Competing Cannabis Companies Duke It Out for California Trademark Rights

Harvest's two San Francisco dispensaries boast sleek wooden cabinetry, understated signage and crisp-looking packaging emblazoned with the company's sunburst logo.

In the next couple of weeks, the boutique Bay Area marijuana company is going to court to defend its rights to all of that fancy branding — in particular, its name and logo — against an Arizona-based competitor.

"Our client's position is that they own the rights to use that name in California," said attorney Michael Dorsi, who represents the Bay Area dispensary's two San Francisco outlets, as well as its Oakland-based holding company, Cosecha. "The court should stop Arizona Harvest from using the same business name for the same service in this state."

"Arizona Harvest" — officially, Harvest Health and Recreation Inc. — is an older and much bigger cannabis player founded in 2011 and headquartered in Tempe, Arizona. It's listed on the Canadian Stock Exchange with a market cap roughly equivalent to $2 billion USD.

Its CEO, Steve White, said his company currently holds close to 90 licenses for retail stores across the country in several states, including seven in California, which is the country’s largest market.

"No court case is going to dissuade us from moving heavily into California," White said.

The company recently opened its first Northern California store in Napa and has plans to expand throughout the state.

The Bay Area-based Harvest has had a physical presence in California longer than the Arizona company and holds registered trademarks in the state. It opened its first location on Geary Street in the Richmond neighborhood in January 2016. It obtained a trademark in California for the Harvest name in June 2018.

Arizona company spokesman Alex Howe said his company's ties to California date back to 2012, even though the company had no physical footprint here until it opened its Napa outlet in January this year.

"We have business-to-business deals with California companies that began as early as 2012," Howe said. "We have California investors from that period. And Harvest has been marketed into California from that early period."

Marijuana industry attorney Burke Hansen said the Bay Area-based company's registered California trademarks and footprint here may give it an advantage in court.

"It gets trickier when you start to come into California, particularly San Francisco, where you've already got an established Harvest brand," Hansen said.

But the case is complex. And it's just one of several disputes between the two Harvests.

In 2017, Harvest of Arizona launched its own legal proceedings in Arizona Superior Court against its Bay Area competitor and its CEO Marty Higgins. The suit accuses Higgins of stealing the Harvest name and logo.

"In February 2014, a mutual friend introduced me to Mr. Higgins and asked me if I would be willing to show him what we were doing in Arizona," said White, explaining the roots of his complaint. "So I spent some time with him and took him through, so he could see exactly how it's set up. We chatted about our plans. He then went back to California and effectively copied just about everything that we were doing."

The Arizona-based Harvest's most obvious complaints against the Bay Area-based Harvest are its alleged copying of the "Harvest" name itself and the similarities of the companies' logos in color and shape.

The mutual friend who introduced Higgins and White recalled his reaction upon first seeing the Bay Area-based company's branding. "That logo looks a lot like Harvest's logo in Arizona. That was one of my first thoughts," said Kris Krane, who is president and CEO of cannabis company 4Front Ventures. "The logo's similar. The name is the same."

Krane said he urged Higgins to reach out to White.

KQED obtained emails that passed between Krane and Higgins from Alex Howe, the Arizona-based Harvest spokesman.

In the first message, Krane alerts Higgins to the potential problem. In his response, Higgins characterizes his use of the Harvest name and similar branding as an "oversight," which he would take steps to rectify.

"We are working on solutions ASAP," Higgins wrote in the email. "We do not want to run into issues or cause ill will."

The Arizona company's legal actions not only accuse the Bay Area company of intellectual property theft, but also assert federal trademark claims to the Harvest name.

According to Howe, the company has two federal trademark registrations — one for the name, and one for the design and logo. Howe said the company started using the branding as early as 2012 and that the first two federal registrations were issued on March 7, 2017 and Sept. 5, 2017.

"We have a valid federal trademark for the name Harvest in the business that we are doing," the Arizona-based company's CEO, Steve White, said.

However, because cannabis is still illegal at the federal level, White admitted the U.S. Patent and Trademark Office likely granted the Arizona Harvest its trademarks without knowing the nature of its business. "The trademark office was likely unaware that we were a cannabis business," he said.

The federal restrictions around doing business in today's cannabis industry are part of the Bay Area-based Harvest's claims for trademark rights over the Arizona company. "We took the position that state law trademarks are the controlling legal authority," said the company's attorney, Michael Dorsi.

White said there's an informal code against marijuana businesses going after each other on federal grounds because it could set dangerous precedents that might harm the industry in the long run.

"While there are some impediments to our business conduct due to the federal illegality, we effectively have a code whereby we will not take advantage of that," White said. "But in this case, Mr. Higgins has gone and challenged our trademark on the basis that we are a federally illegal business, which is effectively the nuclear bomb in cannabis."

Industry attorney Burke Hansen said two companies battling trademark issues out in court is a new development in the cannabis industry. Most of his clients settle out of court or drop the charges. But he expects formal litigation for such cases to become increasingly common. He said this is especially true in San Francisco, which currently places tight restrictions on who can get a license to operate a marijuana business.

"It's becoming a more normalized market," Hansen said. "So you're going to see trademark disputes and all kinds of other standard disputes."