An in-depth look at the current state of Cannabis and Hemp industries, brought to you by the nations premier Hemp and Cannabis Firm, Cultiva Law.
In this portion of our Business Development Series, we aim to tackle the most underutilized tools of any business owner: IP and Contracts! The boring, often overlooked, but very necessary documents that protect you as a business owner. This episode will be anything but boring as we also tackle the importance of branding and intellectual property in the Cannabis space and an intro to the license process. Buckle up, and get ready to upgrade your business knowledge!
Announcer: Information provided on this podcast does not, and is not intended to constitute legal advice. All information, content and materials available on this podcast are for entertainment purposes only. The views and opinions expressed are those of the speakers and do not necessarily reflect the official policy or position of Cultiva Law. Now, without further ado, here are your exquisite esquires, Mio Asami and Fabiola Jimenez.
Fabiola Jimenez: What up, squad?
Mio Asami: What up, squad?
Fabiola Jimenez: Welcome back to another episode of … Episode two of four of the very eloquent business series with Cultiva Law.
Mio Asami: What the fuck. Who is that?
Fabiola Jimenez: You’re here with … Bitch, me. You’re here with Fabi. Yeah. Who’s me? Who is me that, according to the sticker that I have in my mirror in my bathroom, “The queen of fucking everything”. Obviously, it’s me, Fabi, and Mio, cracking up in my-
Mio Asami: And me. That’s right.
Fabiola Jimenez: Very narcissistic attempt of viewing myself.
Mio Asami: No, it’s called self love, and we all preach it, or should at least.
Fabiola Jimenez: I definitely love myself, and I’m getting a bunch of boys that are trying to text me who also love me.
Mio Asami: #KnowYourWorth, y’all.
Fabiola Jimenez: That’s right. #StopFuckingTextingMeBro. I’m not interested. I’m not interested. I’m not going to block you. I’m not going to block you because it bloats my ego, but we’re just going to watch you squirm.
Mio Asami: Clearly we’ve been good this week. Since last episode, we’ve been good. We’ve been chilling. How about y’all?
Fabiola Jimenez: Yeah. Crazy weather, crazy weather. Speaking of not weather, business. Episode two, we’re going to be discussing a little bit more about the growth and development. So, obviously, episode one is you’re getting the start, right? You’re trying to build up your business. Episode two is going to be kind of the next steps. What do you do once you’re set and set up, with your growth development expansion.
Fabiola Jimenez: So, we’re going to be talking about a number of different things. We’re going to be talking about brand identity, websites, social media, contracts, and then finally, white labeling, and other expansion of your brand. So, the weekly word today is …
Mio Asami: Trademark!
Fabiola Jimenez: So yeah, so trademark is actually Mio’s bread and butter right now. She’s my trademark guru right now that I’ve been pushing a bunch of these new projects out her way.
Mio Asami: That’s why I hit your girl up.
Fabiola Jimenez: That’s right. That’s right. So trademark is basically your registration of your brand. So whether that is the wordmark, whether that it’s your actual logo, there is the registration at the federal level. There’s a registration at the state level. We’ll get into that shortly, as in right now. So brand identity, point number one, Mio-
Mio Asami: Actually, sorry. Can I go back on sec? I’m going to rewind just one second, and say, I actually get a lot of people asking me about like, “Hey, I’m trying to like copyrights this”, and they’re really talking about their trademark. So, I think that’s also an important difference. We can also talk about that in brand identity, but just, you know, put that one out there. Copyrights are not the same as trademarks.
Fabiola Jimenez: 100%.
Mio Asami: Anyway, now onto point one, as Fabi was saying.
Fabiola Jimenez: Yeah, point one, brand identity. So, as you’re setting out for your growth and expansion, whether it’s on a local level, state level, international level, whatever that is, the things that we have seen, and the companies that we have seen really take off are the ones that actually prioritize their brand identity. That means they take the time to understand the vision of their business, who they want to be, and they just don’t exist in the realm.
Fabiola Jimenez: Especially in the cannabis industry. Everyone is doing CBD X, CBD, the CBD blah, blah, blah, CBD oils. I mean, it’s all the same, but what really makes brands stand out, and the longevity of the brands is really those people that have spent that time and that energy to develop a really strong brand identity. So, as mentioned with Mio, once … you can start slow, you can start small. What I do is I discuss the budgets. Obviously, when you’re doing the state registration of a trademark, it’s going to cost X. If you’re doing federal registration it’s going to cost Y.
