canada cannabis patent

Currently, seven of Canada’s top ten cannabis patent holders are major multi-national pharmaceutical companies, according to a joint research project by Washington D.C.-based New Frontier Data and London-based cannabis bio-technology firm, Grow Biotech. The list includes Ciba-Geigy AG (Switzerland) with 21 patents; Pfizer Products (United States) with 14; and Telefonaktiebolaget LM Ericsson (Sweden) with 13. Merck Sharp and Dohme Corporation, the fourth largest pharmaceutical company in the world, has 11 cannabis-related patents, and recently announced a partnership to pursue collaborations with Intec Pharma Ltd., a clinical-stage biopharmaceutical company that has developed a propriety oral drug delivery system for delivery of CBD and THC in treating pain. This got me wondering: why are the mega companies choosing to file their cannabis patents in Canada as opposed to the United States?

With cannabis now legal in Canada for both medical and recreational use, as well as legal for medical use in 33 states and D.C. and recreational use in 11 states and D.C., it’s no secret companies are ramping up their R&D and rushing to pursue patent protection. As we’ve referenced before, data shows that the number of U.S. cannabis patent holders has nearly quadrupled since 2016. The U.S. Patent and Trademark Office issued 127 patents containing the words “cannabis” or “cannabinoid” in their claims in 2018. Similarly, the Canadian Intellectual Property Office (“CIPO”) issued 22 such patents in 2018. While numbers on both sides of the border are growing, it could be that the pharmaceutical titans are heading to Canada because the status of “marijuana” in the United States as a Schedule I substance creates patent-related issues that mega companies want to avoid (such as giving sworn statements to the USPTO that the company is, in fact, possessing marijuana in conjunction with its patent application).

On a much simpler, practical note though, they’re probably heading there because it proves to be cheaper and quicker to obtain cannabis patents in Canada. Given how rapidly the cannabis industry is evolving, obtaining patents in the cannabis field first presents several advantages (such as being able to assert your patents against competitors or using your patents with definitive claims to improve your negotiation position during business transactions).

Looking into the process, it may be a year after the request for examination is made before CIPO issues a first Examiner’s Report in a Canadian patent application. In some cases, the subsequent Examiner’s Report or Notice of Allowance may issue in about six to nine months after the applicant’s response. This means it may take a little less than two years (or more) from the time of requesting examination to obtaining a Canadian patent, which is comparable to the timeline in the United States. But! The Canadian patent system offers an excellent option for accelerating examination via a request for Special Order. A Special Order may usually be obtained without difficulty upon payment of a government fee of CAD $500 (at the time of writing this article, that’s USD $382.31). In comparison, a similar program in the United States for accelerating examination, namely the Track 1 examination program, has a filing fee of USD $4,000.

Under CIPO’s current service standard, a Special Order will get the applicant a response within two months from when the correspondence is received. Therefore, by using a Special Order, it may be possible to significantly shorten the length of time from requesting examination to patent grant.

One thing to note is that in Canada, certain subject matter is excluded from patentability. One major example: plants. Plants are not patentable in Canada because its laws provide that “higher life forms” (which includes plants and animals) are not patentable subject matter. In contrast, a cell of a higher life form, methods of making higher life forms, as well as use of a higher life form, may constitute patentable subject matter. So, in order for a breeder or grower to obtain a patent, they must be able to show that the new cannabis cultivar can be identified by technical features (like genetic modifications).

Since it’s possible to obtain patents for inventions related to cannabinoid formulations, etc. in both Canada and the United States, maybe the best approach is to build a balanced Canadian and U.S. patent portfolio. This would allow a company to protect its assets and maximize its shield against competition in both jurisdictions.

california hemp cbd

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order. So far, we have covered AlabamaAlaska, Arizona and Arkansas. This week we turn to California.

I personally think that it’s a bit difficult to talk about Hemp-CBD in a vacuum in California, because the laws we have here are much more focused on the actual hemp plant itself. So today, I’m going to talk not only about Hemp-CBD, but also about laws on cultivation and processing.

Hemp Cultivation

Of all the things you can do with hemp in California, cultivation is probably the safest and most “legalized”.  It’s had a relatively long and complex history in this state, beginning most significantly in 2013, when California passed Senate Bill 566, the California Industrial Hemp Farming Act (or “CIHFA”). The CIHFA amended CA law to redefine “marijuana” to exclude industrial hemp, and to define industrial hemp. It also added a section to the Food and Agriculture Code that would regulate the production of hemp by established agricultural research institutions (“EARIs”) and commercial cultivators. Even though there was a law allowing commercial cultivation, it didn’t actually take place until many years later.

