And you thought the black market was cutthroat.
Legalization has brought the world’s favorite illicit drug into the sunlight, but it hasn’t made the marijuana industry any less competitive. With the drug now legal for recreation in four states and the District of Columbia, and legal for medical use in more than two dozen other states, the white market has become a kind of “Wild West” of weed, according to Esquire.
The magazine described the situation in Colorado, Alaska, Oregon, and Washington – the four states where legal cannabis is or soon will be on sale – as “a scramble to brand and trademark pot products.” And everyone from mom-and-pop entrepreneurs to celebrities is getting in on the game.
The legal market is new, with Colorado and Washington legalizing in 2012. And that means it’s at least as competitive as the illegal market. It’s nowhere near as violent, of course, but the business can be chaotic and ruthless.
Patchwork of conflicting laws
It doesn’t help that the law varies so much from one place to another – not only between states that prohibit marijuana and states that don’t but also among the states that have legalized. And cannabis is illegal under federal law. This nationwide patchwork of conflicting laws makes the legal market riskier and more cutthroat.
Legal marijuana companies are following at least two well-worn paths to building their business: developing a niche market for a unique product and winning celebrity endorsements.
But putting famous faces on labels probably won’t do much to sell product, Esquire explained. That’s because “weed brands aren’t much more substantial than the labels they’re printed on.”
“Patents and trademarks are largely regulated by the federal government, which considers marijuana an illegal drug and therefore ineligible for any sort of legal protection,” the magazine reported. “The result is a Wild West environment of marijuana entrepreneurs trying to stake claims and establish cross-state markets using a patchwork of state laws. Therefore, consumers have no way of knowing that celebrity-branded pot is any different than what they could get in a plastic baggie from a corner drug dealer.”
In other words, Snoop Dogg may work out a deal to endorse a brand sold in Colorado and Oregon, even though cannabis laws are different in each state, but that means nothing in terms of quality or price. Marijuana potency and effects vary widely from one strain to another and, often, from one batch of the same strain to another, so stoners in Oregon would get different Snoop weed than stoners in Colorado.
Businesses rushing to trademark new technology
That may be why many businesses are instead taking the first approach by patenting new products, cultivation methods, and manufacturing technology. It’s impossible to know exactly how many entrepreneurs have applied for patents, but Esquire reported the number is in the hundreds.
Above all, marijuana providers are trying to corner as much of the legal market as they can before the dust settles. The industry is still new everywhere, but time is growing short for entrepreneurs who want to capture a significant market share.
At the same time, those who succeed stand to make a lot of money. As cannabis and legalization spread and gain more public support, the legal industry will generate more and more profit. And the fact that much of that money goes to the state in taxes makes legalization more appealing to voters and state leaders, guaranteeing its further expansion.