Fabiola Jimenez: Obviously, it’s going to be a lot more expensive when you’re doing federal registration, but that doesn’t mean if you don’t pursue federal registration right away, that your brand is just up for grabs. It really isn’t. There’s a lot of protection that has had what we call common law protection of your brand. Take the time to understand your brand, develop it, create it, and you will see that you will, just by the sheer existence of your thought meditation in the morning and saying, “Who the fuck am I? Who is my business?”
Mio Asami: Which is super important.
Fabiola Jimenez: Yeah!
Mio Asami: If you think about any other industry, right? Starbucks. You see a coffee shop that has kind of like greenish interior, or like greenish design, whatever, and you automatically think, “Oh, Starbucks.” Right?
Fabiola Jimenez: Yeah.
Mio Asami: It’s a coffee shop with green. That’s their brand. This is why sometimes trademarking can cost a lot of money, because it will also pay off in the end.
Fabiola Jimenez: 100%. And so, when you’re doing state registration, I mean, you’re talking to maybe 50, a hundred bucks. I’ve seen up to 150 bucks per registration. The registration process is a lot faster, a lot quicker, and a lot more general. When you’re dealing with federal registration, especially with cannabis marks, it’s almost expected that you’re going to get an awful section that says, no, I don’t agree with this. It sucks, but that doesn’t mean you can’t overcome those-
Mio Asami: Part of that also being that … Not to rag on anybody that uses something like cloud in their name, but I’m also going to say you’re a cannabis company and you have something like cloud nine, cloud blah blah blah. [inaudible 00:06:13] First of all, like everybody, not anybody, but it’s a very common name. So obviously if you want to trademark that, if you want to register that trademark, you’re going to get an office action, which is basically the USBTO saying-
Fabiola Jimenez: Saying not found.
Mio Asami: Not found, this already exists. You got to think of something more unique.
Fabiola Jimenez: Exactly.
Mio Asami: Again, you really want to think about what makes your brand unique.
Fabiola Jimenez: And different.
Mio Asami: What makes your strands unique?
Fabiola Jimenez: Yeah, exactly.
Mio Asami: What makes this stand out from everybody else that uses cloud?
Fabiola Jimenez: Exactly. Exactly. AKA, don’t use the fucking word cloud. So, one you spent some time doing that, and you’ve contemplated the different registration levels, boom! The next step is obviously in a world of mobiles, and everything is remote now, and everything’s online. Get online. Create a website. If you’re not good at websites, get someone who can do it. There’s a number of different websites out there that will help you create your own website for pennies on the dollar, for like 25 bucks a month. It doesn’t have to be-
Mio Asami: Squarespace. No, not Squarespace, Sponsor us. [inaudible 00:07:25]
Fabiola Jimenez: Wix also sponsor us. Is my FBI agent listening to me? Wix, wix, wix, please sponsor us.
Fabiola Jimenez: Once you do that, you have to understand that it’s not just creating a website. It doesn’t have to be super complicated, or ridiculous. It’s just a landing page to say, this is who we are. This is our brand. Obviously when you’re selling particular cannabis products, that you can’t sell them online, but that doesn’t mean you can’t create some sort of blog, or some sort of presence. If a website isn’t your jam, and it’s just a little bit too much to handle right now, then go on social media. Get on Instagram, get on Tik Tok. Well, to an extent, Tik Tok. Instagram is massive! Facebook too. Go and utilize some of these platforms that’ll give your brand a voice.
Fabiola Jimenez: People actually kind of forget, Yelp is a social media. There’s a number of dispensaries that you can find. Any business can be listed on Yelp, and particularly like Weed maps as well. So there’s just a number of different avenues that you can pursue to be able to push forward your brains. So take advantage of the free sites. If you have a little bit of extra time and energy, create a website. Trust me. There’s nothing more that gets me like super sketched out as when I am doing my research on a business. Like if I’m getting my eyebrows waxed, if homegirl doesn’t have at least a basic website, I’m like, girl don’t touch me.