The next year, the federal Agricultural Act of 2014 (or “2014 Farm Bill”) was passed. As readers of this blog probably know by now, section 7606 of the 2014 Farm Bill allowed the cultivation of hemp for research purposes conducted under an agricultural pilot program or by a research institution, in states where hemp cultivation was legal. California still hasn’t developed an agricultural pilot program, but according to FAQs issued by the California Department of Food and Agriculture (“CDFA”), the pilot program is in the works.

After the 2014 Farm Bill was passed, on June 6, 2014, then-California Attorney General (and current 2020 U.S. presidential runner) Kamala Harris issued opinion 13-1102, which stated “Federal law authorized, and rendered operative, the relevant portions of the California Industrial Hemp Farming Act on February 7, 2014.” Harris’ opinion, however, noted that provisions of the CIHFA were “inoperative to the extent that they apply or pertain to any form of industrial hemp cultivation not authorized by federal law.” In plain English, commercial cultivation was still not allowed.

In 2016, the Control Regulate and Tax Adult Use Of Marijuana Act (or “Prop. 64”) was passed. Prop. 64 formally amended the above California Food & Agriculture Code sections to make the hemp provisions become effective on January 1, 2017. But even that didn’t really happen.

In 2018, commercial cultivation began to become a reality with Senate Bill 1409. SB-1409 (which we have written about herehere, and here) allowed for the commercial cultivation of hemp upon registration with the CDFA and county commissioners, effective January 1, 2019. It was only on April 30, 2019, years after the CIHFA was passed, that the CDFA published information concerning registration with county agricultural commissioners to cultivate hemp.

To date, CDFA has created (1) regulations that deal with cultivation for commercial purposes; (2) regulations that list of approved seed cultivars; (3) emergency testing and sampling regulations; (4) guidelines for county agricultural commissioners to collect certain information from EARI cultivators; and (5) guidelines requiring certain hemp cultivators to obtain nursery stock licenses. More are likely to come, and soon.

What this all means is:

  • Pilot Program: We don’t have one here officially yet, but might soon.
  • EARIs: CIHFA basically allows EARIs to cultivate hemp with very few restrictions. There are still a lot of unanswered questions, like whether this hemp can be sold for commercial purposes.
  • Commercial Cultivation: Commercial hemp cultivators can pay a modest fee to cultivate hemp (provided their local jurisdiction allows it), and are subject to some testing and sampling, as well as other requirements. All in all, commercial cultivators are subject to DRASTICALLY fewer restrictions and regulations than commercial cannabis cultivators in CA (for the record, CA defines “Cannabis” here to exclude hemp, sorry for any confusion). However, because the 2018 Farm Bill hasn’t been fully implemented and the federal government is still relying on the 2014 Farm Bill, commercial cultivation is still in a gray area.

Being California, this is of course about to possibly change. The state is considering passing new legislation (SB-153) that would amend the hemp provisions of the Food and Agriculture Code to be more consistent with the 2014 and 2018 Farm Bills. I plan on writing more on SB-153 in the coming weeks, but for now, here are some highlights:

  • SB-153 would contain a new definition of “industrial hemp” that’s sort of different from CA’s current definition in the Health and Safety Code, meaning there will be two definitions of the term;
  • The definition of EARI would be restricted much, much further to apply to a much smaller subset of research institutions;
  • Permits would be required for all hemp cultivation—including non-commercial cultivation—meaning that some research institutions that currently qualify as EARIs will need to register and comply with CDFA regulations;
  • The CDFA will be forced to create and submit a hemp production program to submit to the U.S. Department of Agriculture per section 297B of the 2018 Farm Bill; and
  • People who provide false information on their commercial hemp registrations will be barred from participating in CA’s future hemp program.

This is just a brief overview and, again, I plan on writing in detail on SB-153 in the coming weeks. Needless to say, however, SB-153 would clarify a lot for hemp cultivators here given that the 2018 Farm Bill has yet to be implemented and, to date, there hasn’t been much action to get a California hemp production plan going.

Hemp Processing/Manufacture/Testing

The CDFA FAQs say all that needs to be said: “California law does not currently provide any requirements for the manufacturing, processing, or selling of non-food industrial hemp or hemp products.” That said, the California Department of Public Health’s (“CDPH”)  Hemp CBD FAQs take the position that Hemp CBD is illegal in basically all foods, beverages, and some other products. Based on this position, the CDPH has apparently been going after manufacturers of Hemp CBD products on the grounds that Hemp CBD “adulterates” foods, under the California Sherman Food, Drug, & Cosmetic Law.

