Photo of John Mansfield

John represents large and small businesses in complex litigation throughout the country, especially patent, copyright, and trademark disputes. A leading litigator out of Harris Bricken's Portland office, John’s intellectual property cases typically involve representing clients in cannabis, high tech, hardware, software, consumer products, and e-commerce matters.

marijuana RICOWe’ve previously discussed several civil cases in Oregon where private parties sought to shut down cannabis grow operations under RICO (Racketeer Influenced and Corrupt Organizations Act), claiming that the grow was part of a criminal conspiracy that would drive down property values (see our RICO series here, herehere and here).

Today, we have an update on two marijuana RICO cases elsewhere the country, one in Colorado, and the other in Massachusetts.

Colorado: In a previous post, we discussed Safe Streets Alliance v. Alternative Holistic Healing, LLC, a case from Colorado. This case is notable because the 10th Circuit Court of Appeals has already issued an opinion addressing several key legal issues, giving the litigants the go-ahead to try their case. In dicta, the 10th Circuit noted that at trial, it was possible that a judge or jury would determine that the plaintiff’s land was actually more valuable because of its suitability for cannabis cultivation. Although the 10th Circuit’s opinion only technically applies in the states of Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming, other trial and appellate courts will consider the opinion as “persuasive” authority, in other RICO cases.

This case is now scheduled for trial beginning in late August 2018. Assuming this case does not settle, and regardless of the verdict, the result will likely have far-reaching impact on potential RICO actions nationwide. As to the trial itself, many issues will be raised, from admissibility of evidence to expert testimony. One or more of those issues will likely be appealed again to the 10th Circuit. Future litigants are likely to use the trial record as a guide to bringing and defending these RICO cases.

Massachusetts: In Crimson Galeria v. Healthy Pharms, the plaintiff, a Harvard Square property owner, claims that Healthy Pharms, a neighbor and prospective cannabis operation, will diminish the value of plaintiffs’ property. As claimed in the lawsuit, “amongst other matters, marijuana businesses make bad neighbors, which include without limitation, emitting pungent odors, attracting undesirable visitors, increasing criminal activity, driving down property values, and limiting the rental of premises.” As with the Safe Streets case, one wonders whether suitability for cannabis sale actually increases the value of the land.

The lawsuit also alleges that local and state government agencies, including the state Department of Public Health and the city of Cambridge are “facilitating and encouraging violations of the federal drug laws by licensing and permitting marijuana businesses.” One of the plaintiffs’ claims is that the federal Controlled Substance Act (CSA) “preempts the practice of state and local officials in Massachusetts of issuing licenses to operate marijuana businesses.” The 10th Circuit addressed similar preemption arguments, ultimately finding that the plaintiffs had no claims on which relief could be granted. But Massachusetts is in the 1st Circuit Court of Appeals, and the 1st Circuit judges will not be bound by the Safe Streets opinion (although they almost certainly will consider it).

It is at least theoretically possible that the 1st Circuit could find differently than the 10th Circuit, causing a circuit split that would have to be decided by the U.S. Supreme Court. That would be a doozy.

Previous posts have discussed cannabis patents, here, and here, and here. Today I explain the basics of how to read a patent. Why would you want to do such a thing? If you are in the cannabis business, you may own a patent, or be threatened of infringing one. The tips below will give you a good start on understanding what a patent means.

Today I focus on utility patents, which are about 90% of all patents. (The other major category is design patents.) Utility patents can cover such things as cannabis plants, or methods of making cannabis plants. Utility patents have four basic parts: introductory material, drawings, the specification, and the claims. To read and understand a patent, you should be be familiar with each of them.patent marijuana cannabisUnsurprisingly, the introductory material is at the beginning of the patent (shown above). It starts out with the patent number, the date the patent was issued, the inventor(s), and the assignee — if there is one. It also provides the filing date of the patent, which is usually several years before the issue date. The next important part is the “references cited,” a list of prior art that the patent examiner looked at. There is also a short “abstract,” a sort of summary of the invention, often followed one or two pictures of the invention. While the abstract and the opening pictures can give a good idea of what is to come, they do not define the invention. More on that later.

