Certainty is key to forwarding cannabis industry.
W. Michael Schuster 22, assistant professor at the University of Georgia Terry College of Business and UGA School of Law, Winter 2022, “Cannabis Derivatives and Trademark Registration: The Case of Delta-8-THC,” Indiana Law Journal, 98(1), pp. 204-205, Lexis, kav
There is a growing body of literature on strategic behavior within the U.S. cannabis industry.199 This research describes how firms seeking competitive advantage in this market navigate a legal environment characterized by constant regulatory change and inconsistent enforcement of relevant laws.200
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Schuster & Bird, supra note 83, at 373 (describing "substantive uncertainty" and "enforcement uncertainty" surrounding the cannabis industry). Professor Bird describes five tiers of legal strategy. See Robert C. Bird, Pathways of Legal Strategy, 14 STAN. J.L. BUS. & FIN. 1, 17 (2008); Robert C. Bird & David Orozco, Finding the Right Corporate Legal Strategy, 56 MIT SLOAN MGMT. REV. 81, 82-86 (2014). An unsophisticated approach to navigating a legal environment is to attempt to avoid or turn a deaf ear to legal obligations and consequence. Robert C. Bird & David Orozco, Finding the Right Corporate Legal Strategy, 56 MIT SLOAN MGMT. REV. 81, 82 (2014). This is called avoidance. Compliance is a second tier of strategy where a firm recognizes that legal obligations are a cost of business and attempts to conform to these requirements. Robert C. Bird, Pathways of Legal Strategy, 14 STAN. J.L. BUS. & FIN. 1, 17 (2008). Prevention firms will proactively take steps to avoid future legal complications, including employee training and proactively planning for future obligations. Id.at 23-26. The apex of legal strategy is most sophisticated means of strategically navigating the legal environment are advantage (using legal acumen to create proactive benefits). Robert C. Bird & David Orozco, Finding the Right Corporate Legal Strategy, 56 MIT SLOAN MGMT. REV. 81, 84-85 (2014), and transformation (creating repeated, sustainable value through strategic legal behaviors); Robert C. Bird, Pathways of Legal Strategy, 14 STAN. J.L. BUS. & FIN. 1, 14 (2008); see also Mike Schuster, David Mitchell & Kenneth Brown., Sampling Increases Music Sales: An Empirical Copyright Study, 56 AM. BUS. L.J. 177, 210- 13 (2019) (describing how copyright policing costs can be transformed into a revenue source).
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Application of the lessons from this literature explains many firms' recent choices to enter a legally unsettled 8-THC market. Furthermore, that research also rationalizes firms' decisions to pursue 8-THC trademark registrations, even though doing so requires admitting that it is selling the drug201 while some uncertainty regarding the legality of 8-THC continues to exist.
In cannabis markets, firms must determine their level of risk aversion regarding future regulatory change, interpretation, and enforcement.202 Examples of this uncertainty in the industry include the disagreement between the USPTO and the DEA regarding the legality of 8-THC203 and the varied enforcement choices made [*205] by U.S. presidents over the last few decades.204 Depending on their risk tolerance, companies must decide whether to move forward with cannabis-based business plans or delay until the regulatory environment is more certain.