I recently wrote about a new law (AB-228) that if passed, would find conclusively that Hemp-CBD added to foods and other products does not in and of itself adulterate them. The law looks poised to pass, and if it does would do the following:

  • Licensed cannabis companies wouldn’t be precluded from being in the hemp business;
  • Hemp products that are foods, beverages, or cosmetics would have some minimal labeling requirements;
  • Food manufacturers that make hemp products would be required to obtain certain registrations and would need to demonstrate that their hemp comes from a jurisdiction that has an “established and approved industrial hemp program” that meets all federal requirements for the sale and cultivation of hemp;
  • The CDPH wouldn’t be able to conclude that foods, beverages, or cosmetics are adulterated just because they contain CBD; and
  • Raw hemp products would need to undergo certain lab testing and get certificates of analysis prior to sale.

Hemp-CBD Product Sales

The CDPH’s Hemp CBD FAQs prohibit the sale of Hemp CBD in foods and many other products as noted above. It’s less clear about certain products like flower, oil, and vape cartridges. But we do know what if AB-228 passes, Hemp CBD may be allowed in many kinds of products that the state has, for some reason, tried to ban.

In the near future, we may be dealing with a “legal” and regulated Hemp CBD market in California.

kamala harris marijuana cannabis

Every Saturday, we have been running a series of blog posts that take a close look at each of the Democratic Party candidates for President in 2020. We examine each candidate’s historic approach to marijuana law and policy, and we also canvas their current respective stances on marijuana.

Over the past two weeks, we covered Joe Biden and Bernie Sanders. Today, we turn to Kamala Harris, the Senator from California and former state Attorney General.

Grade: B

Stance on marijuana: Senator Kamala Harris wants to legalize marijuana as part of her criminal justice reform platform. As stated on her website:

Kamala will take action to legalize marijuana, further reform federal sentencing laws, end private prisons and the profiting off of people in prison, and push states to prioritize treatment and rehabilitation for drug offenses.”

On social media, Harris has not only called for legalizing marijuana, but also for expunging marijuana offenses from criminal records.

History with marijuana legislation: Harris’ website gives the impression that she has for a long time tirelessly advocated for criminal justice reform, first as an attorney, in her roles as District Attorney of San Francisco and Attorney General of California, and then as a Senator. Now as a presidential candidate, Harris has openly advocated for legalizing marijuana as a criminal justice reform issue. Specifically, she cites the disproportionate incarceration rates for people of color facing marijuana-related charges.

Harris’ pro-legalization stance, however, is actually a recent development and we have criticized Harris on this blog in the past. In 2010, Harris opposed a measure in California that would have legalized marijuana. At that time, she only supported legalization of medical marijuana because she believed “that drug selling harms communities.” Even in 2014, Harris opposed legalization. In 2015, however, Harris’ position seemed to have shifted as she advocated for federal decriminalization of marijuana at the DNC. This change in rhetoric coincided with her announcement that she would run for Senate earlier that year.

As a Senator, Harris’ rhetoric has become increasingly pro-legalization. Most recently, in 2018 Harris co-sponsored the Marijuana Justice Act which would legalize marijuana if passed. Her apparent pro-legalization stance, however, hasn’t always translated into legislative action. Her recent co-sponsorship of the Marijuana Justice Act comes only after she passed up many opportunities to co-sponsor or sign bills which would have legalized or rescheduled marijuana. The timing of her co-sponsorship of the bill — just over half a year before her official announcement of her presidential candidacy — suggests her sponsorship was a political move. Harris knows she must visibly adopt the pro-legalization platform to have a shot at the presidency as the majority of Americans support legalization.  But we wonder how much priority she would actually give the issue if elected into office.

Conclusion: Harris receives a “B” grade. As a presidential candidate, Harris is now outspoken in her support of legalizing marijuana as part of her criminal justice reform platform. Additionally, her recent sponsorship of the Marijuana Justice Act of 2019 demonstrates her willingness to take legislative action. However, Harris’ less than stellar history on cannabis should make people wonder whether she really believes in legalization and how deeply. To put it bluntly, she may be fine on cannabis right now, but her history is cause for concern. Her past opposition to legalization as an attorney followed by inaction during the early part of her career as Senator does not and should not inspire confidence in Harris as an advocate for legalization.

cannabis marijuana hazardous waste prosecutionLast month, the U.S. Attorney for the Southern District of California indicted a San Diego cannabis manufacturer for dumping hazardous waste in violation of federal law. The defendants are alleged to have arranged for an unlicensed garbage hauler to unlawfully dump at various locations twenty-eight 55-gallon barrels of waste ethanol used in volatile extraction of cannabis oils, a process that is permitted under state and local law with proper licenses and permits. The defendants allegedly paid the hauler in cash what amounted to about half of what it would have cost to lawfully dispose of the material. California law strictly controls hazardous waste management and disposal practices by cannabis licensees, including manufacturers such as the defendants here.

