marijuana montana employmentMedical marijuana is legal in Montana. Unfortunately, that does not prevent local employers from terminating workers for legal, off-work use of marijuana in the state.

In 2010, while already employed by Charter Communications, LLC, Lance Carlson was issued a medical marijuana card under Montana Medical Marijuana Act to treat chronic low back and stomach pain. The medical marijuana card allowed Mr. Carlson to legally use marijuana to treat the conditions. In 2016, Mr. Carlson was involved in a work-related motor-vehicle accident. A urinalysis that followed the accident tested positive for THC. Mr. Carlson was promptly terminated as a result of the drug test.

Mr. Carlson initially brought suit against his former employer in Montana state court, alleging the former employer had wrongfully terminated him in violation of the Discrimination Under the Montana Human Rights Act— specifically, that his employer had discriminated against him because of a disability. The case was removed to Federal District Court. Charter Communications quickly moved for a motion to dismiss arguing that the Montana Marijuana Act allowed them to terminate Mr. Carlson for his medical marijuana use. Mr. Carlson appealed the decision to the Ninth Circuit.

The Ninth Circuit, in an unpublished opinion, upheld the district court’s dismissal. The Ninth Circuit specifically relied on the carve-out of Montana’s medical marijuana act that states employers are allowed to prohibit employees from using marijuana. Mr. Carlson challenged that exact regulation as unconstitutional. However, the Ninth Circuit determined it was constitutional because it was “rationally related to Montana’s legitimate state interest in providing careful regulation of access to an otherwise illegal substance for the limited use by persons for whom there is little or no other effective alternative…”

Given the general trend for acceptance of marijuana, the Ninth Circuit decision is disappointing, even though it is unpublished and therefore sets no legal precedent. However, the problem does not generally lie with the Ninth Circuit, but instead with Montana’s state law. Now is the time to lobby Montana officials to have the Montana Medical Marijuana Act revised to protect employee’s off-work medical marijuana use.

Montana is not alone in allowing employers to terminate employee for their legal off-work use of marijuana. Oregon, similarly, has a statute that does not require employers to accommodate employees’ off-work use of medical marijuana. Way back in 2010, the Oregon Supreme Court ruled that the statute prohibiting disability discrimination in employment does not protect medical marijuana users. Washington’s laws do not require employers to accommodate employee’s medical marijuana use either. Colorado, another state on the forefront of adult use legalization, still allows employers to terminate employees for medical marijuana use, too.

While Oregon and California have struggled to pass legislation protecting employee’s off-work medical marijuana use, other states have managed. These laws typically create a carve-out for employers who contract with the federal government and therefore are required to have a drug-free workplace. Federal legislators also have recently introduced legislation  to protect off-work marijuana use. Currently the bipartisan bill is stalled in the Oversight and Government Reform Committee.

I suspect eventually the states discussed in this blog post will catch up with the changing of the times, but until then, be aware that many states allow employers to terminate employees for their legal use of marijuana—medical or otherwise.

Editor’s Note: This blog post first ran on December 6. We are re-publishing it here because a platform glitch erased the initial publication.

Oregon psilocybin psychedelic mushrooms

Back in August, I covered the landmark Food and Drug Administration (FDA) drug trial approval for psilocybin, the naturally occurring, psychedelic ingredient found in around 200 species of mushrooms. I speculated that if everything goes well, we could see an approved psilocybin drug hit the market sometime in the next 5 to 10 years. I also mentioned that it’s possible that psilocybin could be legalized in certain states before that, including Oregon. Last month that came one step closer to happening, when Oregon Attorney General approved ballot measure language to legalize psilocybin statewide.

Initiative Petition 2020-12 (the “Initiative”) can be found here, and a link to the Official PSI 2020 Campaign Website can be found here. If you just want to see a summary of the Initiative ballot title as it would appear in 2020, though, we’ve got you covered:

Currently, federal/state law prohibits the manufacture, delivery, and possession of psilocybin (hallucinogen from fungus). Initiative amends state law to reduce most criminal penalties for unlawful/unlicensed psilocybin manufacture, delivery, possession to violations or misdemeanors; retains felonies for large weight of psilocybin and/or some convicted felons. Initiative amends state law to require Oregon Health Authority (OHA) to establish Oregon Psilocybin Services Program to allow licensed/regulated production, processing, delivery, possession of psilocybin, and administration of “psilocybin service” (defined) by licensed “facilitator” (defined) to “qualified client” (defined). Grants OHA authority to implement, administer, and enforce program. Establishes fund for program administration and OHA appointed advisory board to advise OHA director. Preempts local laws inconsistent with program except “reasonable regulations” (defined). Other provisions.

