Marijuana Business Magazine October 2018

the next level by introducing cannabis products to mainstream consumers. AbsoluteXtracts, a California infused-products maker, partnered with Heineken’s Lagunitas Brewing in the Golden State for a limited-release product line and a new offering that marries hops and cannabis: limited- release Supercritical Hop Blends vape cartridges and new THC- and CBD- infused Hi-Fi Hops sparkling waters. “Integrating other companies and industries in our product line brings us into that normal business space that cannabis needs to be in,” said Dennis Hunter, a co-founder of CannaCraft, the manufacturer of a family of brands that includes AbsoluteXtracts.. The craft brewing business has many similarities to the cannabis industry. Hops are a cousin to cannabis, and both industries have grown and changed rap- idly, Hunter said. Additionally, cobrand- ing opportunities mean you can lean on partners in other industries for business advice, he added. Gauge Demand If there’s overwhelming seasonal demand for pumpkin pie or peppermint bark, it may make sense to rerelease the product for a limited time during COBRANDING: THE DEVIL IS IN THE DETAIL C obranding a limited-edition prod- uct can boost sales by appealing to the consumer bases of two popular brands. California’s AbsoluteXtracts and Heineken’s Lagunitas Brewing did just that by partnering to produce two prod- ucts: Hi-Fi Hops, a hop-flavored THC- and CBD-infused line of sparkling waters, and hop-flavored vape oils. But before you jump at the opportu- nity to strike a cobranding agreement with another company, it’s important to iron out the details ahead of time. It can save you legal and financial headaches later on. Amanda Conley, a partner at intel- lectual property firm Brand & Branch and co-founder of the National Cannabis Bar Association, noted that due diligence is critical. Conley declined to comment on any specific agree- ment, but she offered five tips for businesses entering co-branding agreements: 1. Protect intellectual property (IP). Whether it’s brand- ing, a patent or a proprietary formulation, a cobranding agreement should be clear about who owns what. “You should both know what you’re bringing to the table and what that means, so you don’t accidentally assign rights you didn’t mean to assign,” Conley said. “Your partner also needs to know you have rights to the (IP) you say you’re providing.” 2. Define who will own the new cobranded IP that will be developed under the agreement. In some cases, one party will own the new IP and the other will have a license to sell or distribute it. In other cases, parties create a joint venture and share ownership of the cobranded IP – but that can get complicated if there’s overlap between any existing IP and new, jointly owned IP, Conley said. 3. Identify liabilities. If a product is recalled or deemed illegal, you should knowwho bears liability. Whichever party that is should be sure it does due diligence on the front end to avoid missteps. 4. For limited-edition products, determine how long the product will be sold or manufactured. When the limited-edition run ends, it should be clear who owns the IP rights for the future. 5. Have clear termination provisions. In the cases of regulatory enforcement or a breach in the contract, a cobranding agreement should have clear exit language. A voluntary termination provision is important, too, so you’re not locked into a partnership you no longer want to be in, Conley said. – Joey Peña AbsoluteXtracts, a California company owned by CannaCraft, partnered with Lagunitas Brewing to create Hi-Fi Hops, a cannabis- and hops-infused sparkling water. Photo courtesy of AbsoluteXtracts Dennis Hunter is co-founder of California’s CannaCraft, the parent company of AbsoluteXtracts. Photo by Jon Lohne 78 • Marijuana Business Magazine • October 2018