While the charged conduct described in this case is extremely serious, the most notable part of the indictment is what’s missing: any mention whatsoever of the Controlled Substances Act or other federal law pertaining to the illegality of defendants’ cannabis business. Indeed, the indictment expressly alleges that the charged defendant “was engaged in the business of extracting oils from cannabis,” and the California Department of Public Health’s online license search tool indicates that the business appeared to have both local and state approval to conduct the extraction activities. In other words, despite the parties all but stipulating to the fact that the defendant company was engaged in federally illegal cannabis activity, the federal government decided not to charge anyone for that conduct, and instead focused only on the violation of hazardous waste laws.

Federal enforcement against state-licensed cannabis operators has come a long way in the past decade, from active enforcement to the 2013 Cole Memo to its rescission and the selective enforcement actions that have followed—the instant case falling within the latter category. Likewise, federal courts have continued to refine their legal analysis when it comes to the commercial cannabis industry, finding more and more frequently that commercial contracts involving cannabis businesses will be enforced, particularly if doing so will not force a party to actively violate the Controlled Substances Act.

The current case is consistent with other federal enforcement activity (or lack thereof) against cannabis businesses in California in recent months. Even though the defendant entity apparently held state and local approvals for its cannabis manufacturing activity, it was allegedly violating the terms of those approvals by engaging in illegal dumping of hazardous waste and thereby jeopardizing the health of the community. Similar to the federal government’s team efforts with California authorities last summer to target illegal cannabis grows on public land, the current case targets alleged activity that would be illegal under any state’s law and would trigger environmental concerns, even though enforcement of hazardous waste laws against cannabis operators was not a stated concern of the Cole Memo.

So what does this case mean for cannabis operators when it comes to future federal enforcement activity? No one can say for sure, so long as commercial cannabis activity remains illegal under federal law. But from past and current observations, it seems that federal enforcement resources are largely being directed towards cannabis activity that implicates one or more Cole Memo priorities, and most notably activities that involve organized crime and environmental concerns. It does not seem that federal enforcement activity is being or will imminently be directed towards commercial cannabis operations that are in compliance with state and local law (and federal laws other than those that prohibit cannabis), hold valid permits and licenses, and are generally behaving as good members of the community. And that is very good news.

cbd federal government

In the past few weeks, many opinions on the sale, marketing and transportation of hemp and hemp-derived CBD-infused (“Hemp-CBD”) products have been released by federal agencies, including the U.S. Food and Drug Administration (“FDA”), the U.S. Department of Agriculture (“USDA”), the U.S. Postal Service (“USPS”), and the Transportation Security Administration (“TSA”). While we have written on these agency policies individually, we thought it would be helpful to recap these opinions under one blog post.

FOOD & DRUG ADMINISTRATION

Since the enactment of the 2018 Farm Bill, the FDA has expressly opined that the sale and marketing of CBD-infused food and dietary supplement in interstate commerce is unlawful because CBD has already been approved as a drug, and thus, cannot be concurrently sold or marketed as a food or dietary supplement. Nevertheless, the substantial public interest in accessing CBD in food and dietary supplements has forced the FDA to explore potential regulatory pathways for the lawful marketing of these products. On May 31, the agency held a public meeting that offered CBD stakeholders a platform to share feedback and experiences and provided the agency with information related to the cannabis-derived compound. In addition, the agency created a working group that is evaluating the regulatory frameworks for non-drug uses of CBD. The agency anticipates updating the public about its progress later this summer.

U.S. DEPARTMENT OF AGRICULTURE

On May 28, 2018, the USDA issued a non-binding opinion letter in which the agency explained, in part, that states and Native American tribes may not prohibit the interstate transportation or shipping of hemp or hemp products lawfully produced under the 2014 Farm Bill. Specifically, the USDA reasoned that state and tribe interference is prohibited pursuant to the 2018 Farm Bill, which provides that “[n]othing in this sections prohibits the production of hemp in a State or the territory of an Indian tribe, for which a state or Tribal plan is not approved under this section, if the production of hemp is in accordance with [. . .] other Federal laws [i.e., the 2014 Farm Bill]” (Emphasis added). Note that while the USDA letter is non-binding, this agency policy strongly supports the position that states and tribes should not interfere with lawfully grown and processed hemp shipments.

U.S. POSTAL SERVICE

In March the USPS released guidance on mailing Hemp-CBD products, which it clarified at the beginning of June. Pursuant to its most recent guidelines, the USPS authorizes the mailing of Hemp-CBD products so long as (1) the products contain no more than 0.3 percent THC; (2) the mailer complies with all applicable federal, state, and local laws that pertain to hemp production, processing, distribution and sale; and (3) the mailer retains records establishing compliance with such laws, for no less than 2 year after the date of mailing. The second prong suggests that mailing Hemp-CBD food and dietary supplement would not be lawfully mailable given that these products violate the Food, Drug, and Cosmetic Act (i.e., the laws enforced by the FDA); however, this issue has yet to be administratively litigated or clarified by the USPS.