Next are a series of stylized line drawings or charts. While making patent figures is an art, the figures are not intended to be artistic. Rather, they are there to help the reader understand what the invention is, and perhaps how it is used. Like the abstract, the figures do not define the invention. In fact, some of the figures may not refer to the invention at all.

Following the figures is one or more pages of text in 8 point type, set out in two columns separated by a narrow column of numbers. This is generally referred to as the “specification,” or “spec” (although technically the specification also includes the figures and the claims). The specification usually gives the background of the invention, a summary of the invention, often a brief description of the drawings, and then a “detailed description of the invention.” This sets out the nitty gritty technical details of the patent, usually making reference to the various drawings by number. Although the specification gives this detailed description, once again, it does not define the invention.

Finally, tucked away at the very back of the patent, shyly hiding behind the specification, are one or more patent claims. The claims are numbered, and always start with “What is claimed” or “I claim” or “we claim” or similar language. What, you may ask, do these puny claims do? Well, they define what has been invented, that is, what is covered by the patent. They are the equivalent of the deed to your house, which describes, in somewhat technical terms, exactly where your property begins and ends.

So how do you make sense of all of this? I suggest that you start with the introductory material. Then turn to the claims. Keep in mind that in order to infringe a patent claim, whatever is accused of infringing must have every single thing listed in the claims.  If the claim is for a hybrid cannabis plant, which produces a female flower comprising CBD content of >3% and a terpene profile of alpha phellandrene, a plant that has only 2% CBD won’t infringe.

Next, look at the drawings and the specification. I usually print out an extra copy of the drawings and have them open when I read them. Once you have done that, you can go back to the claims with a better understanding. Often, claims only contain part of what is in the specification. But the claims are the key to knowing what the patent is about.

Most importantly, have fun! You could be reading the tax code.

 

cannabis marijuana intellectual property
It can be tough to decipher who owns your cannabis business IP, if you don’t write it down.

An important question for any cannabis business is: who owns the company’s intellectual property (IP)? The easy way to answer this question is to work it out before any dispute. The much, much harder way is to litigate. As noted in a famous oil filter commercial, “You can pay me a little now. Or you can pay him a lot later!”

The two most common situations where IP ownership disputes arise in a marijuana business are between the owners of a company, and between the company and its employees. Here are some tips on how to handle each situation.

IP ownership in an entity: IP is a capital asset of a cannabis company, and like all other capital assets, e.g., grow equipment, real property, office furniture, software, etc., should be owned by the cannabis company itself, as provided in the entity operating agreement. Issues can occur, however, when the entity wants to use IP that is already owned by a member/owner of the entity.

In particular, many operating agreements provide that a member contributes her IP as initial capital. There is nothing wrong with this, in theory. Intellectual property, like real property or other assets, can be contributed as capital provided that the operating agreement properly values and accounts for the asset. But problems can occur when the operating agreement does not legally transfer title in the IP to the entity. In such a situation, the “contribution” may be more like a license, which can be revoked. If the contributed IP is the primary brand name of the company, this could give the contributing shareholder undue leverage if she wants to withdraw from the entity after the company has built equity in the brand name. A significant number of operating agreements do not properly transfer title to the trademarks, copyrights, or patents that are being contributed. Without the appropriate transfer, this is a time bomb waiting to explode, in a courtroom near you.

IP ownership of employee creations: The conventional wisdom is that everything that is created by a company’s workers automatically belongs to the company as “work for hire.” While there is a federal copyright statute that refers to works for hire, the rules are much narrower than conventional wisdom suggests. This often causes conflicts between employers and employees about patents and copyrights, which in turn lead to litigation.