That’s a fair bit to digest, but if you’ve been around this stuff for a while you might observe that the Initiative offers a structure similar to Oregon’s early-stage medical marijuana program. That program also: 1) was borne of an initiative back in 1998; 2) was solely administered by OHA (through its predecessor); 3) reduced criminal penalties, and 4) created a doctor-patient-caregiver program similar to the facilitator-client concept on offer for psilocybin. It appears that the Initiative’s chief petitioners are wisely working off the model.

The steep and imminent challenge for the petitioners is the requirement to gather 140,000 signatures over the next 18 months in order to get the Initiative onto the ballot. If that somehow happens, an even steeper challenge will be convincing 51% of everybody to vote “Yes” to legalizing psilocybin. All in all, it feels like a bit much, even for Oregon. Our guess is that the signatures hurdle will sink the initiative, as recently occurred with a similar effort in California.

Still, you never know. Oregon can boast a history of progressive action on controlled substances, dating back to 1973 when it became the first state to decriminalize possession of small amounts of cannabis. That action was taken against the strong headwinds of the recently enacted federal Controlled Substances Act. Today, the zeitgeist is quite a bit different.

If you want to get involved in legalizing psilocybin in Oregon, the landing page for volunteers is here. Otherwise, we will keep you posted on any major developments as they arise.

california cannabis BCC

Today, the Bureau of Cannabis Control (BCC) published its Proposed Text of Regulations Submitted to Office of Administrative Law for review here. We are still in the process of reviewing everything, but there are enough ambiguities to cause us a good deal of concern, particularly with respect to IP licensing and contract manufacturing agreements.

We are also reviewing the BCC’s responses to comments submitted on the proposed regulations back in early November, of which there are about a thousand pages. We’ll be analyzing the regulations section by section and writing about all of the changes over the course of the next week.

Stay tuned.

marijuana bank fincen
Slowly but surely, it’s happening for canna businesses.

According to a recent report from the U.S. Treasury Department’s Financial Crime Enforcement Network (“FinCEN”), a growing number of financial institutions are willing to work with cannabis businesses. As of September 30, 375 banks and 111 credit unions were managing marijuana business accounts.

These numbers reveal a steady growth in the number of financial providers willing to engage with the cannabis industry, despite its federal illegality. The report confirms what our cannabis business lawyers have observed over the past few years in Washington, Oregon and California: namely, most of our licensed cannabis business clients are banked, and it isn’t as hard as it used to be to acquire a basic merchant account.

Still, most financial services providers have been reluctant to serve the marijuana industry for years, fearing the federal cannabis prohibition would trigger liability under money laundering laws. Earlier this year, many concluded that banks would refuse to associate with cannabis businesses following the decision by then-U.S. Attorney General Jeff Sessions to retract policy protections for licensed marijuana businesses from federal interference. However, the latest FinCEN report reveals that those fears were mostly speculative.

The American Bankers Association, which recently conducted a survey on the issues faced by banks that are serving cannabis businesses, is advocating for greater legal clarity to banks operating in states where recreational and medical cannabis has been legalized. Indeed, the guidelines currently used by the financial services industry are those published in 2014 by the FinCEN and could use an update given the continued ascendance of marijuana reform.

Several key officials of the Trump administration have also expressed the need to clarify cannabis banking issues. For instance, Treasury Secretary Steven Mnuchin stated in congressional testimony that he wants businesses operating in states where marijuana is legal to be able to store their profits in banks.

I assure you that we don’t want bags of cash … We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”

In June, Federal Deposit Insurance Corporation Chariwoman Jelena McWilliams explained that she instructed her staff to consider ways to address the banking issues, but that the agency’s hands were “somewhat tied” until federal law legalizes cannabis.

Support for clarification and for fixing marijuana banking problems also comes from the states. A few months ago, a coalition of the top financial regulators located in thirteen states asked Congress to take action to protect banks working with the cannabis industry.

In their letter, the regulators wrote:

It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space without the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties.”

Finally, back in June, a bipartisan group of twelve governors urged lawmakers to pass the Strengthening the Tenth Amendment Entrusting States (“STATES”) Act, which proposed to amend the Controlled Substance Act to exempt state-legal marijuana activities.