TRANSPORTATION SECURITY ADMINISTRATION

Back in May, we wrote about the confusing guidelines issued by the TSA on traveling with CBD-infused products. Shortly after our post was published, the agency revised its website, which now provide that:

Marijuana and certain cannabis infused products, including some Cannabidiol (CBD) oil, remain illegal under federal law except for products that contain no more than 0.3 percent THC on a dry weight basis or that are approved by FDA. (See the Agriculture Improvement Act of 2018, Pub. L. 115-334.)” (Emphasis added).

On its face, this policy suggests that the TSA will authorize travelers to carry any CBD-infused product that meets the federal THC concentration limit of 0.3 percent, even if the product is deemed unlawful by the FDA. However, travelers should understand that traveling with these products remains risky for two reasons: (1) “[t]he final decision rests with the TSA officer on whether an item is allowed through the checkpoint”; and (2) if it unclear how TSA would test products to verify their THC content. As far as we know, the TSA’s testing procedure is solely geared towards determining whether THC is present, not to measure its exact concentration.

To conclude, while the USDA, the USPS, and the TSA have all released guidelines that seem to legalize the transportation and shipping of Hemp-CBD products, these policies are drafted too broadly to completely shield carriers, mailers and travelers from enforcement actions. We anticipate – and sincerely hope – that the transportation of these products will become clearer and easier once the FDA implements a regulatory framework for their sale and marketing.

oregon cannabis law

The 2019 Oregon legislative session formally concluded on June 30 and it was a doozy. With respect to cannabis, however, the session was significantly less eventful than any conference since 2014 (and that is mostly a good thing). If you’d like to track how we got here, we previewed the 2019 session in March and we gave a mid-session update in May. If you’re just here for the final tally, we didn’t get any legislation on hemp, social consumption, off-work use, or grow taxation. Instead, we got new laws limiting production, allowing the possibility of interstate trade, allowing the expungement and reduction of marijuana crimes, and banning system development charges targeting marijuana grows. Each new law is summarized below.

Production License Caps (Senate Bill 218)

This law authorizes the Oregon Liquor Control Commission (OLCC) to refuse to issue initial marijuana production licenses at its sole discretion, based on supply and demand in the state. As we’ve covered extensively on this blog, there is massive marijuana oversupply in the OLCC market. Although demand is also higher than anticipated, Governor Brown (who requested this bill pre-session) and others have been eager to curb production, apparently due to some combination of protectionist instincts and perceived federal pressure.

Although SB 218 is straightforward, existing and potential clients have come to us with confusion over certain aspects of the new regime. Here is a summary of how the law affects certain parties:

  • Existing licensed producers. No change. If you are already licensed in the OLCC system, you will be able to renew your license annually (if you have been behaving), apply for changes in ownership in any amount, and apply for a change in location.
  • Pending producer applicants in general. OLCC will no longer allow changes in ownership greater than 51% for these applicants, or changes of premises location. Who qualifies as a pending producer applicant? Anyone with a license dashboard status of “New,” “Local Government Review,” or “Applicant Hold.”
  • Pending producer applications submitted on or before June 15, 2018. OLCC will continue to process producer applications received prior to the June 15, 2018 “pause” so long as those applicants have submitted an approved Land Use Compatibility Statement (“LUCS”). Applicants in this category without an approved LUCS has been moved to “inactive” status.
  • Producer applications submitted on or after June 16, 2018. OLCC will inactivate all producer applications received after June 15, 2018, regardless of whether a LUCS has been acquired. It is unclear whether OLCC will refund the $250 application fee.

Is SB 218 going to fix the oversupply issue? We doubt it very much. As I wrote a few months back, if Oregon had wanted to cap marijuana production in the OLCC market, it’s about four years and 900 grows too late. Still, SB 218 creates some new wrinkles and affected parties must plan accordingly.

Interstate Trade (Senate Bill 582)

This law authorizes the Governor “to enter into agreements with other states for purposes of cross-jurisdictional coordination and enforcement of marijuana-related businesses and cross-jurisdictional delivery of marijuana items.” The export provision would take effect on the earlier of: (a) the date Federal law is amended to allow for the interstate transfer of marijuana items between authorized marijuana-related businesses; or (b) U.S. Department of Justice issuance of an opinion or memorandum allowing or tolerating the interstate transfer of marijuana items between authorized marijuana-related businesses.