Mio Asami: Or some type of social media presence. I mean, I’m sorry, but no, actually, no, you know what? I’m not sorry.
Fabiola Jimenez: She’s not sorry.
Mio Asami: Small businesses really need to utilize, I can’t stress that enough, utilize social media. Instagram is free. There’s really no reason why you should be paying anybody for that, maybe except for if you want to pay somebody for ads, or if you want to pay somebody for photography and making your pictures look pretty. But, I mean, Instagram can also be touchy with cannabis. So I mean, there’s a fine line, but …
Fabiola Jimenez: You should try.
Mio Asami: Yeah. Try. Let’s look at like, not, you know, not to … Again, these are not sponsored quotes or anything.
Fabiola Jimenez: We are not.
Mio Asami: This is not sponsored. [inaudible 00:09:36] sponsor us, but they don’t. So for example, cookies. Everybody knows about cookies. It’s like a national brand now. Everybody knows, Buddies. People know about that one too. That’s something else, but anyway. It’s got tens and thousands of followers, which is huge for a nameless brand. It also instills a level of trust in what you have, what your products are, what your brand is, what your company is. It’s not just some like, oh, you know, I’m just a …
Fabiola Jimenez: I’m just a sketchy dealer in the corner somewhere.
Mio Asami: Yeah.
Fabiola Jimenez: That’s not who we are.
Mio Asami: It helps legitimize your company.
Fabiola Jimenez: 100%.
Mio Asami: And it’s free. Literally, I can not stress on that. Instagram is free, y’all. Utilize it.
Fabiola Jimenez: Use it. Yeah, definitely use it. Don’t let these resources go by the wayside. You’d be surprised if you start now where your brand will be in one or two years. It’ll blow your mind. Especially right now with everyone, with phones in their hands and constantly on social media, the growth is exponential and it’ll happen before you know it.
Fabiola Jimenez: So, once you kind of get that situation, I think probably one of the issues in the areas that causes me and Mio the most heartburn.
Mio Asami: Heartburn, headache, what have you.
Fabiola Jimenez: It’s a lack of paperwork y’all. I understand sometimes I don’t want my shit recorded, or somehow, a receipt.
Mio Asami: Those are different! That’s so so different reasons girl!
Fabiola Jimenez: Nevermind, nevermind, nevermind. We’re talking about [inaudible 00:11:13]. My bad, my bad, excuse me, excuse me.
Mio Asami: But, we also understand, as a small business, a lot of these things are dealt on good faith.
Fabiola Jimenez: Exactly.
Mio Asami: You know you have these, you go into transactions because you know this person, they’re your friend, or you know them through a friend, or whatever it is, then your handshake deals. And I understand that. We understand that. That’s totally fine-
Fabiola Jimenez: But don’t do it!
Mio Asami: But don’t do it.
Fabiola Jimenez: So, point number three is create a contract, some sort of evidence, paper trail, for each transaction, a receipt. You’d be surprised at the number of transactions that Mio and I look at where it’s written in a one pager that this is this, and this is this. Where is this money going? Or who’s getting what? Who’s responsible for what? As transactional attorneys, we obviously look at these contracts from a very different perspective, where we look at it and say, “Oh!” We can nitpick and say, this is what we need. So, we definitely don’t like seeing these one-pagers, but-
Mio Asami: But it’s still better than nothing.
Fabiola Jimenez: It’s better than nothing, because then if there’s nothing, you will have people coming up with like the most wildest situation.
Mio Asami: Yeah, so like, “So it’s not in the contract, so I can just do this.”
Fabiola Jimenez: I can just do X, or, “You signed the contract, so you know what? I’m not going to pay you and I’m going to take all your shit.” And then you’ve got to deal with this whole other scenario that could be totally avoided. When it comes to contracts, Mio, and please chime in here, when it comes to contracts, those contracts are there for everyone’s benefit, for everyone’s understanding that this is what you’re going to do. This is what I’m going to do. This is what the resulting transaction is going to look like.
Fabiola Jimenez: You have this ability. It’s so important, because you’d be surprised, as small businesses, one transaction can bankrupt you. Someone taking 10 grand from your business on good faith, and then you never see them again. What are you going to do?