This growing support for permanent protections of banks that serve cannabis businesses is a promising sign that legal reform is on its way. The newly formed Democratic House has expressed a strong desire to move cannabis legislation, including banking issues, in the new year. Only time will tell whether the Republican-controlled Senate will allow it.

california cannabis litigation
We see litigation in the California industry’s future.

Because California’s cannabis regulatory scheme is still in relative infancy, 2018 has looked the same for most operators: applying for annual licenses and waiting (and then continuing to wait) for them to issue or fighting to get temporary license applications submitted before they can no longer be issued. But what happens in two or three years after hundreds or thousands of commercial cannabis licenses have been issued? A host of administrative and civil litigation, probably.

California’s cannabis regulators have immense power that’s not just going to disappear after they issue licenses. The Bureau of Cannabis Control, which regulates a number of different license types, arguably has more police power than the actual police. Section 5800 of the BCC’s readopted emergency regulations, for example, gives the BCC “full and immediate access”, without prior notice, to enter premises, inspect cannabis or vehicles, and copy books and records, and failure of a party to comply with a BCC investigation can be subject to discipline.

Not only do the agencies have broad investigative power, but the subject matter of what they can investigate—all the various regulations that companies have to comply with—is immense. The regulators are not going to sit around and assume that licensees are following the law, the regulations, or even their own operational plans submitted with their applications—they are almost certainly going to use their investigative power to root out non-compliant operators. This should come as no surprise as the BCC, for example, has already taken some action against allegedly unlicensed cannabis operators. Our cannabis lawyers in other states with older licensing schemes have already seen targeted agency investigations and enforcement actions.

There are really endless ways that the agencies may choose to investigate or enforce their regulations, but it’s safe to say that they will prioritize enforcement against unlicensed operators. They may also go after some other easy targets—selling to underage persons, violations of advertising or delivery regulations, track-and-trace non-compliance, and so on. Rest assured, too, that administrative rules will continue to evolve, and licensed businesses that do not keep up on compliance will also be vulnerable.

Not only are the next few years likely to see an increase in administrative actions, but they are also likely to see a swath of civil litigation between licensees and internally. With the development of so much new technology and other intellectual property, we expect to see a good deal of trade secret and other IP litigation. Prop 65 and other forms of false advertising litigation are likely to continue as well. And internally, members of cannabis companies may start to bring lawsuits against each other or their companies for a number of reasons—from simple things like alleged mismanagement of company assets to fraud in soliciting investors.

The future of the California cannabis industry isn’t entirely certain, but it’s likely going to involve a lot of time before arbitrators, judges and other dispute resolution officiants.

california cannabis CLE ethics

Representing cannabis businesses is fraught with ethical traps. Cannabis businesses require guidance in navigating complex and shifting state and local regulations, and providing that guidance in a federally illegal landscape requires a delicate dance. To learn about and discuss potential pitfalls in representing California cannabis businesses, join us on December 7 at 12pm PST for a webinar entitled “Ethically Navigating Local and State Licensing for Cannabis Businesses.”

At the webinar, attorneys Julie Hamill of Harris Bricken and Ruben Duran of Best Best & Krieger will provide tips on how to traverse the ever-changing landscape of local and state licensing without getting your clients or yourself in trouble. The attorneys will cover changes to the California Rules of Professional Conduct, updates to federal policies and state regulations, and cautionary tales of cannabis attorneys who have found their ethics called into question.

Program Highlights:

  • Continuing tension between state and federal laws
  • Applying the new Rules of Professional Conduct
  • Regional bar association ethics opinions
  • Attorney-Client privilege concerns
  • Public law: conflicts of interest and bribery
  • Real life ethical scenarios

This is an intermediate level program worth 1 MCLE credit in Legal Ethics. Some experience with cannabis law is assumed. Please go here to register!

For more of Julie’s work, please check out the below posts:

shelf space california cannabis contract
Shelf space is a big deal right now in California cannabis.