In an impressive show of state-federal coordination, Oregon Senator Rony Wyden and Representative Earl Blumenauer introduced the State Cannabis Commerce Act shortly after SB 582 passed, which would protect all state licensed cannabis industries from federal interference, and which specifically shields commerce between states that have entered into trade agreements. This is a critical move. As we explained in the spring of last year:

“the interstate compact would almost certainly need to be buttressed by Congressional consent, which is a formal legislative action contemplated by Article I, Section 10, Clause 3 of the Constitution. When Congressional consent is given, an interstate compact literally transforms into federal law.”

Does the State Cannabis Commerce Act stand any chance of passing? It seems like a long shot given the current composition of the U.S. Senate. Still, the export and interstate trade discussion is a positive development and Oregon has shown both leadership and creativity in moving the conversation forward.

Expungement and Reduction of Marijuana-Related Convictions (Senate Bill  420 and Senate Bill 975)

SB 420 allows individuals to use an expedited process to set aside most convictions for possession, delivery and manufacture of marijuana, so long as the underlying conduct is no longer a crime. Anyone with a conviction that wouldn’t be illegal now, is eligible for an expedited process to expunge the conviction. Companion law SB 975 allows for a reduction in offense classification for other marijuana convictions.

Ban on Transportation Systems Development Charges (SDCs) (Senate Bill 365)

Last but not least, SB 365 prohibits local governments (namely, Deschutes County) from imposing SDCs for increased use of transportation facility resulting from marijuana production in exclusive farm use zone. Deschutes County has generally made a mess of cannabis regulation, and its ham-handed attempt to levy SDCs on cannabis production forced the legislature’s hand.

cannabis patent litigationWe have been closely monitoring the first ever cannabis patent infringement case, between plaintiff United Cannabis Corporation (“UCANN”) and defendant Pure Hemp Collective, Inc. (“Pure Hemp”). UCANN owns the “911 Patent,” which generally covers liquid cannabinol formulations of a purified CBD and/or THC greater than 95%. For the past year, UCANN has fought to secure a permanent injunction against Pure Hemp from infringing on its patent, as well as damages and attorneys’ fees. For our previous coverage, see  herehere and here.

Things have not been going well for Pure Hemp, and it recently struck out again. Last month, Pure Hemp had filed a Motion for Leave to Brief the Invalidity of the Certificate of Correction for the 911 Patent. UCANN filed a Response in Opposition on May 3, 2019 and Pure Hemp filed its Reply on May 22, 2019. The Magistrate Judge, Nina Y. Wang, issued her Order denying Pure Hemp’s Motion for Leave the same day.

As relevant here, recall in our previous post that in Pure Hemp’s Motion for Partial Summary Judgment (the “MPSJ”), Pure Hemp had claimed that Claim 31 of the 911 Patent is invalid because “it is a multiple dependent claim that improperly depends on another multiple dependent claim.” Essentially, Pure Hemp had argued that Claim 31 of the 911 Patent incorrectly covers: “The formulation of any one of the proceeding claims, wherein the formulation is infused in a medium chain triglyceride (MCT).” In response to this argument, UCANN had filed a Motion to Correct Claim 313 of the 911 Patent, seeking to modify Claim 31 by replacing “proceeding claims” with “preceding claims,” arguing that the former construction is simply an error the court may correct.

The Court denied UCANN’s Motion to Correct on February 19, 2019, finding that the error, if any, would be more appropriately addressed by proceedings before the USPTO. Three days later, UCANN did file a Request for Certificate of Correction with the USPTO, indicating it had made an “inadvertent typographical error” and arguing that the correction did not “involve new matter or require reexamination.”

“The standard for issuing a certificate of correction is laid out in 35 U.S.C. 255:Whenever a mistake of a clerical or typographical nature, or of minor character, which was not the fault of the Patent and Trademark Office, appears in a patent and a showing has been made that such mistake occurred in good faith, the Director may, upon payment of the required fee, issue a certificate of correction, if the correction does not involve such changes in the patent as would constitute new matter or would require reexamination. Such patent, together with the certificate, shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such corrected form.”

On April 17, 2019, UCANN filed a notice indicating that the USPTO had agreed and issued a Certificate of Correction on April 9, 2019, amending “proceeding” to “preceding” in Claim 31 of the 911 Patent. This was relatively quick, cost-effective way that resulted in a big win for UCANN – that same day, Judge Martinez denied Defendant’s MPSJ. In his Order, Judge Martinez noted that UCANN had obtained the proper Certificate of Correction and therefore, Pure Hemp’s argument that Claim 31 was invalid because it did not contain a reference to a previous claim was moot.

Pure Hemp’s latest Motion for Leave argued that the Certificate of Correction is a broadening amendment, which is not proper, and that it did not have the opportunity to brief the issue as part of its MPSJ due to the timing of the issuance of the Certificate. Pure Hemp also argued that the issuance of whether the Certificate of Correction is a broadening amendment is an issue of claim construction, and that it should be permitted to brief the issue in conjunction with the same.