There is an easy way to avoid the work-for-hire minefield, called an employee IP agreement (“EIA”). An EIA is a written agreement that defines which creations are the employee’s, and which are the employer’s. For example, where a new employee has already created IP before her employment, the EIA could provide that the employee retains title to all disclosed preexisting IP, but is required to assign any future IP created in the scope of her work to the employer. EIAs also often address creations done outside of the workplace or outside of the scope of employment, and may provide for invention bonuses or other incentives. The key is that the EIA allows the parties to define their ownership of worker creations, without having to rely on the limited default rules that exist in federal and some state law.

***

IP ownership agreements: don’t leave the dispensary without one! For parts 1 – 3 of this series, check out the following:

Cannabis legaization and federal law
We are hoping for a good roll from the Christie case

Christie v. NCAA is a U.S. Supreme Court (SCOTUS) challenge to the federal law that bans states from allowing sports gambling. Though nothing in Christie addresses cannabis directly, SCOTUS’s decision, due out next year, could give Congress a tool to ban states from allowing legal marijuana.

In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA), which prohibits states (save for some that were grandfathered) to “authorize” gambling on sports. The state of New Jersey, which was not grandfathered, passed laws in 2012 to authorize sports betting. In a federal case, the state admitted that these laws violated PASPA, but argued that PASPA unconstitutionally allowed the federal government to “commandeer” the state to enforce federal law. The Court of Appeals found that the Constitution’s anti-commandeering doctrine (derived from the 10th Amendment) didn’t apply here because PASPA didn’t affirmatively require New Jersey to do anything, but simply prohibited it from enacting laws that allowed betting on sports. The Supreme Court declined to review the Court of Appeals’ decision.

In 2014, New Jersey passed a new law that merely repealed existing its laws prohibiting sports betting. The Court of Appeals was unconvinced that the new law was any different than the 2012 law. According to the Court of Appeals, the difference between “authorizing” sports gambling and “repealing” laws that prohibited sports gambling was insignificant. The result in either case was that New Jersey allowed gamblers in New Jersey to bet on sports, which was banned by PASPA.

This time SCOTUS took notice and agreed to hear the case. New Jersey’s brief before SCOTUS argues that under the anti-commandeering doctrine, it makes no difference whether the federal law prevents a state from repealing a law or affirmatively forces it to pass a new law. Either way, the federal government is forcing New Jersey to regulate conduct that its voters would rather leave unregulated. At least one amicus curiae brief argued that upholding the lower court’s decision would allow Congress to require states to affirmatively ban medicinal or recreational cannabis, denying the states their traditional role as experimenters in parallel legal regimes.

On December 4, 2017, SCOTUS heard oral argument in Christie v. NCAA. While it is difficult to predict the final decision simply from oral arguments, at least one noted commentator opined that “Justices seem to side with the state on sports betting.”

But what will happen to state-legalized cannabis if SCOTUS goes the other way and upholds the lower court’s decision? Nothing at first. Christie will only decide the question of whether the lower court properly found that PASPA applies to the New Jersey law. Although Justice Sotomajor mentioned marijuana in passing at oral argument, the issue of state marijuana regulations is not before SCOTUS in Christie. In the future, however, it is at least conceivable that Congress could take its lead from such a ruling and pass a law that requires states to repeal their legal cannabis regulations.

 

cannabis litigation
Cannabis litigation is its own thing

Two previous posts (here and here) discussed the McCart v. Beddow case, in which an attorney who was fed up with cannabis grows next to her rural home filed RICO (Racketeer Influenced and Corrupt Organizations Act) claims against dozens of defendants who allegedly participated in a criminal enterprise that damaged her by diminishing her property value, among other things. The defendants aptly described the lawsuit as an “attempt to put some shiny federal lipstick on an otherwise quite beleaguered pig of a state-law nuisance claim.”

The McCart case appears to be wending its way towards settlement.  Although motions to dismiss the complaint were filed, the plaintiff never responded to them and the court never addressed the merits. We probably won’t get to see the terms on which the parties settled, as settlements are usually kept confidential.

Meanwhile, the same attorney has filed a similar lawsuit on behalf of property owners in the Lebanon/Albany Oregon area, against various grow defendants. Ainsworth v. Owenby, Case 6:17-cv-1935, D. Or. It will be interesting/important to see how the RICO/nuisance claims hold up this time around.

