Intellectual property is commonly understood in the cannabis community as being synonymous with trademarks. But IP encomapsses much more than logos and taglines. It includes copyright patents and trade secret protection, and for companies creating unique formulations and for hemp and marijuana plant breeders, the options for IP can play an important role in your overarching business strategy.
You might think that because cannabis – particularly high-THC marijauna – is federally illegal, the U.S. Patent and Trademark Office (USPTO) cannot issue patents for strains of cannabis. But this is not the case. However, there are many issued patents on cannabis strains as well as pending patent applications currently before the USPTO.
Cannabis Operators Protect Their Intellectual Property
Back in march we sat down with Hoban Law Group IP counsel, Cathleen Rocco on The Hoban Minute to discuss the options cannabis operators have to protect their intellectual property, the risks CBD manufacturers take on who don’t patent their formulations, and whether or not high-THC cannabis varieties are able to be patented through Plant Variety Protection (PVP).
Cathleen, who has spent the last 15 years helping inventors capture patent and trademark rights, navigate intellectual property risks, craft IP strategy and build a robust patent portfolio, points out that there’s a lot of misunderstanding in the cannabis industry with respect to IP.
When it comes to high-THC cannabis strains, Cathleen points out that it’s not the job of the USPTO to police what’s legal and what isn’t. With this in mind, she highlights that in light of the fact that we are seeing such a drastic and dramatic push towards registering all forms of IP in the cannabis industry, it’s very important for cannabusiness owners to think terms about their business goals, the place of their products in the market, and what makes the most sense for them in term of intellectual property protection. If your business is technology-driven, you need to be thinking in terms of taking patent protection as there is no other way to ensure that you have control over how your invention is used. Cathleen strongly encourages cannabis entrepreneurs to file patent applications.
Patents Are a Business Asset
While investing in IP can be potentially expensive, patents are a business asset, and having patent protection allows you to have negotiation leverage and command over price. Ultimately. it goes to the bottom line of your company and can be a revenue driver. This is why it’s very important to have the help of a good intellectual property attorney who is familiar with the ins and outs of registration requirements and can help you decide what makes sense for your business to get the registrations accomplished.
Recently, the Hoban Law Group was involved in an incredibly important IP case, as it was the first case in federal court in which a patent holder seeks to enforce a patent concerning cannabis-related inventions. In young industries, patent claims tend to be very broad. This was certainly the case for this particular matter. As the industry matures, patentability will narrow as a result of prior art – the searchable literature, patent applications, and issued patents that examiners must consider in order to determine whether an invention meets the criteria for patentability – becoming more and more crowded.
What about Plant Variety Protection (PVP) for industrial hemp?
For decades, European plant breeders have been using PVP and abiding by the rules of the International Union for the Protection of New Varieties of Plants (UPOV). With the recent reemergence of industrial hemp in the U.S., it’s important to think about how American hemp breeders will use PVP. Much of this work will be done in terms of identifying varieties that have a number of advantageous and superior traits including growing characteristics, micro-climate acclimation, high yields, and lignin content, just to name a few. We have a very strong agriculture industry here in the United States and I have every confidence that hemp breeders and cultivators will quickly “catch up” to the innovation we’ve seen in Europe.
It is a critical time for operators in the cannabis industry to have a crash course in patent law. With so many innovations and new technologies being developed in the space, there is a great need for protecting IP. While many inventions are patentable, you must be proactive in order to get ahead. The HLG IP team is a wealth of knowledge and can help you get a leg up in this respect. Gone are the days we stopped to decide where we should go, we just ride.
Cannabis and the 2020 Election
Next month, five states will be voting on seven ballot measures to legalize cannabis. A variety of proposals, including constitutional amendments, statutory initiatives, and alternative measures, could establish new medical cannabis markets in two states and expand legalization to include adult use legalization in four states. Three of these proposals would enshrine cannabis possession and consumption within state constitutions.
This article will explore the proposals themselves as well as the short-term implications of legalization on existing license holders and the industry.
Arizona voters have another opportunity to legalize cannabis next month, after narrowly defeating adult use legislation four years ago. In recent years, the Copper State’s medical cannabis market has seen significant MSO expansion, and new mandatory testing requirements launch at the beginning of November.
There are roughly 150 medical cannabis licenses in the state currently — all of which would receive priority status in the application process for adult use licensing. Additionally, diversity applicants and applicants in areas currently lacking cannabis retail access would be fast-tracked applicants.
Prop. 207 does include local control and opt-out provisions, and a new 16% tax would direct revenue to a variety of funds, while retail operators would be able to launch delivery services as soon as 2023.