In response, UCANN made two simple arguments: (1) Pure Hemp’s motion violates the limits on the number of motions for summary judgment a party may file (in this case, one), and (2) the Patent Local Rules limit claim construction briefing to resolving issues of claim interpretation. Judge Wang agreed and denied Pure Hemp’s Motion for Leave in its entirety. This just goes to show: sometimes, really complex issues are resolved on really simple procedural grounds.

Now that the validity of Claim 31 has been put to rest, the parties have proceeded to the claim construction phase of all patent litigation (the subject of a future post!).  It will undoubtedly include more complex arguments, so stay tuned.

california hempCalifornia is on the brink of legalizing hemp-derived cannabidiol (“Hemp CBD”) in many products—well, sort of. The law at issue is Assembly Bill 228 (“AB-228”), and I’ve been writing about it since it was introduced in January 2019 (for my posts on it, see here, here, and here). As of today, it’s made its way through the California Assembly and most of the way through the California Senate with very little resistance. AB-228 is likely to pass soon, and because it is what’s called an “urgency” statute, will become immediately effective.

Since I started writing about AB-228, the bill has morphed a lot, and now actually has some teeth. Even if it passes though, Hemp CBD may not be completely legal in the Golden State. Here’s a brief explanation of what’s happened, and what’s at stake.

About a year ago, the California Department of Public Health’s (“CDPH”) released its now-infamous Hemp CBD FAQs, which take the position that Hemp CBD is illegal in basically all foods, beverages, and some other products (but note, there is not a single law or regulation on the books anywhere in the state that takes this position). The FAQs “outlawed” Hemp CBD based on the federal Controlled Substances Act (which as of December 20, 2018 and the passage of the 2018 Farm Bill no longer hemp illegal) and the fact that the federal Food and Drug Administration (“FDA”) did not allow the addition of Hemp CBD to the same products that are mentioned in the FAQs. (For a discussion of the FDA’s policy memos which claim that Hemp CBD is illegal, see here and here).

While the FAQs didn’t really cite California law (except to define foods, etc.) as the basis for enforcement, it’s come to light that the CDPH has been relying on the California Sherman Food, Drug, & Cosmetic Law (not to be confused with the federal Sherman Act, an antitrust law), to pull Hemp CBD products from retail and wholesale operations. The CA Sherman Law gives the CDPH authority over foods and beverages and allows them to target products that it deems “adulterated”. In a sense, the CA Sherman Law is a lot like the federal Food, Drug and Cosmetic Act that the FDA gets its authority from (hence all of the citations to FDA policy).

Originally, AB-228 was very narrow and only would have created a law saying that the mere addition of Hemp CBD to foods and cosmetics did not adulterate them. Over the last few months, in various committees, more and more things have been piled onto the bill. Here are some of the highlights of the current version:

  • Licensed cannabis companies wouldn’t be precluded from being in the hemp business;
  • Hemp products that are foods, beverages, or cosmetics would have some minimal labeling requirements;
  • Food manufacturers that make hemp products would be required to obtain certain registrations and would need to demonstrate that their hemp comes from a jurisdiction that has an “established and approved industrial hemp program” that meets all federal requirements for the sale and cultivation of hemp;
  • The CDPH wouldn’t be able to conclude that foods, beverages, or cosmetics are adulterated just because they contain CBD; and
  • Raw hemp products would need to undergo certain lab testing and get certificates of analysis prior to sale.

It’s clear that if AB-228 becomes law, it will be a huge victory for the burgeoning hemp industry across the state. But there are a few key issues that may still not wipe out the gray areas:

  • AB-228 does not change federal law. The California legislature has no power to modify federal law or policy. The FDA’s policy memos are not affected by California law. If sellers sell Hemp CBD foods, they may still draw the ire of the FDA—which is more likely if medical claims are made.
  • AB-228 does not require the CDPH to ignore federal law. Remember that the CDPH FAQs cited the FDA’s position. It is theoretically possible that the CDPH could continue to uphold the FAQs unless and until the FDA changes its mind. I think this is unlikely to happen, but in the hemp world, sometimes anything is possible.
  • AB-228 does not take away all grounds for enforcement from CDPH. If AB-228 passes, the addition of Hemp CBD to foods and cosmetics alone doesn’t render them adulterated. But that’s just scratching the surface. Other things could render them adulterated. The CDPH can also go after “misbranded” foods and other products. And, of course, there are tons of other product specific laws (e.g., Prop. 65) that may create problems for sellers of CBD goods.