With the roll out of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA“), our California cannabis attorneys see all kinds of agreements between and among licensees. From IP licensing to white labeling to distribution contracts, we’re beginning to see people emerge from the shadows and enter into written agreements with each other, which is undoubtedly for the best given the amount of litigation that already exists in the industry and given the amount of fighting that’s sure to come regarding commercial disputes. Lately though, what we’ve seen a lot of are “pay-to-stay” and slotting fee agreements between cannabis cultivators, manufacturers, distributors, and retailers. In these agreements, cultivators, manufacturers and distributors are locking retailers into contracts for dedicated, prime-time shelf space. The question, though, is whether such agreements are kosher in California and what you need to know to have a reliable, enforceable, pay-to-stay contract.

California is still pretty dynamic when it comes to contracts between licensees. Unlike other states, California hasn’t really broached the subject of massive restrictions on contracts between licensees (the lone exception is the most recent of proposed permanent regulations that attacked IP licensing and white labeling between licensees and non-licensees). Other states are very particular about licensees exerting undue influence over each other via contract when it comes to things like control, term, and the legitimacy of services/goods being provided to the licensee. Here in California, though, the following are pretty much the only contractual restrictions that exist between licensees in the marketplace:

A licensee shall not perform any of the following acts, or permit any of the following acts to be performed by any employee, agent, or contractor of the licensee:
(1) Make any contract in restraint of trade . . .
(3) Make a sale or contract for the sale of cannabis or cannabis products, or to fix a price charged therefor, or discount from, or rebate upon, that price, on the condition, agreement, or understanding that the consumer or purchaser thereof shall not use or deal in the goods, merchandise, machinery, supplies, commodities, or services of a competitor or competitors of the seller, where the effect of that sale, contract, condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of trade or commerce.
(4) Sell any cannabis or cannabis products at less than cost for the purpose of injuring competitors, destroying competition, or misleading or deceiving purchasers or prospective purchasers . . .
(6) Sell any cannabis or cannabis products at less than the cost thereof to such vendor, or to give away any article or product for the purpose of injuring competitors or destroying competition . . .
In turn, licensees pretty much have free reign to contract for whatever they want for however long they want without fear of interference from state regulators (so long as such agreements basically don’t amount to anti-competitive behavior). In addition, in case you’re thinking that licensee contracts don’t matter, California already passed legislation ensuring that commercial cannabis contracts are indeed enforceable in state court so that no one is left holding the bag over some illegality defense to performance.
On to slotting fee and pay-to-stay agreements. When you walk into the grocery store, the retailer likely isn’t just arranging products by name or color. In fact, what’s likely going on is that certain shelf space for new products has been negotiated and paid for by a manufacturer. And with good reason. In commodities, especially saturated ones, face time with consumers isn’t great and margins can be really poor and the competition is vast. In California, only cannabis retailers can sell to the public, so it’s hugely important for wholesale and distributor licensees to have good placement on shelf space in dispensaries and on the retailers’ online menus. The slotting fee agreement essentially amounts to the lump sum fee the supplier pays to the retailer to reserve their sacred, strategic shelf space. The pay-to-stay agreement (which can be similar to the slotting fee) typically takes things a step further where it’s instituted after the initial slot and addresses issues for existing products like marketing, promotion, inventory stocking, failure fees, and paying extra to ensure that your competitors don’t get any valuable shelf space near you or at all.

What should go into these contracts? Like any other agreement, if you’re the supplier, you want to fully articulate exactly where your placement will be in the store, how often that placement occurs, your inventory schedule, what happens in the event you cannot deliver on the inventory, what happens if no one wants your product despite its placement, what happens if the retailer (for its own benefit) wants to place another, better performing product in close proximity to yours, and the list goes on and on. Suppliers of cannabis in California should not be paying robust slotting fees to retailers willy-nilly. Even though retailers have a lot of leverage where there are still so few of them and because they’re the only licensees with a daily, face-to-face relationship with the public, if you are a supplier of a recognized brand (or even if you’re consistent with product potency and quality assurance testing), you still have some leverage where many cannabis consumers are still coming to the marketplace trying to decide what they like. The other reason cannabis suppliers shouldn’t be paying super high slotting fees is because the contract could be invalidated not because of the cannabis aspect, but because it’s anti-competitive in nature.