In the meantime, this case nicely highlights how cannabis litigation can be so different from other litigation; who brings a RICO claim against their neighbors? Which is a perfect segue to tell you how I and three of our other Oregon, Washington and California cannabis litigation lawyers will be putting on a FREE webinar on January 11. Go here for full information and to sign up.

Everybody knows that because marijuana is a Schedule 1 drug under the Controlled Substances Act, it is illegal to sell under federal law. Last year, the FDA again reviewed the published scientific literature on medical cannabis and recommended that marijuana stay in Schedule 1. The DEA relied upon this finding in its August 2016 ruling upholding the cannabis ban.

What everybody doesn’t know is that the FDA’s website says that it “actively supports the development of drugs from marijuana.”

Some statements are even more emphatic: “FDA needs to do all it can to support the needed scientific research with marijuana to characterize its therapeutic promise.”  What? Is the FDA suffering from cannabis cognitive dissonance? Not at all. Under the Food, Drug & Cosmetic Act (FDCA), the FDA has the power to approve drugs, based on scientific evidence.

The reason cannabis hasn’t been rescheduled is because, according to the FDA, there is not sufficient evidence to show a currently accepted medical use.

Where does the FDA get off saying there is no medical use? A look at the FDA’s history is instructive. Modern drug regulation started in the beginning of the last century, when the market was filled with unregulated patent medicines claiming to cure everything from constipation to cancer. Many of these medicines, e.g., Johnson’s Mild Combination Treatment for Cancer, were merely worthless.

But some were poison. Elixir Sulfanimide was marketed in the 1930s as a raspberry antibiotic syrup. Unfortunately, this elixir contained diethylene glycol, a known toxin, and killed over 100 people, mostly children. The manufacturer performed no safety testing–because none was required. This and other tragedies in the 1930s led Congress to pass the Food, Drug & Cosmetic Act, the first comprehensive law requiring that medicines be proven safe and effective. This history shows the importance that the FDA places on its core mission of making sure that drugs are safe and effective, relying on scientific evidence including human and animal trials.

As previous readers of this blog might recall, the FDA will usually treat any substance that is “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease,” or that will “affect the structure or any function of the body of man or other animals,” as a drug. The FDA’s key decision in approving new drugs is whether the drug is safe and effective for its proposed uses.

So how do you perform scientific research on an illegal Schedule 1 drug to prove safety and effectiveness?

On its website, the FDA tells you how: “The FDA believes that scientifically valid research conducted under an [Investigational New Drug] application [INDA] is the best way to determine what patients could benefit from the use of drugs derived from marijuana.” The INDA is the method that most proposed new drugs begin the approval process. Once the proposed new drug has undergone the (extensive) testing required by the INDA, the test data can be used to file a New Drug Application (NDA). Virtually all prescription drugs sold in the U.S. are approved under an NDA.

The FDA has already approved three products based on cannabis compounds.

Marinol was approved in 1985 to treat nausea caused by cancer chemotherapy, and Sydros, a liquid form of dronabinol, the active ingredient in Marinol, was approved earlier this year. Cesamet (nabilone) was approved in 1985 and 2006 for nausea and neuropathic pain. The active ingredients in all of these drugs are synthetic forms of THC. So we know that cannabis can be approved as medicine.

Why there aren’t more FDA-approved cannabis drugs?

To find out, be sure to read our next installment, in which we will examine what you need to get an INDA and an NDA. Bring lots of paper or its equivalent; you will need to take notes.

For more on the FDA and cannabis, check out the following:

In Cannabis Edibles and the FDA, I discussed the basics of FDA regulation of cannabis edibles. On November 1, 2017, the FDA provided further specific examples of prohibited health claims made for cannabis products, in this case, cannabidiol (CBD):

The FDA has grown increasingly concerned at the proliferation of products claiming to treat or cure serious diseases like cancer. In this case, the illegally sold products allegedly contain cannabidiol (CBD), a component of the marijuana plant that is not FDA approved in any drug product for any indication.

