Global candy giant Mars Wrigley has filed lawsuits against several businesses selling cannabis products in the United States and Canada, claiming the companies have infringed on trademarks for some of its most iconic consumer brands. Mars Wrigley said on Monday that the legal action is intended to stop the illicit cannabis industry’s illegal and dangerous use of its world-famous trademarks in the marketing for THC-infused edibles.
“Mars Wrigley strongly condemns the use of popular candy brands in the marketing and sale of THC products, which is grossly deceptive and irresponsible,” the company wrote in a press release. “The use of Mars Wrigley’s brands in this manner is unauthorized, inappropriate, and must cease, especially to protect children from mistakenly ingesting these unlawful THC products.”
Legal Action Filed In California and Illinois
The company noted that THC products sold under the names “Medicated Skittles,” “Starburst Gummies,” and “Life Savers Medicated Gummies” were available to consumers in Canada and the United States from e-commerce sites. Mars Wrigley said that the look-alike products “pose a great danger to the public as anyone, children and adults alike, could easily mistake the infringing cannabis-infused products for Wrigley’s famous and beloved candies and inadvertently ingest” the THC in them, according to a complaint filed Monday in federal court in Riverside, California.
Mars Wrigley said that the infused products sold by the defendants in the case have a nearly identical resemblance to its trademarked products. Defendants include the California-based owners of the websites 2020ediblez.com, ie420supply.com, and oc420collection.com, reported Bloomberg, noting that emails and phone calls requesting comment from the defendants went unanswered.
In a complaint filed in the U.S. District Court for the Northern District of Illinois, Mars Wrigley named Terphogz and five Illinois-based companies that purchase, market, and sell cannabis-infused Zkittlez in the state.
“Mars Wrigley filed an additional lawsuit in the U.S. against a company selling a marijuana strain and related products under the name Zkittlez, bearing an extreme likeness to a Mars Wrigley brand,” the company said. “Mars Wrigley’s legal actions in the U.S. and Canada are a testament to its commitment to stop the distribution of these harmful THC products.”
In the court filing, the company is seeking a permanent injunction on any products sold under the Zkittlez brand name and wants the company to surrender any goods bearing the mark. Mars Wrigley is also demanding that Terphogz rescind a trademark application for the Zkittlez name, surrender the domain name for the brand, and shut down related social media accounts.
“Terphogz’s Zkittlez Marks are substantially identical in sight, sound, meaning, and commercial impression to Wrigley’s Skittles Marks,” the filing states, citing the similar red package for the products as an example.
The company also filed legal action in Canada, seeking damages of $2 million per trademark violation for each type of candy sold, all profits from the sale of products bearing the infringing marks, and the destruction of any remaining products.
Popular Mars Wrigley Brands Easy To Fake
Mars Wrigley noted that it is not difficult for illicit cannabis operators to create seemingly familiar products for the unregulated market.
“Like other consumer packaged goods brands, Mars Wrigley brands are being used without authorization to create fake THC packaging, which is sold empty and then filled with THC-infused candies to market and sell THC products that look substantially like genuine candies,” the company wrote in a statement to reporters, noting that “Mars Wrigley does not manufacture or sell any products containing THC.”
Mars Wrigley said that the unauthorized use of its trademarks is confusing to consumers and has the potential to harm the goodwill it has fostered for generations. The company also said that the look-alike products pose a danger to children.
“At Mars Wrigley we take great pride in making fun treats that parents can trust giving to their children and children can enjoy safely,” a company spokeswoman said in an email to CNBC. “We are deeply disturbed to see our trademarked brands being used illegally to sell THC-infused products, and even more so to hear of children ingesting these products and becoming ill.”
Rhode Island Rakes In $1.6 Million in First Week of Recreational Pot Sales
Rhode Island’s new adult-use cannabis market opened for business earlier this month, and so far, business is good.
Local news station WPRI, citing the state’s Department of Business Regulation, reported this week that “Rhode Island’s six marijuana dispensaries — five of which are currently authorized to sell to recreational customers — collectively sold just over $1.63 million worth of marijuana from Dec. 1 to Dec. 7.”
