The Law Office of Shay Aaron Gilmore – Cannabis Lawyer San Francisco
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HEMP BRAND LICENSING & IP AGREEMENTS

Hemp companies operate in a more favorable intellectual property environment than cannabis companies — they can access federal trademark registration for qualifying products, execute licensing agreements that travel across state lines with fewer legal complications, and structure IP portfolios that support national distribution and co-branding arrangements. But the hemp IP landscape has its own set of complex rules: not all hemp-derived products qualify for federal trademark protection, FDA regulations constrain marketing claims, and California’s cannabis-adjacent regulatory environment adds a layer of compliance that pure hemp brands must navigate carefully. Shay Aaron Gilmore is recognized by the Los Angeles and San Francisco Daily Journal as one of California’s Top 20 Cannabis Lawyers, named to the Top 100 Northern California Super Lawyers list, recognized among the Top 200 Global Cannabis Lawyers by the Cannabis Law Journal, and serves as Board Member of the International Cannabis Bar Association (INCBA) and Chair of the California Lawyers Association Cannabis Practitioners Group (CLA CPG). The Law Office of Shay Aaron Gilmore advises hemp brands on IP licensing strategy, brand licensing agreements, co-branding arrangements, and IP assignment structures.
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The Hemp IP Advantage — and Its Limits

Hemp’s removal from the Controlled Substances Act by the 2018 Farm Bill (Agriculture Improvement Act of 2018) created a genuine federal IP pathway that cannabis companies cannot access. The USPTO’s Examination Guide 1-19 opened federal trademark registration for hemp-derived non-ingestible products — topicals, skincare, cosmetics, clothing, and other goods whose THC content does not exceed 0.3% on a dry weight basis. Federal registration confers nationwide priority, the presumption of validity, access to U.S. Customs enforcement against infringing imports, and the right to use the ® symbol.

The critical limit: ingestible hemp products — foods, beverages, dietary supplements, and pet treats containing CBD — are still refused by the USPTO under the Federal Food, Drug, and Cosmetic Act. The FDA’s position, which the USPTO follows, is that CBD is a drug ingredient that cannot be lawfully added to human or animal food. This limits the federal trademark pathway to non-ingestible hemp goods and certain hemp-related services.

Hemp vs. Cannabis IP Licensing: Key Differences

Feature Cannabis IP Licensing Hemp IP Licensing
Cross-state license enforceability Complex — state law varies Standard — federally lawful
Federal trademark available No (for cannabis goods) Yes (non-ingestible goods)
FDA marketing restrictions DCC/CDFA govern FDA + FTC govern
Royalty repatriation risk High — banking limitations Lower — standard banking available
License territory Typically California only National license possible

Elements of a Hemp Brand License Agreement

A hemp brand licensing agreement governs the right of a licensee to use the licensor’s trademarks, trade dress, formulations, or other intellectual property in connection with the production, distribution, or sale of hemp products. Well-drafted hemp brand licenses address:

  • License scope — Exclusive vs. non-exclusive; permitted product categories; geographic territory (which for hemp can be national or multi-state); permitted channels (retail, wholesale, direct-to-consumer, online).
  • Quality control provisions — Brand licensing requires that the licensor maintain genuine control over the quality of licensed goods. Failure to include and enforce quality control provisions can result in loss of trademark rights through “naked licensing” — a well-recognized doctrine under which courts have held that a licensor who fails to exercise quality control has abandoned the mark.
  • IP ownership and assignment — Who owns improvements, derivative products, or new formulations developed under the license. The default rule under U.S. copyright law (work made for hire doctrine) and patent law differs from the default rule under trade secret and trademark law — a clear IP ownership provision eliminates ambiguity.
  • Regulatory compliance representations — The licensee’s obligations to maintain compliance with FDA regulations, CDFA hemp regulations, and applicable California MAUCRSA provisions if the products will be sold in California.
  • Royalty structure — Flat fee vs. percentage of net sales; minimum guaranteed royalties; audit rights; reporting periods; payment terms and dispute resolution for royalty calculations.
  • Term and termination — Initial term, renewal conditions, termination for cause (including loss of regulatory license or violation of quality standards), and post-termination obligations (inventory wind-down, destruction of branded materials).

