In 2017, seven US states and Canada tallied cannabis sales of $9.7 million. That excludes California, where recreational marijuana was legalized in January of this year. Sales in California, the world’s sixth largest economy and with 40 million people, is expected to reach $3.7 million by the end of this year, and possibly $5.1 million in 2019. (That’s a concern for beer, sales of which were $5 million in 2017 and remain relatively flat.)
PMMI, the Association for Packaging and Processing Technologies, says legal cannabis could grow to $24.5 billion by 2020 in the US. Right now, medical marijuana is legal in 30 states and in the District of Columbia, and comprises 65% of sales. Ten states and DC have legalized the recreational use of marijuana, despite the fact that the federal government still considers it illegal (but is not enforcing the law in states where it’s approved). Nations where it is legal are Canada, Georgia, South Africa and Uruguay. Weed is illegal in most of the world, but a sizeable percentage of countries look the other way at consumer consumption.
Private enterprise stands to gain by legalization, of course, but so does government. California imposes several taxes, which resulted in revenue of about $74 million in the second quarter of 2018. That includes excise tax, cultivation tax, and sales tax of 15% on retail sales of all cannabis products. Local taxes and fees could apply.
What’s on the label?
California offers a good example of cannabis label and packaging regulations. The first thing to note is that all regulations, there and in every other state, focus first on making the products inaccessible to young people.
“Cannabis product packaging cannot resemble traditionally available food packages and must be tamper-evident, re-sealable if the product includes multiple servings, and child-resistant. In addition, packaging for edibles must be opaque… Cannabis product labeling cannot be attractive to children. This includes using cartoons, images popularly used to advertise to children, imitating candy labeling, and using the words ‘candy’ or ‘candies’ anywhere on the label.”
The products within a package “cannot make unproven health claims. Health-related statements, such as claims about a product’s ability to treat or cure disease, may not be made unless there is significant scientific agreement and the claims are supported by a totality of publicly available peer-reviewed evidence. Anecdotal information and preliminary study results do not meet this criteria. Health-related statements are extensively regulated by the FDA, and cannabis businesses are not exempt from federal prosecution for misleading health statements.”
All cannabis and related product packaging must have a primary label and an informational label. The first is the label most likely to be viewed by the consumer. The info label can be placed anywhere else on the package.
Colorado, the first US state to legalize marijuana, requires that eight warning statements be included on every label. These include mention of possible health risks, use by adults 21 and over, use by pregnant women, and heavy machinery operation, plus the following: “This product is infused with marijuana,”and “This product was produced without regulatory oversight for health, safety, or efficacy.” Finally, “The intoxicating effects of this product may be delayed by two or more hours.”
An ingredient list must be included on edible retail marijuana products in Colorado, “which may include a list of any potential allergens contained within.” Also required is a statement of refrigeration if a product is perishable, an expiration date, and a serving size statement that includes mention of the amount of THC.
In October of this year, recreational pot became legal throughout Canada. All cannabis products must be sold in plain packages, similar to those required for tobacco. One observer opined that the restrictions call for “overwhelmingly plain packaging.” Cannabis producers are quite unhappy about this, but so are tobacco companies, for the opposite reason. The former cry that the restrictions limit their ability to market their products. Tobacco grumbles that “marijuana producers are being given more leeway than their cigarette-making counterparts,” according to the London [Canada] Free Press. Draft regulations “allow cannabis companies to put a logo on packaging, choose the format and add color – things cigarette makers aren’t allowed.”
So don’t look for any award-winning labels coming from that country.
A side note: Constellation Brands, a US-based international producer of Corona and other large breweries, plus big wine and spirits brands, has increased its small investment to 37% of Canopy Growth, a Canadian company that specializes in cannabis products. In a marketplace in which commercial beer faces challenges, Constellation has made a strategic move. Canopy is looking at investments in 30 countries pursuing medical marijuana programs, and looking also at those states that might fully legalize the product down the road.
Trademarks? Good luck
One roadblock for US cannabis manufacturers involves trademarks. Because the substance is illegal at the federal level, the US Patent and Trademark Office has consistently refused – despite repeated challenges – to issue a trademark to anyone seeking to brand marijuana products: smokable, ingestible or otherwise.
This inhibits the ability of companies to establish brand identity. Trademarks serve two good purposes. One is that it protects a brand owner from exploitation and two is that it protects consumers. “Trademarks are extremely important from a consumer protection standpoint,” wrote Alison Malsbury of the Harris Bricken law firm in the Canna Law Blog. “From a public policy perspective, we want consumers to know where the goods and services they purchase are coming from, and to make informed purchasing decisions based on factors like quality and safety. The primary way for consumers to distinguish the goods of one company from the goods of another is via branding.”
One form of brand protection, albeit limited, is the acquisition of a state trademark.
“Though the protection afforded by a state trademark is geographically limited to the state of the registration, at best, state trademarks tend to provide more extensive geographic protection and legal remedies than common law rights,” says Malsbury. “Common law rights can be limited to the geographic area in which you are using the mark, meaning that if you only do business in San Francisco, your common law trademark rights could only protect you within the city of San Francisco. And if you want to avail yourself of the statutory remedies available to trademark owners in infringement cases, you will need to register your mark.”
Oregon’s labeling laws appear to offer a bonus for the label business. Here’s Vince Sliwoski, also writing in Canna Law Blog:
“The labeling requirements are comprehensive and label makers love them. There are separate requirements for many categories, including plants, seeds, topicals, edibles, concentrates, extracts, uncured and unusable marijuana, and so-called ‘other products.’ There are overarching label requirements and prohibitions as well. Program participants will have to pay very close attention to comply with all of this fine print. It will take considerable time and effort to achieve compliance with these rules and also that many cannabis businesses will make mistakes along the way.”
There’s no doubt that cannabis labeling has a promising future in the USA. But make sure you read the operator’s manual first.
The author is president of Jack Kenny Media, a communications firm specializing in the packaging industry, and is the former editor of L&NW magazine. He can be reached by email at email@example.com.