Mississippi could become the 34th state to legalize cannabis for medical use, but two competing measures are creating complications on the ballot. A citizen-driven campaign led to the placement of Initiative 65, while the legislature responded with Alternative Initiative 65A.
Initiative 65 establishes a medical cannabis program similar to the program structure of many other states; with clearly defined qualifying conditions, possession limits, taxes, registration fees, and a regulator — the state health department. The alternative includes no definitions and only allows smokable cannabis products for terminally ill patients, leaving a highly restrictive market requiring enabling legislation.
Previous bills have been proposed, but never brought to a vote — leaving some skeptical that anything at all may come of Initiative 65A.
Montana’s existing medical cannabis program relies on a system of caregivers who cultivate cannabis and make manufactured products, including edibles and concentrates. Additionally, there is a limited number of licensed dispensaries throughout the state. Legalization would be a major evolution for Montana, which has seen multiple ballot initiatives and legislative interventions in recent years.
Two measures have been placed: one constitutional amendment to set the age of 21 as the minimum buying age and a measure to establish a commercial adult use market. While no early sales provisions are included, Montana companies would be the only businesses able to start sales for the first year after legalization.
New Jersey voters may make history, legalizing the adult use of cannabis and triggering a race among Mid-Atlantic states to implement sales first. While all of New Jersey’s neighbors have existing medical cannabis programs, none have taken steps to expand further. In recent years, numerous regional state legislatures have attempted to legalize, and Public Question 1 may tip the scales for an entire region with over 50 million residents.
The text of the amendment is brief, but it establishes a definition for ‘cannabis’ while permitting possession, use, and industry operations for adults ages 21 and up. The existing Cannabis Regulatory Commission would be tasked with regulating the industry, but the state legislature must first come to an agreement and pass enabling legislation.
Currently, New Jersey’s medical market includes roughly fifteen licenses, including cultivation and manufacturing, as well as a limited number of dispensaries. The next phase for cannabis in NJ is uncharted territory for now: it is unclear if existing licenses will be given the first opportunity to serve the general public.
Given licensing delays and a slow rollout in Illinois, lawsuits and delays could be in New Jersey’s future — with some analysts suggesting a four-year timeline from amendment passage to full implementation. This may be good news for MSOs, including Columbia Care, Verano, and Acreage Holdings, among others.
South Dakota has long been unfriendly to cannabis in all forms and has some of the nation’s strictest marijuana possession penalties. While other non-medical states have at least given a nod to low-THC medical hemp programs, the Mount Rushmore state hadn’t established any kind of hemp or cannabis program at all until the legislature passed industrial hemp legalization this past spring.
Now, the state could make history as the first to legalize cannabis for medical and adult use purposes at the same time. Two proposals are on the ballot: an initiated measure to launch a medical cannabis program, and a constitutional amendment to fully legalize cannabis, with provisions including adult use, a medical program, and expanded hemp legalization.
Medical use is enshrined in both proposals, while the constitutional amendment would prevent the legislature from any type of statutory tampering to limit a retail market. The constitutional amendment would establish a commercial market for both adult use and medical purposes. Medical use would include home cultivation. As there is no cannabis market in the state at this time, no businesses would be able to take advantage of “early sales” provisions, as seen in other states.
Previously, medical cannabis programs and commercial licensing schemes predated adult use legalization, and the majority of these proposals came into existence by way of the ballot. In most of the earliest states to fully legalize, this was the case: Colorado, Washington, Alaska, Oregon, California, Massachusetts, and Nevada all had some form of voter-approved medical cannabis legislation first.
Implementation of adult-use legalization has, however, varied across the states. In these proposals, Arizona, Montana, and New Jersey have existing medical cannabis infrastructures, but the implementation of adult use will likely lead to program changes.
Some legalization measures have allowed for existing medical dispensaries to launch sales to adults during a period of late-stage rulemaking. These businesses have operated under modified compliance rules, with track-and-trace requirements and varying tax rates until legalization rules are completed.
After Oregon voters approved legalization in 2014, the state’s medical market rapidly expanded with early sales on the horizon. At one point, there were more medical dispensaries in the state than Starbucks or McDonald’s locations. That number later dropped as businesses converted their licenses over.
For some of the states with legalization on the ballot this year, the transition out of medical will pose challenges: product shortages, long customer lines, new tax rates, uncertainty over product offerings, and testing requirements on top of an already difficult pandemic business environment.