You’ve probably already concluded that the companies that can afford the highest slotting fees are the ones who will make it to the shelves of cannabis retailers in California. And you’re likely not wrong since retailers also have to financially survive in this newly regulated marketplace and slotting fee agreements certainly help to allocate the risk on what products to buy and re-sell (or not). In addition, the bigger cannabis brands may not even face the prospect of these contracts from retailers because the retailers desperately want to carry on them on their shelves anyway. That begs the question then of whether slotting fee agreements and pay-to-stay contracts are actually anti-competitive in violation of MAUCRSA. There’s no doubt that they certainly could be if retailers band together and start to create extremely high, universal slotting fees. Or if suppliers decide to lock up entire dispensaries. The upside, though, can be that retailers are actually more willing to take on new products since they shift liabilities for their failure back to the supplier, the slotting relationship makes product distribution more efficient, and consumers can benefit from lower prices where the retailer can better allocate its risk on investing in the presentation of new products. In any event, state regulators have stayed silent on this practice for now (although the FTC, the sleeping giant of the cannabis world, has debated the subject a good amount).

The bottom line? Unless and until regulators squarely address it or suppliers start to sue over the practice, if you’re presented with or need a fee slotting agreement or a pay-to-stay contract, make sure that you check the box on the details of the relationship. Make sure, too, that you’re avoiding anti-competitive terms and conditions if you want to make hay in California.

Legalized recreational cannabis businesses are still new in California. As a cannabis business owner, you may be thinking that a great way to protect your confidential information and prevent your employees from leaving would be a non-compete agreement. Think again. Not only are non-competition agreements unenforceable and prohibited in California, but they can come with criminal sanctions if an employer requires an employee to enter into a non-competition agreement as a condition of employment. In other words, don’t even think about entering into non-competition agreements with you California cannabis employees.

Many cannabis companies may try another route to protect their confidential business information and get employees to stick around through “non-solicitation agreements.” Non-solicitation agreements are not as restrictive as non-competition agreements and generally are not prohibited by California law. Non-solicitation agreements typically prohibit employees from taking any actions that will cause any employee, customer, or vendor of the employer to change its relationship with the employer. California courts will carefully scrutinize non-solicitation agreements to ensure they are not overly broad and therefore crossing the line from non-solicitation into non-competition. A recent case from the California Court of Appeals demonstrates that the courts are continuing this tradition and carefully examining non-solicitation agreements and only enforcing them if they are true non-solicitation agreements.

california cannabis nonsolicitation noncompete employeeIn AMN Healthcare Inc v. Aya Healthcare Services Inc, AMN Healthcare required employees to sign a non-solicitation agreement preventing them from soliciting other employees of AMN Healthcare, to leave the service of AMN Healthcare. AMN Healthcare required a recruiter it hired to sign the non-solicitation agreement. The recruiter then went to work for Aya Healthcare, which practiced in the same field as AMN Healthcare. The recruiter, pursuant to the non-solicitation agreement was not allowed to recruit employees from AMN Healthcare. Litigation ensued.

The Court of Appeals determined the broad language of AMN Healthcare’s non-solicitation agreement violated California’s Business and Professions code because it restricted the employee’s ability to freely engage in a lawful profession or trade. Specifically, the recruiter could not freely recruit from AMN Healthcare, her exact professional requirements. While the Court of Appeals decision turned on the recruiter’s specific issue, the Court went further and noted AMN Healthcare primarily employed travel nurses for a period of 13 weeks or less. The AMN Healthcare non-solicitation agreement was to be in effect for at least one year following the end of the employment relationship. The Court found this to be overly restrictive given that most of the nurses were employed for such a short period. Overall, the court determined the non-solicitation agreements ANM Healthcare required employees to sign were unenforceable.

What does this mean for your cannabis company? Non-solicitation agreements can be useful tools to help protect confidential information and protect employees from jumping ship. However, they need to be carefully crafted to be enforceable. There is little point in requiring employees to sign an unenforceable non-solicitation agreement. More importantly, non-solicitation agreements need to be carefully drafted to ensure they are not actually non-competition agreements that could violate the Business and Professions Code, and subject your cannabis company to criminal sanctions. If you are interested in a non-solicitation agreement, it is always best to consult a cannabis employment attorney to draft a strong one that will protect your interests.

asset forfeiture fine cannabis marijuana

We have handled a number of excessive fines cases on behalf of clients who’ve had their property seized, or threatened to be seized by the government. For some background on this, see our blog posts here and here.

The United States Constitution provides that excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted. U.S. Const., Amdt. 8. The Excessive Fines Clause “limits the government’s power to extract payments, whether in cash or in kind, ‘as punishment for some offense.’” Austin v. United States, 509 U.S. 602, 609-10 (1993). That constitutional protection applies in cannabis cases, just like everywhere else.