“Less than half of those sales were for recreational marijuana, at about $786,000. The rest, about $845,400, were sales to medical marijuana patients,” the station reported. “For comparison, during the last week of October — the most recent full week available prior to recreational sales — the dispensaries collectively sold $1 million worth of medical marijuana.”
Rhode Island legalized recreational cannabis use in May, when Gov. Dan McKee signed a bill that was passed by lawmakers in the state General Assembly.
The law made it legal for adults aged 21 and older to cultivate and possess marijuana, while also establishing the regulatory framework for cannabis sales.
“This bill successfully incorporates our priorities of making sure cannabis legalization is equitable, controlled, and safe,” McKee, a Democrat, said in a statement at the time. “In addition, it creates a process for the automatic expungement of past cannabis convictions. My Administration’s original legalization plan also included such a provision and I am thrilled that the Assembly recognized the importance of this particular issue. The end result is a win for our state both socially and economically.”
Additionally, the law “will give courts until July 1, 2024, to automatically expunge past convictions, and those who want their expungement sooner may request it,” the governor’s office explained in a press release at the time.
Late last month, McKee and the state’s Department of Business Regulation’s Office of Cannabis Regulation announced that “five licensed medical marijuana compassion centers have received state approval to begin selling adult use marijuana on or after December 1.”
The five “compassion centers” that were given approval to begin adult-use sales are: Aura of Rhode Island (Central Falls); Thomas C. Slater Center (Providence); Mother Earth Wellness (Pawtucket); Greenleaf Compassionate Care Center (Portsmouth); and RISE Warwick (Warwick).
“This milestone is the result of a carefully executed process to ensure that our state’s entry into this emerging market was done in a safe, controlled and equitable manner,” McKee said last month. “It is also a win for our statewide economy and our strong, locally based cannabis supply chain, which consists of nearly 70 licensed cultivators, processors and manufacturers in addition to our licensed compassion centers. Finally, I thank the leadership of the General Assembly for passing this practical implementation framework in the Rhode Island Cannabis Act and I look forward to continuing our work together on this issue.”
Matt Santacroce, who is serving as interim deputy director of the Rhode Island Department of Business Regulation, said last month that the state was “pleased with the quality and comprehensiveness of the applications we received from the state’s compassion centers, and we are proud to launch adult use sales in Rhode Island just six months after the Cannabis Act was signed into law, marking the Northeast’s fastest implementation period.”
“We look forward to continuing to work with the state’s cannabis business community to ensure this critical economic sector scales in compliance with the rules and regulations put forward by state regulators,” Santacroce said.
The launch of recreational sales on December 1 was only one change to Rhode Island’s existing marijuana policy to arrive this month.
WPRI reported that, on the same day, “the state also stopped charging medical patients to obtain or renew their medical marijuana cards,” adding that “there is an expected revenue loss from the pending plan to expunge marijuana possession charges, which will eliminate court fees from those crimes.”
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D.C. Council Approves Cannabis Bill To Promote Equity, Provide Tax Relief And Eliminate Medical Marijuana License Caps
On Tuesday, lawmakers in Washington, D.C., approved a bill that would significantly alter the city’s medical marijuana program. The bill would, among other things, remove licensing caps on cannabis businesses, reduce taxes for operators, increase efforts to promote social equity, and establish new categories of regulated businesses, such as on-site consumption facilities and cannabis cooking classes.
Additionally, it would allow current “gifting” operators, who sell non-cannabis items in exchange for “free” marijuana products, to transition into the permitted market while granting authorities the ability to crack down on those who continue to operate unlawfully.
The measure, which had been revised by the Committee of the Whole earlier in the day, was passed by the full D.C. Council by a vote of 7 to 4.
A second reading vote by the Council is still required before it can be sent to the mayor’s office.
Pro-reform lawmakers have voiced concerns that the bill’s most recent iteration may have unintended consequences for social fairness by granting preferential treatment to already established medical cannabis outlets.
Legally, adults would be able to selfcertify their medical marijuana use according to the Medical Cannabis Amendment Act.
Council Chairman Phil Mendelson (D) introduced the legislation on behalf of Mayor Muriel Bowser (D).
A note prepared for the hearing by the Committee of the Whole states that the most recent print “retains a majority of the adjustments and additions made by” the Committee on Business and Economic Development (CBED), which passed the measure last week.