FDA Commissioner Scott Gottlieb followed up:

Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors. We don’t let companies market products that deliberately prey on sick people with baseless claims that their substance can shrink or cure cancer and we’re not going to look the other way on enforcing these principles when it comes to marijuana-containing products.

The FDA issued warning letters, usually its first step in enforcement proceedings, to four companies. The prohibited health claims made by these companies included:

  • “Combats tumor and cancer cells;”
  • “CBD makes cancer cells commit ‘suicide’ without killing other cells;”
  • “CBD … [has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer, not allowing the tumor to grow;” and
  • “Non-psychoactive cannabinoids like CBD (cannabidiol) may be effective in treating tumors from cancer – including breast cancer.”

Recall from our earlier post that the FDA will treat products as drugs if their own labeling suggests they are “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.” Phrases like “combats tumor cells” and “[has] anti-proliferative properties that inhibit cell division and growth in certain types of cancer” clearly suggest that the CDB product can cure, mitigate, treat or prevent cancer, and is thus a drug.

As shown by the last bullet point, it doesn’t matter if you say “may treat” cancer, instead of “treats cancer.” Any suggestion that a product might have a role in treating or diagnosing disease, or that it is intended to affect the structure or any function of the human body of humans or other animals, is a health claim that subjects the product to drug regulations (unless it falls within the narrow confines of the Dietary Supplement Health & Education Act.)

Most importantly, the FDA press release says – again – that “unlike drugs approved by the FDA, the manufacture of these products has not been subject to FDA review as part of the drug approval process….” Only the FDA can determine whether a drug can be labelled as safe and effective for a particular disease. Preventing health claims based on anecdotal evidence has been one of the FDA’s core functions since 1906.

This isn’t the first time the 800-pound gorilla has visited CBD makers. FDA issued warning letters based on similar CBD health claims in February 2015 and again in February 2016. If you want to keep this monkey off your back, don’t make health claims.

For related posts about the FDA, CBDs and health claims, check the:

Cannabis patent litigation
Noted cannabis patent expert

In previous posts, we’ve discussed how cannabis is patentable, and what these patents might mean for a cannabis business. Today, we peer into the not-so-distant future to imagine what a lawsuit to enforce a cannabis patent might look like. My research has discovered no such lawsuits filed to date.

Keep in mind that all patent infringement cases must be heard in one of the 94 federal courts, with very few exceptions. No non-federal trial or appellate judge has jurisdiction to decide any issue relating to patent infringement.  There are at least four major parts of a potential cannabis patent litigation in which the federal illegality of cannabis raises concerns: pleadings, discovery, proof/evidence, and remedies.

Pleadings: In the initial phase of a lawsuit, each party must detail its allegations in pleadings. A pot patent plaintiff will allege she owns a patent for a cannabis plant and that the defendant has infringed the patent by growing, selling, offering to sell, or importing the patented plant in the United States. Because a patent is merely a right to keep someone else from practicing the patent, the plaintiff needn’t plead anything about her own business, although there are good strategic reasons for her to do so. The defendant must then either admit or deny each and every allegation made by the plaintiff; there is no “no comment” option. In most cases, this means the defendant must plead, in substance: “I grow marijuana.” Pleadings are almost always publicly available, including to federal law enforcement. Though under past practice the Department of Justice has not prioritized cannabis enforcement in states where cannabis has been legalized, each set of pleadings will remain as a public record admission of criminal activity and therefore available to any DOJ attorney who wants to pursue such cases.

Discovery: In this phase of litigation, each party collects evidence to support its claims or defenses. One form of discovery allows a party to force the other party to admit or deny any fact related to the lawsuit, under oath. Here is an actual request I saw recently: “Admit that the products sold at [defendant’s cannabis shop] containing marijuana and/or cannabinoids are illegal under federal law.” It may be possible to plead the Fifth Amendment privilege against self-incrimination to avoid answering such requests. But if a defendant can “take five” to avoid admitting many of the facts a plaintiff must prove to show infringement of a patent case, how will cannabis patent plaintiffs enforce their patents as a practical matter?

