As we mark the end of 2022, we are able to analyze last year’s cannabis litigation trends to try to better prepare for 2023. As the industry becomes grows, so do the amount of legal claims that cannabis companies may face. Here’s a look at what 2022 brought in the way of cannabis litigation.
The single biggest single area of cannabis litigation: commercial disputes. This includes traditional business lawsuits like breaches of contract, landlord-tenant disputes, and employer-employee disputes. To prevent being on the wrong side of these lawsuits, make sure your contracts and leases are up to date and legally enforceable, and that you have a good HR program in place to protect against disgruntled employees looking for a payout.
The next biggest area for 2022 was compliance and regulatory disputes. These are either brought by licensees suing their local jurisdiction or the state over regulations and regulatory procedures, or the local jurisdiction or state bringing enforcement actions against licensees for violating regulations. The lesson: make sure you are in compliance with both state and local law.
Third was cannabis litigation regarding intellectual property disputes. We have previously written to you all about the importance of creating a brand and protecting that brand through trademark registration and trade secret protection. Many cannabis companies are bringing suit against competitors for using confusingly similar names, logos, or packaging design concepts. When a competitor uses confusingly similar names, logos, or packaging, it can create consumer confusion and dilute your brand. This is especially true if the competitor’s product is inferior and negatively impacts your brand. As prices of cannabis continue to drop, we want to emphasize how much hidden value there may be in your brand and how it could be your next most valuable asset. Your intellectual property can also help you enter markets outside of California more easily. Please protect your brand, and your brand may have more future value than you know.
Can we predict future trends? Not really, but if we were to make predictions, it would be that cannabis litigation will become more product-focused, including class actions by consumers, FDA enforcement against a company, and products liability cases for defective or falsely advertised cannabis goods. Back in October, we got a preview of this when DreamFields – the maker of Jeeter pre-rolls – was sued by consumers for overstating the THC content of their products. We suspect that claims like this may continue to rise, especially for companies making hemp and CBD products that claim to have health benefits.
As a cannabis company, you can be proactive in minimizing the risk of litigation as you conduct business. We are always here to support your business at any step of the way – including catching potential risks before they become a problem and identifying when you may have a viable claim against another entity. Being proactive and understanding the risks associated with your business could save you and your business hundreds of thousands of dollars and countless hours of stress. Regardless of the situation, we are a phone call away and happy to support you however we can.