No matter if you’re Apple, Google, or High There!, it’s best to protect your Intellectual Property (IP) before someone else beats you to the punch. Now, even though the cannabis industry doesn’t deal exclusively with the type of IP that most of us are familiar with (technology), it does deal with unique products and strains that could potentially be worth millions of dollars on their own.
This is why it is essential for cannabis entrepreneurs to IP rights and the benefits they can provide them. They must also understand the potential problems that may occur when IP rights are ignored or overlooked for too long. Let’s go over the legalities of IP and patent infringement for the cannabis industry and what your organization needs to do to keep your IP safe.
Protecting Your Cannabis Company’s IP
IP is critical for creating true differentiation between companies and their product and service offerings. The challenge for cannabis entrepreneurs is that cannabis IP needs to be rigid enough to be defensible against infringement, but also flexible enough to be applied across 33 different state regulatory schemes.
That means that the IP being used in your cannabis company may be one of your most valuable assets. While protecting your IP rights can be tricky, there are some methods available for doing so. By successfully protecting your IP rights, you may produce significant benefits both in terms of future valuation of your business as well as current tax minimization.
Before registering your IP, make sure to consider who will own/utilize the IP and what purpose it serves. For unregistered IPs, just make sure to consistently name the entity as the owner in any documentation. It’s important that any person (no matter their level) that has a hand in working on the IP assigns all their rights, if any, within the IP to the entity in writing. For the entity to maintain ownership of the IP, they must remain in control of it for the foreseeable future.
As the cannabis industry continues to grow and established companies enter the market, early-acquired IP rights will prove indispensable. Those IP rights can then be licensed to generate additional recurring revenue, help attract investment, and enhance valuation for exits. Effectively acquired IP rights can also give cannabis entrepreneurs the legal footing to prevent competitors stealing their trade secrets, customers, ideas, and more. This is why executives need to do due diligence to supplement their IP. Making sure that any new products don’t violate existing IP will help keep business moving once the product hits the market.
The Future of Cannabis Industry IPs
As the cannabis industry continues to grow and attract new market entrants, effectively securing IP rights has become a critical business task. Entrepreneurs who fail to assess and pursue appropriate IP rights early in the business cycle do so at they own peril. While thinking about patents, trademarks, copyrights, and trade secrets may not seem as urgent as making payroll and growing your profit margin, failing to promptly secure IP rights may undercut your business in the future, allowing competitors to rip-off the successful aspects of your business.