Watching the Pot™ (May 2021)

Two recent court decisions highlight that there may still be a bit of a disconnect when it comes to branding cannabis products. In other words, even if your product is cutting edge, and perhaps not yet federally legal, that doesn’t mean it is immune from a good-old fashioned trademark infringement claim.

Los Angeles cannabis delivery company Tops Cannabis learned this lesson the hard way when it was found to have violated both the Lanham Act and California’s Business and Professions Code by marketing, selling, distributing, and advertising a product called “Medicated Nerds Rope.” In a suit brought in the U.S. District Court for the Central District of California, plaintiff Ferrara Candy Co. alleged that “there have been multiple reports of children being rushed to emergency rooms” after eating Medicated Nerds Rope they mistook for regular Nerds Rope. The suit was resolved earlier this month via a consent judgement that included a permanent injunction against Tops Cannabis, and a disgorgement of profits.

Similarly, cannabis company Terphogz LLC was sued earlier this month in the U.S. District Court for the Northern District of Illinois by candy and gum giant the Wm. Wrigley Jr. Co. The suit alleges that Terphogz’s “Zkittlez” name and marketing strategy infringe Wrigley’s SKITTLES trademark and “Taste the rainbow” ad campaign. Wrigley said in a statement that it “commenced this action to protect the public from Terphogz’s deceptive and dangerous business practices and to safeguard the goodwill and reputation of Wrigley’s renowned Skittles marks.” While the Terphogz website does not currently offer cannabis for sale, social media posts suggest it will soon offer hemp buds and pre-rolled joints. The complaint includes images of shirts for sale that bear the Zkittlez name and the hashtag “TaztetheZtrainBro,” as well as stash jars for storing marijuana emblazoned with the Zkittlez name.

These recent lawsuits illustrate how cannabis brands are moving into the mainstream – both in terms of reach and responsibility. More importantly, they send the message that candy companies do not get the joke when it comes to riffing on the consumer trust and goodwill associated with their brand names.

This article appeared in the May 2021 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.