Your dispensary is the best and most successful in your home city and you would like to duplicate that success in other cities and other states.
As more states come on board with legalizing the medical or recreational sale of marijuana, our cannabis business lawyers are increasingly working with cannabis businesses that want to take their businesses national.
But wait just a minute.
How can a cannabis business in one state go national when most states prohibit out-of-staters from applying for the licenses or permits needed to grow or process or sell marijuana? Does not this “home-towning” preclude you from taking your cannabis business skills and your highly reputed brand nationwide?
Not exactly.You can license your intellectual property rights and sell consulting services and by doing so profitably take your brand and your skills nationwide.
Intellectual property rights are the rights given to persons and entities over the creations of the mind. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. Trademarks are a common form of intellectual property held by marijuana businesses — think brand names like Coca Cola or McDonalds or logos like the Nike Swoosh, all of which are well known trademarks.
So now imagine that you have created a really popular and well known medible in Colorado called Joe’s Best Medibles. Joe’s Medibles have become so big in Colorado that cannabis users in Washington State keep asking you to start selling Joe’s Best Medibles in Washington as well.
Since Washington prohibits out-of-staters from owning an interest in a cannabis business that either makes or sells cannabis in Washington, you cannot simply set up a kitchen in Washington State. And since federal law makes it a crime to transport marijuana across state lines, you certainly do not want to drive or fly your medibles from Colorado to Washington either.
There is a way for you to legally get both your brand and your medible making techniques into Washington. You can license your brand name to someone in Washington for a fee and you can charge your Washington State licensee a consulting fee for you to teach them how to make your medibles and to maintain their quality. Licensing of trademarks (and other IP) is incredibly common outside the cannabis industry and it is rapidly increasing within it because it provides a way to legally leverage a brand name and expertise from one state to another.
In a subsequent post we will discuss what goes into a well-written cannabis licensing agreement.