I recently wrote an article entitled “Building a House, With a Lawyer?” which in part detailed some of my experiences practicing law relating to the cannabis industry and discussing the importance of strong legal foundations for start-ups as well as for existing companies and individuals seeking to expand with cash or talent infusion. While writing that article, I excluded two recent anecdotal stories that highlighted the intersection of an industry reflective of the good feelings which came out of the 60s, Grateful Dead concerts and the positive vibes of an afternoon spent on a beach in Negril, Jamaica versus an industry no different than any other. Unfortunately, the realities of this business intersect what one might hope to be those good vibes with legal and business realities and jaded mentalities. In essence, as much as we would like a handshake or one’s word to suffice or the yogi, we can all get along mentality to pervade our business dealings, I am not convinced that this is possible on a greater scale.
The first of my anecdotal stories is one perhaps that should have been publicized with real names and information, however, I wasn’t in the self-aggrandizing mood so to this point I haven’t done so, even if the client had wanted me to. Let’s call the client, “Client”, and say that Client is in the trade show industry. Client has a catchy name and has been producing industry related trade shows for a number of years. Being a good brander and marketer, Client many years ago reserved a domain name, Twitter account, and other social media mediums. Life went on for a number of years with Client using his domain name for marketing purposes of his trade shows, as well as his cleverly named Twitter account. Interestingly enough, Client never used the same exact trade show name that matched his domain name, Twitter account, or pursued trademark rights. One day in the mail, Client received a cease and desist letter from counsel for another trade show which we’ll call The Big Bad Wolf. The letter sent on behalf of The Big Bad Wolf basically asserted that Client had misappropriated the information of The Big Bad Wolf and was using that to its economic advantage and, among other things, demanded that Client hand over the domain name, stop doing the business it’s doing, and essentially disappear from the face of the Earth. Yours truly, after doing a little research (candidly in an area which I have not practiced a lot in and with the advice of a practitioner in trademark) determined that The Big Bad Wolf was standing on faulty legal ground. Client had reserved the domain name and Twitter account and began using them years in advance of The Big Bad Wolf even coming into existence and, in fact, Client might even have claims against The Big Bad Wolf for improper registration of a trademark. Long story short, with a smile I responded to The Big Bad Wolf’s counsel letting him know of Client’s position and inviting them to have a conversation about the current circumstances. It is important to note that there are a number of legal actions that could potentially have been taken by our side, but the reality is that litigation isn’t cheap. Furthermore, within the trademark arena it is possible that a co-existence agreement could be worked out, allowing the parties to move forward without some of the uncertainties that they might currently hold, but frankly, even moving forward in this fashion is not cheap. The cannabis industry which is replete with start-ups doesn’t have companies that have the financial where-with-all to engage in protracted legal battles. What should one draw from this? (1) have a good lawyer nearby, (2) before you dive into something, be prepared for responses that you may not like, and lastly, (3) get ready for more of this. As the industry continues to develop, this will not be the first, nor the last of stories like this.
Segueing from a client’s experience, I now address one of my own experiences which I probably could have avoided from the inception. Long story short, I myself had a business idea within the industry which I wished to pursue. I was contemplating taking on an active role in an idea that I had had versus acting in the service industry of providing legal services. I shared my idea with an individual whose services I needed to facilitate the idea that I had. Now, it is important to note that this individual, through their Linked In profile and other Internet marketing material (hereinafter “The B.S.”) came across as an enlightened practitioner of yoga and other mediums of kindness and friendliness. With my guard down, I shared the idea that I had with her in order to discuss some type of potential business arrangement wherein I might enlist her as a partner to move my idea forward. After numerous chats and e-mails, instead of coming back with an arrangement that was workable, she gave me the friends and family plan which was essentially twice as much as I would pay by going to someone off the street. Needless to say, I moved on and as I was only discussing the idea with her as a vendor of sorts, I thought nothing more of it. Two months later, much to my surprise, I saw that she and her partner had taken my idea and developed it for commercial use. I mentioned to her partner how interesting the idea was and that it was something I had discussed with her partner months earlier. I soon thereafter received an e-mail from “The Enlightened One”, essentially indicating that she spent a lot of time preparing a proposal for me, that the industry moves very quick, and that something had to be done, and if I cared about my idea that much, I would have had her sign a non-disclosure agreement. You know what, she was right. Faith and handshakes only go so far. I know this from my legal practice and shame on me for not utilizing it in my personal life. The moral to this anecdotal story is: Look, this industry is moving fast, there is a lot happening, and what we discuss, whether sitting in a conference room or in a slightly altered state with friends, may be best unsaid until certain legal parameters are defined. For those of you in California, there are some avenues you can pursue if somebody should steal your idea but in most jurisdictions, that is not the case.
So, with all of the foregoing said, what do we take from my two instances? Take what you will. Be kind, be compassionate, take chances, take risks, but be smart. Think about what you’re doing. Think about who you’re talking to, and think about how you can protect yourself from making mistakes that may have long term legal and financial effects.
David Kotler is a partner in Medical Marijuana Business Lawyers™, LLC, a practice of Cohen Kotler, P.A. He draws on his broad practice experience to serve clients across the country that are involved in the cannabis industry. He may be reached at email@example.com.