Mio Asami: And don’t even get me started on like predatory investors, man. They will fucking just throw money at you, and then they’ll give you this contract and be like, you know, this is it.
Fabiola Jimenez: Don’t have your lawyer looking at me.
Mio Asami: Yeah, Just don’t show anybody. This is our contract. I’ll give you a hundred K. Here you go. But it’s going to be on a note that, you know, that’s going to be. Sorry, I do whatever I want, and if you don’t pay, then I’m going to hostile take over your company.
Fabiola Jimenez: Yeah.
Mio Asami: That shit happens!
Fabiola Jimenez: And I’m going to take over your children. I’ve seen that. I haven’t, but you need to assume that that’s what’s going to happen. I’m going to take your baby!
Mio Asami: That’s so funny. I mean, your company is your baby.
Fabiola Jimenez: I’m just saying. Create something. There’s a number of websites. There’s a number of places that you can go. You can get the most basic … Again, which Mio and I love getting to test. But we also understand budgets, man. You know, when you’re in a transition of growth and development, you don’t always have 20 grand to throw at a lawyer and say, “Make me pretty. Make all this nice and tight.” That’s just not the case, but you can go, again, to Staples. You can go online and create a document that says, this is the transaction that we’re having. Please, please, please, the most basic of terms. Who is doing what. Names. I need names, businesses. Who’s paying what.
Mio Asami: When are they paying what.
Fabiola Jimenez: What is delivered, what and where. Who’s taking ownership, and who’s taking the risk of loss from X, and Y and Z. And is this a revolving? What are the termination clauses? Is this a revolving agreement where it’s going to be renewed automatically every year, every six months, every five years? Those are all actually the most important terms that we deal with, because those are the issues, and those are the areas where people are like, “Ah, shit!”
Mio Asami: Yeah.
Fabiola Jimenez: “This is not right. How do I fix this?” When it comes to product and money, as long as you can trace it back to some agreement that says, this is what we promised each other that we would do, then you can move forward with resolving this issue, or at least getting close to resolving that type of issue.
Mio Asami: And honestly like shameless bug though, there’s a reason.
Fabiola Jimenez: We are a reason.
Mio Asami: Yeah, not only are we freaking amazing, but we also like … You hire lawyers because we think of the worst case scenario all the time, so that you don’t have to. We know that you want to keep your deals friendly with whoever you are dealing with, whoever this transaction is being consummated with, we know that you want to keep it friendly, so it’s our job to think of the worst. If worst case scenario happens, then you’re like, “Hey, look, I got a fucking lawyer.” It’s an investment. You can look at it as an investment into your company, because future … I mean, obviously again, it’s better in the future, if anything does go wrong.
Fabiola Jimenez: 100%.
Mio Asami: Because I mean, there’s no … There’s literally no company That’s never had any type of issues as they grow.
Fabiola Jimenez: 100%.
Mio Asami: It’s going to happen. Something’s going to happen.
Fabiola Jimenez: It’s part of the growth. It’s growing pains.
Mio Asami: Yeah, growing pains. Yeah, which we’ll talk about in the next episode. But …
Fabiola Jimenez: 100% Yes, episode three is going to actually discuss what happens when-
Mio Asami: Possible issues, and what happens when shit goes down, what happens.
Fabiola Jimenez: Exactly. But, definitely the contracts, and depending also on the size of the firm, obviously don’t go to someone like the big law firms. In all seriousness, when you’re dealing with smaller boutique firms, particularly like [inaudible 00:16:44], we, Mio and I really do work with a lot of startups. Like I said, as we grow with our clients, I mean, we’ve had clients that just reach out to us and they say, “I have a thousand bucks, I have 1500 bucks, and like, that’s it. What can you do?” Our advice is, give me something to start with. If you can give me the terms that I need, I can plug and chug and do what I need to do on the backend, if you do the heavy lifting. So smaller firms, more boutique firms are definitely more malleable when it comes to dealing with startup.
Fabiola Jimenez: And definitely look for a law firm that has startup experience, and that is wanting to work with startups, because those budgets and the structured, and the way that those relationships are developed are very, very, very, very different than if you were to go to like Perkins Coie or K&L Gates, that are just massive.
Mio Asami: Not everyone is down with that.
