The Growing Value of Domain Names in the Cannabis Industry

Domain names represent one of the most important, yet often overlooked, components of any cannabis company’s branding efforts. At a basic level, domain names allow consumers to find websites through easy-to-recall names (e.g. “www.rogowaylaw.com”) rather than the all-numeric IP addresses (such as “192.0.34.65”) assigned to each computer on the Internet. Each domain name is made up of a series of character strings (called “labels”) separated by dots. The right-most label in a domain name is referred to as its “top-level domain” (TLD). While many cannabis companies focus on domain names from a brand protection and anti-cybersquatting perspective, domain names offer significant utility and worth to savvy businesses.

The Secondary Domain Market

Not only do domain names help establish and identify an online presence, but they may constitute some of the most valuable assets of any company. While it costs only a nominal amount to register a domain name, a secondary market has built significant value around treating domain names as commodities. Domain name speculation is the practice of identifying and registering or acquiring Internet domain names as an investment with the intent of selling them later for a profit. The main targets of domain name speculation are generic words which derive value from type-in traffic (e.g., consumers typing the domain name in their web browser) and for dominant search engine results due to their descriptive nature.

Domain Names With Popular Industry Terminology

As the cannabis industry has grown, so too have the value of domain names that incorporate popular industry terminology. Recently, a Las Vegas CBD oil company spent over $500,000 to acquire the domain name CBDOIL.com! BuyLegalMeds.com, which owns virtual and physical storefronts for selling CBD products, purchased the domain name intending to use it for an online marketplace. The company’s CEO, Joe Vargas explained: “We look at the domain as an authority to the entire industry, and the CBD oil industry is worth billions.”

Industry Trends and The Implications for Cannabis Businesses

This mindset surely applies to countless other names that bear prominence in the cannabis industry. As investor interest in the cannabis industry grows, we anticipate the value of cannabis-related domain names will follow suit. Industry entrepreneurs will attempt to corner the market and claim ownership of key terms, driving demand for these domain names sky high. Domain names incorporating terms such as “bloom,” “emerald,” “kush,” and “green” will surely start fetching thousands of dollars on the domain name secondary market. Bidding wars between rival prospective buyers could drive prices even higher.

As with any significant asset sale or acquisition, buying or selling a valuable domain name can be a complicated process. Registrars, the customer-facing retailers of domain names, often establish complicated transfer procedures that must be closely followed when consummating a domain name sale. Also, the parties must address potential liabilities associated with websites that may have resided on the domain names. The IP attorneys at Rogoway Law Group possess extensive experience navigating this complex landscape. Please reach out with any questions.

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