Overall, legalization measures promise to bring a significant impact to consumers and patients in Arizona, Mississippi, Montana, New Jersey, and South Dakota. It’s hard to quantify the short-term improvements to consumers and industry operators, as passage of these initiatives will set off a flurry of legislative and regulatory discussion over the holidays and into the spring. Existing licensees and hopeful applicants should keep an eye for new opportunities: public comment periods, application deadlines, and new sales opportunities on the horizon.
Jason Kikel is a Senior Data Analyst at Cannabiz Media, where he researches licenses across the cannabis marketplace and the policies behind them. He brings forth a variety of experience in urban planning, agriculture, and education, as well as enthusiasm for an expanding industry. Jason graduated magna cum laude from West Virginia University and recently completed his Master of Community + Regional Planning at The University of New Mexico. A longtime cannabis policy reform advocate, Jason first jumped into the cannabis economy as a graduate student while completing his master’s thesis, studying the legalization-land use-water policy nexus in Colorado. Jason recently delivered a presentation on this research, “Land Use, Water, and Policy Considerations in Emerging Cannabis Markets: Lessons from the Arid Mountain West” at the inaugural Institute for Cannabis Research conference at Colorado State University-Pueblo.
Cuomo advisor predicts New York will legalize pot in April
New York Governor Andrew Cuomo’s advisor on marijuana policy said this week the Empire State could legalize weed in April of next year with a bill that would serve as a model for other states looking to allow recreational pot in the United States.
Axel Bernabe, assistant counselor to Governor Cuomo, was a guest on the Under The Canopy series, recently launched by Canopy Growth, where he discussed cannabis legalization efforts in New York. According to Bernabe, a bill to legalize marijuana will be introduced through the state budget in January again, while he expects legalization to take effect by April.
As New Jersey appears ready to legalize marijuana this November, Bernabe said the Cuomo administration has been watching its neighbor “closely.”
“We’re watching New Jersey closely. We’ve always been confident that we’d get to this before New Jersey, so if they pass the referendum they still have to have an agreement between the governor and the Senate over there,” he said.
“If New Jersey can beat us to it, they’ll get a gold star but I still think we’re gonna set the model for this,” Bernabe added, referring to the bill’s social equity provisions, among other things.
During the interview, Bernabe also said that New York has been monitoring how legalization has been unfolding in Vermont, Maine, and Massachusetts, but has also consulted with states on the West Coast, where the legal pot industry is larger and more developed.
Regarding hemp, Cuomo’s advisor said the state will release its guidelines and regulations for CBD consumer products early next year as well.
“Those products are already out there, so there’s no sense in pretending they’re not,” Bernabe explained.
For this reason, the governor and his team have been working on guidelines, which will include maximum dose per serving labeling and warnings about potential THC content in various hemp-derived products. New York has copied a lot of Florida’s hemp regulations while crafting its own policies, Bernabe stated, before telling Canopy Growth’s David Culver that the administration is currently putting the finishing touches to the guidelines.
Although Governor Cuomo promised his state would legalize weed soon, marijuana legalization was left out of the New York state budget for 2020 due to the coronavirus pandemic, which hit the state particularly badly earlier this year.
Cuomo previously proposed working in conjunction with the neighboring states of New Jersey, Connecticut, and Pennsylvania on coordinating a recreational marijuana system for the region.
PURA Concludes Farmersville Meetings – Deal Imminent
Dallas, TX – October 20, 2020 – OTC PR WIRE — Puration, Inc. (OTC PINK: PURA) today announced that CEO Brian Shibley concluded a key meeting yesterday essential to finalizing the acquisition of 72-acre property in Farmersville, Texas central to the company’s recently announced Farmersville Brands strategy. “The acquisition is imminent. Look for an announcement very soon,” said Mr. Shibley.
PURA has scheduled the release of a comprehensive update this Friday, October 23, 2020, to provide the latest information on progress with the Farmersville Brand strategy. The Friday update this Friday will include the latest on the company’s planned dividend of PAO Group, Inc. (OTC PINK: PAOG) stock in conjunction with PURA’s sale of its cannabis cultivation business to PAOG.
For more information on Puration, visit http://www.purationinc.com
This news release contains forward-looking statements within the meaning of the Securities Litigation Reform Act. The statements reflect the Company’s current views with respect to future events that involve risks and uncertainties. Among others, these risks include the expectation that any of the companies mentioned herein will achieve significant sales, the failure to meet schedule or performance requirements of the companies’ contracts, the companies’ liquidity position, the companies’ ability to obtain new contracts, the emergence of competitors with greater financial resources and the impact of competitive pricing. In the light of these uncertainties, the forward-looking events referred to in this release might not occur. These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat, cure, or prevent any disease.
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