Fabiola Jimenez: Yeah, so they have a very different view on cannabis in the cannabis industry. So, I’m really emphasizing and pursuing and trying to find a law firm that caters to your particular business. Not just cannabis, they just deal with, I don’t know, just topicals, or they really deal with … For us, we’re kind of an all service, but maybe you want to pursue patents. We don’t do patents, but there’s a couple of other law firms that do do it in the Seattle area. And so, really try to understand what your needs are for your business.
Fabiola Jimenez: I promise you that there’s going to be a law firm that will cater to that, or at least provide some services in that way. So, not to toot our own horn, but [inaudible 00:18:21] is a full service law firm that does all this shit for you. But again, it’s your business. You need to run it how you want, and you should have a law firm and an attorney that understands you and wants to grow with you and develop with you because we are in an ever-changing industry, and it’s ever-growing.
Mio Asami: And again, it’s an investment into your own company.
Fabiola Jimenez: 100%.
Mio Asami: It’s not just money that you’re giving up, or a piece of paper. I’ve said this, I probably not on this, but I’ve said, I usually say, if you’re … A lot of people also tend to think that like, “Hey, I’ve seen a contract report, so I can write one.”
Fabiola Jimenez: No.
Mio Asami: But, if your contract looks and sounds like it’s easy to write, it’s because your lawyer wrote it that way-
Fabiola Jimenez: Exactly.
Mio Asami: So that you can understand it, and you understand what you’re signing. Again-
Fabiola Jimenez: And not all contracts are the same. I mean, there’s some lawyers that pride themselves in being fucking douche bags. They write these agreements that are so heavy pretentious, and just like …
Mio Asami: Heavy when they [inaudible 00:19:21], and just sounds icky.
Fabiola Jimenez: Yeah, and I’m like, no one fucking talks like that. No one fucking talks like that anymore. So like, our-
Mio Asami: Take your fucking Latin shit out of my fucking contract.
Fabiola Jimenez: Bitch, [inaudible 00:19:30], get the fuck out of here! You need to understand, when you’re in a hostile takeover, and you’re trying to take over a mom and pops situation, and you’re just kind of like, “Okay, I need them to have this contract, and not understand the shit that they’re writing thing”, you’re a shitty person, but it happens.
Mio Asami: Yeah. All the time.
Fabiola Jimenez: But in the real world, you need to really understand what you’re signing, what your obligations are, and what the other party is. So lawyers, particularly us, I’ve broken down agreements, per paragraph, per section. We wrote them where I’m like, I don’t understand why the fuck this is a single spaced, one fucking paragraph. I don’t understand this.
Mio Asami: The entire agreement’s just one chunk.
Fabiola Jimenez: Do you remember that fucking-
Mio Asami: I do fucking remember that one.
Fabiola Jimenez: Personal guarantee was like a page and a half, single paid, single spaced, no indentation.
Mio Asami: It literally looked like it was something from the 1800’s, y’all. It was like fucking mind blowing.
Fabiola Jimenez: Because [inaudible 00:20:30] went to the fucking public library and was like contracts [inaudible 00:20:33].
Mio Asami: I’m sorry Jane Austin. I didn’t ask you to write a goddamned contract.
Fabiola Jimenez: Bitch, I want to be titillated by fictional science. I don’t need that shit in my contract. I don’t even know what I’m reading.
Mio Asami: So anyway, if it’s not clear enough about the importance of contracts and having a good one.
Fabiola Jimenez: You, as lawyers, they work for you. Be very clear with your lawyer. Like, I don’t understand what indemnification is, which I get a question all the time. I don’t understand was, you know, FOB. I don’t understand what that is. Like, there’s all these different terms that are super common in the transactional era that you have absolute right to understand and know what that is. And if you don’t like that language, I promise you, there are synonyms that will cover the exact same shit that will give you the exact same results that you want in a much more digestible way. We talked I think about contract’s death. What is our final point Mio?
Mio Asami: [inaudible 00:21:31] Just like different, actually just different … I think a better, or not better, but like a different way to think of it is different revenue streams, rather than just I’m buying and I’m selling. I’m buying the materials I need to sell whatever I’m going to sell, instead of just that. There’s things called white labeling. There’s things called licensing your brand. There’s different ways that you can-
Fabiola Jimenez: Grow.
Mio Asami: Create revenue.
