White label agreements have become an essential tool in the cannabis industry, allowing companies to rapidly expand product lines and enter new markets without the heavy upfront investment of building production facilities. By partnering with a white label manufacturer, brands can focus on marketing and consumer engagement while relying on established operators to handle cultivation, processing, or packaging. However, while these partnerships offer speed and flexibility, they also introduce significant intellectual property (IP) and branding risks that businesses must carefully manage.
The Nature of White Labeling in Cannabis
In a white label arrangement, a manufacturer produces cannabis products that other companies sell under their own brand names. For example, an edibles manufacturer might produce gummies that multiple dispensary brands sell with unique packaging. This structure provides efficiency and market reach but blurs the line between manufacturer and brand ownership. Unlike private label deals—where products are created exclusively for one brand—white label products are often identical across multiple entities, differing only in branding.
This business model creates unique challenges in cannabis, a sector already constrained by varying state laws, federal prohibition, and limitations on marketing and interstate commerce.
Trademark Limitations in Cannabis
At the federal level, cannabis remains a Schedule I controlled substance under the Controlled Substances Act. As a result, cannabis companies cannot secure federal trademark protection for plant-touching products like flower, concentrates, or edibles. Instead, they are limited to state-level protections or creative “ancillary” filings, such as trademarks for apparel or non-THC goods.
This restriction leaves brands exposed. In white label deals, the inability to register a federally enforceable trademark means multiple companies could market indistinguishable products under similar branding without strong legal recourse. As the United States Patent and Trademark Office (USPTO) has repeatedly confirmed, any mark used in connection with federally illegal goods cannot receive federal protection. Thus, IP rights in cannabis branding are weaker than in traditional consumer packaged goods, making white label disputes particularly risky.
Ownership of Formulations and Trade Secrets
Another risk in white label deals concerns product formulations, processes, and recipes. If a brand collaborates with a manufacturer to develop a unique strain, terpene blend, or edible recipe, questions arise: who owns that intellectual property?
Unless explicitly defined in contracts, the manufacturer may claim rights over the formula or replicate it for other brands. Conversely, the brand may assume exclusivity without written guarantees. This lack of clarity can lead to costly disputes. In industries such as food and beverage, contracts typically include non-disclosure and non-compete clauses to protect proprietary formulations; in cannabis, where innovation is rapid and oversight fragmented, these clauses are even more critical.
Branding and Consumer Confusion
Because white label products often originate from the same source, they carry a heightened risk of consumer confusion. If two competing dispensaries sell indistinguishable vape cartridges under different names, consumers may question authenticity, quality, or brand trust. Inconsistent packaging or misaligned marketing messages can damage reputations—especially in an industry where consumer trust is closely tied to lab testing, potency labeling, and safety assurances.
The Federal Trade Commission (FTC) and Food and Drug Administration (FDA) have already scrutinized misleading claims in cannabis-related products, particularly in the CBD sector. White label brands that fail to maintain consistent quality control may inadvertently expose themselves to regulatory penalties or consumer lawsuits.
Contractual Risk and Liability
Contracts are the primary safeguard in mitigating IP and branding risks. Poorly drafted agreements can leave brands vulnerable in several ways:
- Exclusivity: Without explicit exclusivity clauses, manufacturers may sell identical products to competitors.
- Confidentiality: Absent robust non-disclosure agreements, proprietary branding strategies or formulations may be shared with third parties.
- Quality Control: Liability for defective or mislabeled products must be clearly assigned. Otherwise, both the manufacturer and brand risk lawsuits.
- Termination Rights: If a brand wishes to exit a deal, the lack of defined termination rights can trap them in damaging partnerships.
In cannabis, contracts must also account for state-specific compliance, since regulations differ dramatically across jurisdictions. A contract enforceable in California may not align with requirements in Colorado or Nevada, further complicating interstate brand strategies.
Case Examples and Market Implications
While public case law in cannabis white label disputes is limited due to federal illegality, parallels can be drawn from alcohol and dietary supplement industries. In those sectors, courts have often sided with parties who had clearer contractual protections. Cannabis companies that fail to anticipate these risks may face reputational damage, loss of market share, and costly litigation.
In practice, some brands have sought to mitigate these risks by pursuing hybrid models—developing partial in-house production while outsourcing certain products under tightly controlled agreements. Others have leaned heavily on licensing arrangements, which, unlike white labeling, often provide more defined IP ownership terms.
Best Practices for Protecting IP and Brands
To reduce exposure, companies engaging in cannabis white label partnerships should adopt the following best practices:
- Draft Comprehensive Contracts – Clearly define ownership of IP, exclusivity, liability, and termination rights.
- Pursue Alternative Trademark Strategies – Register ancillary goods and packaging designs federally where possible, while maintaining state-level marks for cannabis goods.
- Prioritize Quality Assurance – Implement strict testing, labeling, and consistency requirements to protect brand trust.
- Use Confidentiality Agreements – Safeguard proprietary formulations, marketing strategies, and consumer data.
- Align on Compliance – Ensure agreements are tailored to each state market in which products will be sold.
In Summary
White label deals in the cannabis industry present both opportunity and risk. They enable brands to scale rapidly, diversify product lines, and compete in crowded markets. Yet, without careful attention to intellectual property and branding safeguards, these partnerships can create long-term vulnerabilities.
For businesses navigating this landscape, proactive legal planning is not optional—it is the foundation of sustainable brand equity. By prioritizing contracts, alternative trademark strategies, and quality assurance, cannabis companies can leverage the benefits of white labeling while minimizing its risks.