On Wednesday, the United States Supreme Court heard oral arguments in the case of Timbs v. Indiana regarding whether the Eighth Amendment’s Excessive Fines Clause is incorporated against the States under the Fourteenth Amendment. The case involves the forfeiture of petitioner’s land rover as punishment for selling heroin. The Indiana Court of Appeal held that the forfeiture of the land rover was grossly disproportionate to the gravity of the offense. The Indiana Supreme Court reversed and concluded that because states are not subject to the Excessive Fines Clause, the forfeiture was not unconstitutional.

The predicted outcome is that the United States Supreme Court will apply the Excessive Fines Clause against the states. The Timbs decision will have nationwide impacts for those accused of drug crimes and other offenses, and will be an important check on the government’s power to interfere with private property. That would be great news for the cannabis industry.

As stated in the petitioner’s opening brief:

“The right to be free from excessive fines is fundamental and applies to the States. The power to fine is—and has always been—a formidable one. And unlike every other form of punishment, fines and forfeitures are a source of revenue for the government, making them uniquely prone to abuse. The accompanying risk to life, liberty, and property is very real. “[I]n a free government,” after all, “almost all other rights would become utterly worthless, if the government possessed an uncontrollable power over the private fortune of every citizen.” 3 Joseph Story, Commentaries on the Constitution of the United States § 1784, 661 (1833).”

It’s a compelling argument, and you can read the full brief here.

We will be monitoring this case and will provide an update once the decision is published.

cbd label copyright trademark
Start from scratch to avoid infringement issues.

We previously discussed the need for manufacturers of CBD-infused foods and beverages (“Manufacturers”) to comply with the Food and Drug Administration labeling rules. However, such requirements are only one of many issues Manufacturers should worry about. Indeed, Manufacturers should also ensure: 1) that their name as well as their logo/design are not infringing on those of another; and 2) that they hold the right to the Trademarks they intend to display on their labels. This post provides a brief overview of the steps Manufacturers should take to shield themselves from infringement claims.

Trademark and/or Logo Infringement

As we explained before, trademarks are words, phrases, symbols or designs (i.e., logos) that identify the source of a product and help distinguish that product from that of competitors. The very best way to protect your trademark is to register it at the state or federal level.

Logos may also be protected under copyright law. Copyright law protects literary, musical, graphic, or other artistic forms in which an author expresses intellectual concepts. Thus, logos that are adequately original and ornate have a strong chance of being copyright protected, even without registration—though it is in the Manufacturer’s best interest to register its Logo with the U.S. Copyright Office, see why here.

Choosing branding that will not infringe the trademark and/or copyright rights of another is a critical step in developing a sound marketing strategy. Infringing will not only result in paying substantial damages to the pre-existing brand owner, it will also lead to massive rebranding costs: Think of all those printed labels a Manufacturer will need to throw away and the products they will need to pull off the shelves.

Therefore, before they start printing their labels (and ideally, before they start marketing altogether), Manufacturers should do their due diligence and conduct comprehensive searches with the U.S. Patent and Trademark Office and the U.S. Copyright Office to ensure that no one has already registered a similar trademark and/or logo.

Ownership of Logo

Some Manufacturers whose labels we reviewed hired a graphic designer to develop their logo, yet, few entered into a written independent contractor agreement (“Agreement”).

This Agreement is a contract between two parties, in this case a Manufacturer and a graphic designer, for a specific service or project (i.e., the development of a logo). It clearly provides why the graphic designer was hired and stipulates that he or she is not an employee of the Manufacturer for legal and tax purposes.

In addition to requiring the graphic designer to carry insurance and to hold any mandatory professional licenses under state and federal laws, the Agreement states that the designer assigns his or her rights in the work product to the Manufacturer. In other words, the logo becomes the sole ownership of the Manufacturer even if its author is the graphic designer (under copyright law, the author of a creative work is automatically the owner of the work, absent any arrangement to the contrary).

Consequently, an Agreement will ensure that the Manufacturer has the right to freely use the logo, including entering into licensing agreements and relying on their logo as a valuable asset.

With the growing popularity of CBD-infused foods and beverages, Manufacturers are eager to enter the market and tend to rush through the marketing process, running the risk of incurring significant recall and rebranding costs. To avoid such financial burden, Manufacturers should consult with experienced CBD business attorneys who can review their product labels and ensured that their branding is indeed theirs to use.