Co-Branding and IP Assignment in Hemp Transactions

Co-branding arrangements — where two hemp or CBD companies combine their brands on a single product or line — require careful IP structuring. Each party should confirm its existing trademark clearance before the collaboration launches, document ownership of the co-branded mark (joint ownership of trademarks is legally disfavored and requires specific management provisions), and address what happens to the co-branded mark if the collaboration ends.

IP assignment agreements arise most frequently in acquisition contexts: when a cannabis or hemp company acquires another business, the acquiring party must ensure that all IP — trademarks, trade secrets, copyrights, domain names, social media accounts, website content, and any licensed third-party IP — is properly transferred as part of the transaction. Failure to document IP assignments at closing creates gaps in ownership that can be exploited by former owners, former employees, or subsequent creditors.

Representative Matters

Medterra CBD, LLC — Hemp Retail Brand, Legislative Counsel, and Marketing Compliance (Publishable): Represented Medterra CBD, LLC, an online retailer of hemp and cannabinoid products, as government relations advisor on California Assembly legislation affecting online cannabis and hemp retail platforms. Testified before the Judiciary Committee of the California State Assembly on what was at the time of the engagement the first bill of its kind in the United States, with the potential to influence other states and the entire online cannabis and hemp marketplace. Also advised the client on the brand and marketing compliance implications of the legislation, including restrictions on health claims and advertising requirements under California law.

Cannabis Technology IP Owner — National Distribution Licensing (Confidential): In representing the IP owner of a cannabis technology product with a national distribution footprint, negotiated an IP licensing and distribution agreement that structured the licensor’s economic rights — including royalties and profit-sharing provisions valued at $250,000–$750,000 per annual term — while protecting the licensor’s brand standards and quality control obligations in the distribution chain.

Frequently Asked Questions

Naked licensing occurs when a trademark licensor grants the right to use its mark without exercising genuine quality control over the licensed goods. Courts have held that naked licensing constitutes abandonment of the trademark, which means the licensor can lose the trademark rights entirely. Every hemp brand license must include quality control provisions — and more importantly, the licensor must actually enforce them.
Hemp brand licenses can be structured for national or multi-state territories because hemp is federally lawful under the 2018 Farm Bill. This is a meaningful advantage over cannabis brand licenses, which must generally be limited to California (or other specific states where the licensee is licensed) because cannabis remains a Schedule I controlled substance under federal law. The cross-state enforceability of hemp agreements is one of the key reasons hemp IP strategy differs fundamentally from cannabis IP strategy.
IP does not transfer automatically in a business acquisition unless the transaction documents expressly address it. An asset purchase requires explicit IP assignment provisions covering trademarks (including all registered marks, pending applications, and common law marks), trade secrets, copyrights, domain names, social media handles, website content, and all licenses the target company holds as licensor or licensee. A failure to document IP transfer at closing creates disputes between buyer and seller, and can leave the acquired brand legally unowned.
Hemp brand license royalties are most commonly structured as a percentage of net sales (typically 3–10% depending on brand strength and exclusivity), a flat per-unit fee, or a combination of both with a minimum guaranteed annual royalty. The license should include audit rights allowing the licensor to verify royalty calculations, defined reporting periods (quarterly is standard), and specific dispute resolution procedures for royalty disagreements.
Yes. California Labor Code §§ 2870–2872 permit employers to require employees to assign inventions developed using company resources or relating to the company’s business to the employer — but the assignment must be expressly documented. An employee who creates a new hemp formulation without a written IP assignment agreement may argue they retain ownership of that formulation. This is especially important for companies whose core competitive advantage is a proprietary product formula.

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