Fabiola Jimenez: Exactly, and think about it this way, Kirkland, right? Costco? The Kirkland brand, that’s all like white labeling. I mean, Costco-
Mio Asami: Kroger.
Fabiola Jimenez: Kroger. Trader Joe’s.
Mio Asami: The up, what is it? Targets up and up
Fabiola Jimenez: Up and up, or whatever, Amazons, whatever that’s on basics. So, woo. Fuck you, Amazon. I’m sorry. You’re just super rich and I’m very angry about it. But yeah, so white labeling is another way, but again, it all kind of ties into each other. If people respect your product, respect your brand, you’ll have people come out and say, “Hey, will you do this for me? Will you make these creams for me under your name? I will, or under our name? I just want … I love your base. Or I love the stance that you have on social equity, on poverty, on whatever it is.” But when you create this brand and you really put that time and effort into it, it all kind of comes full circle where people are now understanding and wanting your brand, and they will want to take a piece of it for their own because you are so profitable and you are so popular, and so you see that.
Mio Asami: Yeah, and on top of that, instead of being on the receiving end of that, if you are expanding and you started out with a lab, or you started out with, you manufacture your own topicals, and now you’re at a point where you’re expanding and you’re like, “Shit, I can’t satisfy all my orders because I’m getting so many.” Then you want to license your brand out to a different lab, or different manufacturer that will create your product according to your exact trade secreted recipe, according to your specific IP, whatever it is, to the quality of your brand. They will make it for you, except it’ll look exactly like you made it all yourself.
Mio Asami: That’s another way to white label. That’s another way to expand your businesses. You know, I need, now I need to help. So let me IP. Let me license out to my brand, my trade secret, my knowledge, to this other company that’s going to now make my products for me, in addition to whatever the hell else I’m doing. So, it’ll actually also let you free up some space so that you can-
Fabiola Jimenez: Create a new products, or-
Mio Asami: Yeah, a new line. Exactly. Should pivot to something else. Yeah.
Fabiola Jimenez: And then again, this is all tied back into each other, right? So like once you’re doing Y, please get that in shit in writing. Please contract your trade secrets.
Mio Asami: Oh my God, especially when … Oh, shit.
Fabiola Jimenez: Yeah. Oh my gosh. It’s wild. Because they’re coming after you because your shits good, straight up. That’s just what it is. And so you want to protect that and-
Mio Asami: If you don’t have it in writing, they can just take your recipes, bro
Fabiola Jimenez: And just leave.
Mio Asami: They can just leave and they’ll make it themselves, and then they’ll brand it under their own shit. And then you’ll be like, what the fuck dude!
Fabiola Jimenez: 100%. So don’t get caught up in that shit, at all. All right, so those are the four points that are the most common, most important, for our clients as they’re growing and developing their businesses. What is our stream Mio?
Mio Asami: Our straight up choice today is Bubba Kush. Reason being, I mean, before I get into like the description of what it is, reason being Bubba Kush is in itself, it’s a brand.
Fabiola Jimenez: It is a very, very popular brand.
Mio Asami: Everybody in this industry, we all know what Bubba Kush is.
Fabiola Jimenez: 100%.
Mio Asami: We all like Bubba Kush.
Fabiola Jimenez: That’s right. That’s right.
Mio Asami: [inaudible 00:25:30] all of this, but I’m just saying. So anyway, Bubba Kush, description wise, it’s an indica strain. It’s got sweet hashish flavors, subtle notes of chocolate and coffee. It’s an indica, right? So it’s relaxing. It’s great.
Fabiola Jimenez: It’s fucking great and sometimes you need a little bit of Bubba Kush after you’ve had a very long day of growth and development, 100%.
Fabiola Jimenez: All right y’all. That is our episode two. Stay tuned for episode three dropping, where we actually get and start discussing some of the more stickier situations of clients get their selves into and how we help them out. Catch us on the next episode y’all.
Mio Asami: You can find us Cultivating Conversations, IG. Find me on IG as well. Mio@Cultivalaw.
Fabiola Jimenez: Find me Fabi, Fabi@Cultivalaw. Find us on Facebook as well. And we will catch you guys here shortly.
Fabiola Jimenez: Bye!
Mio Asami: Bye!