It had progressed out of a different panel before.
Dispensaries’ Cashless ATM Transactions Get The Ax
Cannabis dispensaries in several states were left scrambling to find ways to process transactions without cash when a popular workaround to federal banking regulations known as cashless ATMs stopped working for many retailers beginning last week. Cashless ATMs, also known as “point of banking” systems, allow customers to use bank cards instead of cash at cannabis dispensaries, giving retailers and their patrons alike more flexibility when processing transactions for marijuana purchases.
But beginning last week, some of the biggest ATM transaction processors including NCR Corp.’s Columbus Data Services have shut down the ability of cashless ATM transaction processors to use their service, according to unidentified sources cited by Bloomberg. NCR declined to comment on the situation, according to the report.
“This is a pivotal point in cannabis banking,” Ryan Hamlin, chief executive officer of payment technology provider Posabit Systems Corp., told Bloomberg about the cashless ATM shutdowns.
Notice Given Last Year
Late last year, international payment processing giant Visa announced in a memo to retailers that it “was aware of a scheme where POS devices marketed as ‘Cashless ATMs’ are being deployed at merchant outlets.”
The system worked by rounding up purchases, often to multiples of $20, to make the transaction appear to be cash disbursements. Instead, only the change from the transaction would be returned to the customer, and the dispensary would keep the rest to cover the payment for the purchase.
“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs. However, no cash disbursements are made to cardholders,” the December 2021 memo continues. “Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement.
In April, Bloomberg reported that cashless ATM transactions were able to be processed because they were disguised by listing an address of a nearby business such as a fast food restaurant instead of the actual dispensary address. An estimate put the portion of cannabis sales processed through cashless ATM transactions at 25% of the $25 billion in projected annual dispensary sales.
“Those sales could generate more than $500 million in fees for payment processors, based on average purchase sizes,” Bloomberg reported.
Banking Laws Hinder Legitimate Cannabis Businesses
The popularity of cashless ATM transactions is indicative of the difficulty federal regulations pose for cannabis businesses, even those operating legally under state law. Federal banking and money laundering laws put restrictions on the banking industry, making it difficult for financial institutions to provide traditional services such as credit card processing, loans, and deposit and payroll accounts. But cashless ATMs fail to pass muster with the federal regulations.
“The cashless ATM trend is damaging to investors, dispensaries, and consumers, as when it comes down to it, it’s blatant money laundering,” CannaTrac CEO Tom Gavin told High Times. “Instead of creating loopholes and using a cashless ATM, dispensaries should take advantage of other solutions currently on the market that are safe, legal, and transparent. A proper financial solution should be registered with FinCEN and have a money transmitter license, or be the agent of a sponsor or bank with a money transmitter license in their state.”
Hamlin of Posabit said that signs of the cashless ATM shutdown began to appear in November and increased last week. He estimated that by the end of the weekend, only about 20% of the cannabis industry was still able to use cashless ATM payments.
Cannabis dispensaries in Arizona, California, and Massachusetts have reportedly been affected by the shutdown of cashless ATM transactions, with employees at those shops recommending that they pay for their purchases with cash instead. Curaleaf Holdings, one of the largest cannabis retailers in the United States, reported in April that approximately one-third of the company’s dispensary transactions were processed through cashless ATMs.
“It’s left merchants in the lurch because it happened overnight, but the writing has been on the wall for a while now,” said Peter Su, a senior vice president at Green Check Verified, a consulting and software company that specializes in cannabis and banking.
Sahar Ayinehsazian, a partner at Vicente Sederberg LLP and co-chair of the law firm’s Banking and Financial Services Access Group, said that the shutdown of the cashless ATM system illustrates the need for the passage of legislation now pending before Congress that would allow legal cannabis businesses access to banking services.
“This shutdown further underscores the ongoing need for banking and financial reform for cannabis businesses and the passage of the SAFE Act,” Ayinehsazian wrote in an email to High Times. “While there can be no guarantee that the Act will open up payment processing for cannabis operators, the industry is very optimistic that its passage will facilitate access to legal and legitimate cashless payment options for cannabis operators.”
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