already developed) into states like New York, Texas, Illinois, Ohio, and California when they fully legalize.

On the flip side, however, mistakes you make now could jeopardize your future branding efforts or even knock you entirely out of the business.

We have already seen instances of companies suing cannabis companies for brand abuse. Hershey’s, for example, initiated multiple lawsuits against companies that branded cannabis-infused chocolate products with names such as “Mr. Dankbar,” “Reefer’s Peanut Butter Cups,” “Hasheath,” and “Ganja Joy,” all meant to parody their non-cannabis Hershey’s counterpart. This type of branding constitutes trademark infringement, as well as tarnishment of the more famous marks.

Unsurprisingly, given the infancy of the legal cannabis industry, we have yet to see any examples of cannabis-related advertising lawsuits. Marijuana businesses, however, are a prime target for these types of lawsuits. It’s only a matter of time and the following are some examples where we see eventual lawsuits.

We are aware of a number of cannabis businesses that tout their cannabis as “organic.” But as we noted in Organic Marijuana: Not Exactly, this presents a big issue:

“There is just one problem with this [listing your cannabis as ‘organic’]. One big problem. Doing so is illegal under federal law. I repeat, it is illegal under federal law to label or describe marijuana as organic.”

Labeling a product as “organic” generally requires a specific certification, and that certification is regulated by the U.S. Department of Agriculture. Congress set forth general organic principles in the Organic Foods Production Act, and the USDA defines specific organic standards. Though alternative certifications exist for marijuana and marijuana products, none are approved or regulated by the USDA, and they therefore do not create an official organic certification.

Any marijuana company that claims its cannabis is organic is opening itself up to a deceptive advertising lawsuit.

We also have real concerns about marijuana businesses that make excessive or inaccurate claims about their marijuana. A marijuana producer that claims its particular strain cures cancer could easily be sued when that claim falls short. A dispensary that wrongly advises a customer that a particular strain is great for sleeping (when it actually is not) could be sued for deception. It goes on and on.

Right now, with our industry in its legal infancy and with few super wealthy cannabis companies, the odds of such lawsuits are still relatively low – though considerably higher than zero. But that is going to change, and for any cannabis business with growth aspirations, now would be the best time for you to review what you are saying, confirm it all as accurate, and map out internal rules and regulations going forward. If you are a producer, you should be talking with the dispensaries that sell your products to make sure that they are not making any promises that you or your products cannot keep, because if they are and something goes wrong, you will almost certainly be a named defendant right with them.

As the cannabis industry grows and gains legitimacy, cannabis business owners will increasingly need to play by the same rules as all other legal businesses. When it comes to branding and marketing, this means that you too need to be certain not to make false or misleading statements in your advertising or on your packaging, and be certain that your brand does not infringe on the trademarks of another company.

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The Canna Law Blog™ is a forum for discussion about the practical aspects of cannabis law and how it impacts those involved in this growing industry. We will provide insight into how canna businesspeople can use the law to their advantage…

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Please be mindful that possessing, using, distributing and selling marijuana are all federal crimes and that this blog is not intended to give you any legal advice, much less lead you to believe that marijuana is legal under federal law.