In spite of these issues, if AB-228 passes it’ll create a lot of certainty for hemp businesses in California, where there previously wasn’t much. We’ll stay tuned on updates to this law and how it will affect the hemp industry in California, and as a whole.

arkansas cannabis hempThe Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA. This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp-CBD”). Each Sunday we will summarize a new state in alphabetical order. So far, we have covered Alabama, Alaska and Arizona. This week we turn to Arkansas.

The Arkansas State Plant Board (“ASPB”), which is part of the state Department of Agriculture, has been overseeing the state’s hemp program since August 2018.

The ASPB rules require a license to cultivate, process, distribute or market raw hemp and industrial hemp products. “Industrial hemp products” or “hemp products” means “products derived from, or made by, processing industrial hemp plants or plant parts, including without limitation: (A) Certified seed for cultivation if the seeds originate from industrial hemp varieties; (B) Cloth; (C) Cordage; (D) Fiber; (E) Food; (F) Fuel; (G) Paint; (H) Paper; (I) Particleboard; (J) Plastics; and (K) Seed, seed meal, and seed oil for consumption.”

The rules also provide for “publicly marketable hemp product” which is differentiated from “industrial hemp products” and refers to “a hemp product that meets one or more of the following descriptions:”

(a) the product does not include any living hemp plants, viable seeds, leaf materials, floral materials, or decarboxylated delta-9-THC content above 0.3 percent; and does include, without limitation, the following products: bare stalks, bast fiber, hurd fiber, nonviable roots, nonviable seeds, seed oils, and plant extracts (excluding products containing decarboxylated delta-9-THC above 0.3 percent).

(b) the product is CBD that was derived from industrial hemp, as defined in this regulation; or

(c) the product is CBD that is approved as a prescription medication by the United States Food and Drug Administration.”

Publicly marketable hemp products are excluded from the ASPB’s definition of “cannabis” as well as from the ASPB’s explanation of who must apply for a license to grow or process industrial hemp.  Accordingly, no license or permit is required by the state agency to sell or deliver Hemp-CBD products in the state.

Moreover, on March 18, 2019, Arkansas removed Hemp-CBD that contains no more than 0.3 percent THC on a dry weight basis and that is not approved as a drug by the FDA from its list of controlled substances. In doing so, the state removed all criminal and civil penalties for possession hemp-derived CBD products in Arkansas, and thus, authorized the sale of these products regardless of continued federal prohibition.

Consequently, it is safe to say that Arkansas is one of the safest and most hemp-friendly states in the country.

bernie sanders marijuana

Every Saturday, at least for a while, we plan to run a series of blog posts that take a close look at each of the Democratic Party candidates for President in 2020. We are examining each candidate’s historic approach to marijuana law and policy, and also canvas each politician’s current stances on marijuana.

Last week, we covered Joe Biden. Today, we turn to Bernie Sanders, the Senator from Vermont who almost wrestled the nomination away from Hilary Clinton in 2016.

Overall Grade: A

Stance on marijuana: The legalization of marijuana is a major part of Bernie Sanders’ criminal justice reform platform. As stated on his campaign website, Sanders hopes to end the War on Drugs and legalize marijuana and he will do whatever he can to accomplish those things if elected. Sanders has frequently voiced his pro-legalization stance in interviews and on social media.

History with marijuana legislation: Over the course of his career, the Vermont senator has maintained a pro-legalization stance. As a House representative in the 1990s, when it was uncommon to do so, Sanders co-sponsored and signed a multitude of bills to legalize marijuana, to reschedule the drug, and to protect states that legalized cannabis for medicinal use. As a senator, Sanders has continued to sponsor pro-legalization bills, the most recent being the Marijuana Justice Act of 2019, which focuses on legalization as a method of criminal justice reform, and the Secure And Fair Enforcement Banking Act of 2019, which would protect banks that serve cannabis businesses.

Though Sanders’ rhetoric and record surrounding marijuana are mostly consistent, early in his political career, Sanders did vote for a few bills which conflicted with his platform of criminal justice reform. Sanders voted for the Violent Crime Control and Law Enforcement Act of 1994, which put into law the “Three Strikes” statute. And in 1997, he voted for a bill which if passed would have mandated minimum sentences for crimes involving firearms, regardless of whether the weapon was legal or not. Had this bill passed, a person arrested for pot while carrying a legally owned gun would receive a mandatory minimum sentence. 

Conclusion:  Sanders receives an “A” grade based on his nearly flawless support for cannabis for the last 20 years. His record of pro-legalization legislation is remarkable and cannabis legalization is a central part of his platform as a presidential candidate. Though Sanders supported a couple bills early in his career that were inconsistent with his criminal justice platform, his two decades of pro-legalization legislation and rhetoric demonstrate his dedication to cannabis legalization and convince us that a Sanders presidency will be great for cannabis.