Green Lighting your Cannabis-Related Branding

It is important to preface this document with a simple clarification that the Cannabis Act and the Cannabis Regulations (the “Act”, the “Regulations” and collectively, the “Cannabis Legislation”) were written with as much detail and clarity as possible; but, the fact remains that many of the provisions included in these legal instruments are open to interpretation and may require further clarification through formal legal proceedings. Given that the substance of the Cannabis Legislation has yet to be formally interpreted or tested, the information contained herein should be taken as general guidance only formulated in light of the information available to us at this time.

The recently enacted Bill C-45, an Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (hereafter, the “Cannabis Act”) creates tremendous opportunities for Canadian businesses and brand owners. Before adopting a name or a symbol to associate with your cannabis company, there are several important factors with respect to cannabis-related branding that must be considered. The most important factors are discussed below.

Aspects of the Cannabis Legislation draw on existing rules related to product labeling and packaging. For example, the definition of a “principal display panel” is drawn from the Consumer Packaging & Labeling Regulations, and many of the regulations relating to branding have been drawn from established rules governing tobacco sales and new provisions enacted through the Tobacco and Vaping Products Act and Regulations, which came into force earlier this year.

The intent of this document is to assist with cannabis branding, and as such, we must start with what the Act defines as a branding element. According to the Act, a branding element includes a brand name, trademark, tradename, distinguishing guise, logo, graphic arrangement, design or slogan that is reasonably associated with, or that evokes cannabis, a cannabis accessory or a cannabis-related service.

The Regulations state that one branding element, apart from the brand name itself, may be displayed on the principal display panel of a product, (two elements may be displayed where English and French branding is included on the principal display panel). The branding element cannot be displayed in certain metallic, fluorescent, or Pantone 800-series colours. Essentially, the use of strikingly flashy colours for brand elements is prohibited. The Regulations further require that all packaging includes the standardized cannabis symbol and, if a branding element is an image, that image cannot be bigger than the cannabis symbol. Similarly, if the brand element is simply composed of words, those words must be in a font that is equal to or smaller than the required health warning on the packaging.

The sections most likely to directly impact brand owners are found in sections 17(1)(a)-(e), 18 and 26 of the Act. Section 18 makes it illegal to promote cannabis in a manner that is false, misleading or deceptive, or that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks. Outside the cannabis industry, it is all too common to find products and services that embellish or exaggerate the benefits associated with their product through their branding. It is absolutely essential to avoid this sort of puffery in regards to cannabis products and services. To that end, an example brand name like “CANNA-LIXIR OF LIFE” would likely be prohibited under the Act.

Section 17 and 26 of the Act contain explicit prohibitions that relate to promotion, packaging and labelling of cannabis products and services. Specifically, Section 26 states that packaging and labelling cannot:

  1. on reasonable grounds, be interpreted to be appealing to young persons;
  2. set out a testimonial or endorsement;
  3. set out a depiction of a person, character or animal, whether real or fictional;
  4. associate cannabis or brand elements with, or evoke a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring;
  5. contain any information that is false, misleading or deceptive or that is likely to create an erroneous impression about the characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks of cannabis.

Section 26 evokes the same considerations that most of us have become accustomed to in relation to tobacco sales. Long-gone are the days of the “Marlboro Man” in Canada, and the adoption of a mascot, or erroneous claims relating to the benefits of cannabis-related products or services should be avoided at all costs. Despite the prohibition on “depictions” of fictional and non-fictional people, characters and animals, the ambiguity of the statement could arguably allow for silhouettes of anonymous people or human body parts, such as hands. Also, it is unclear whether depictions relate only to images or also to words. Similarly, Section 26 may prohibit depictions of animals, but it is silent on animal parts like feathers, wings, or horns. As long as the brand is not in contravention with other explicitly prohibited sections of the Act or Regulations, certain animal or human elements may indeed be permitted as brand elements.

What does this mean for trademarks? The Trade-marks Act prohibits the use of a trademark if that trademark contravenes a Canadian federal statute. To that end, and to the degree to which a company’s labels, packaging and overall branding are related to their trademarks, specific and careful attention must be paid to the Cannabis Legislation and, in particular, to the sections outlined above. Failing to do so could render your trademark vulnerable to cancellation or opposition proceedings.

Prior to the Act coming into effect, the Canadian Intellectual Property Office (CIPO) would not allow registrations for trademarks used in association with recreational cannabis. Now that recreational use and sales of cannabis are legal, brand owners are off to the races.  So long as you have created a brand name or logo that adheres to the requirements of the Cannabis Legislation, your trademark is likely eligible for registration. Of course, the normal considerations relating to all trademark applications, such as descriptive marks, deceptively mis-descriptive marks, and marks that are confusing with pending or registered trademarks must also be contemplated when shaping your brand.

At this point in time, it seems highly unlikely that CIPO will object to the registration of cannabis trademarks on the basis of non-compliance with the Cannabis Legislation. This seems all the more likely given the ambiguity of certain parts of the Act. It remains to be seen exactly how branding that “appeal[s] to young persons” is manifested, or how certain “depictions” may or may not evoke “a positive or negative emotion about or image of a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring”. It seems a safe assumption that ambiguous legislation will not be interpreted by trademark examiners.

Despite the challenges posed by ambiguous language and interpretation, failure to comply with the Cannabis Legislation potentially comes with a heavy price tag. Under the authority vested by the Minister of Justice, enforcement entities may issue “notices of violation” when sections of the Act and Regulations are contravened. Such notices will contain a description of the alleged offence, as well as a summary of your rights, and may include a maximum fine of up to $250,000 or imprisonment for a term of up to 6 months (or both for first-time offences), which would likely only be applied where a blatant disregard for the Act has occurred. If the penalties are disputed–which we anticipate many will be if they are based on the ambiguous language identified above–section 113(2)(b) of the Act stipulates that the person named in the notice may request that the Minister review the acts or omissions that constitute the alleged violation or the amount of the penalty. In other words, there appears to be a mechanism for administrative review in the event that a penalty is issued. In the absence of established case law, a cannabis company’s willingness to adopt provocative branding at this point in time largely depends on its ability to shoulder the risks involved. A risk-adverse company should avoid the identified prohibitions in sections 17, 18 and 26 to the best of its ability, but a risk-tolerant company may wish to take its chances with more provocative branding knowing that it may be granted an opportunity to justify its branding decisions at a later date.

Aside from considerations related to branding, labeling and packaging, prospective entrants into the cannabis industry are reminded that the industry is, as a whole, highly regulated. There are specific licensing requirements that must be met in order to grow and sell cannabis for recreational use, and there are additional application procedures involved with selling your product through the Ontario Cannabis Store. That being said, branding remains a vital part of creating a successful cannabis business and, to that end, we are pleased to answer any questions and provide any further information about registering your cannabis-related trademarks.

Author:  Patrick Smith November 29, 2018

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