Proof/evidence: In almost every plant patent trial, the plaintiff must hire an expert to provide an opinion that the patent applies to the plant accused of infringement. In a cannabis patent case, this means the plaintiff (or plaintiff’s counsel) must have the expert botanist or horticulturist analyze the accused cannabis product. That means the lawyer, or the client, or the expert, must possess or transport the cannabis product, which constitutes a federal crime.

What will happen if counsel or a witness tries to bring cannabis to the courtroom to use as evidence? Under some circumstances like drug prosecutions, illegal narcotics are introduced into evidence in federal court under highly restrictive conditions. But it is far from clear whether federal judges will routinely allow parties to a civil suit to bring Schedule 1 narcotics into a courtroom, at least without Congressional approval.

Remedies: The most common remedies in a patent suit are damages, e.g., lost profits or a reasonable royalty, and/or an injunction prohibiting further infringement of the patent. But will a federal judge be willing to order the losing defendant to pay over the profits from its illegal activity to the successful cannabis patent plaintiff? Will the judge enter an injunction relating to the sale of an illegal product?


If cannabis patents are so hard to enforce, we may wonder why the Patent Office grants them. The reason is that the PTO, an agency in the Commerce Department, is empowered to grant patents and cannabis is patentable. The Department of Justice, another department, is empowered to enforce criminal laws passed by Congress, including the CSA. The courts, in another branch of government altogether, hear patent cases, as well as criminal prosecutions. Isn’t federalism fun?

Cannabis patent litigation

 

 

 

 

 

Cannabis trademark litigation
Can they live together?

A recent post here looked at the “Gorilla Glue” trademark dispute between a cannabis business and a glue maker. As we’ve often seen, the cannabis business gave up its brand, rather than litigating. Sometimes a settlement is the best choice. When the cannabis business is the smaller, newer, less financially-sound company, facing an established brand holder with more resources for litigation, it may be smart for the cannabis business to spend its money on rebranding rather than on litigation. But settlement is not the only option when a cannabis business uses a mark similar to the mark used by a non-cannabis business.

Imagine a hypothetical business, “Naturewave Furniture, Inc.” (“NFurn”). NFurn has been selling furniture for 25 years throughout the United States to consumers who want environmentally-friendly products. In 1995, NFurn federally registered “Naturewave” in international trademark class 20, “furniture.” Though NFurn is a player in the enviro-friendly products market, it is not a household name. Now imagine Naturewave Cannabis, LLP (“NCanna”), an Oregon cannabis producer that also sells branded rolling papers. In June 2016, NCanna registered “Naturewave” with the Oregon Secretary of State under class 131, “agricultural products,” and class 134, “tobacco & smokers articles.”

NFurn sues NCanna in federal court, alleging 1) NCanna’s use of Naturewave infringes on its trademark because confusion with NFurn’s Naturewave® mark is likely, and 2) NCanna’s use of Naturewave® to sell cannabis and rolling papers is diluting or tarnishing its mark. But NCanna has invested heavily in marketing its cannabis products and accessories under the Naturewave name, and its Naturewave cannabis products are popular and profitable. Does NCanna have good defenses to either claim? You bet it does.

The basic question for trademark infringement is whether consumers would mistake the source of the goods. Here, the goods offered by each party—furniture and cannabis—are unrelated. No stores sell both furniture and cannabis and the marketing channels for these two products do not overlap. The customers for both goods are sophisticated, careful shoppers. People looking for enviro-furniture usually spend at least 10 hours before buying a particular item. Cannabis consumers are known for research that borders on the obsessive, as shown by the proliferation of sites like MassRoots, Leafly, and Fresh Toast. Neither company is going to move into the other’s product line. Though NCanna had heard of Naturewave Furniture, the words “nature” and “wave” have different connotations in the different industries. NCanna isn’t branding itself as environmentally friendly, and NFurn isn’t suggesting its furniture will let the buyer “ride a wave.” It is unlikely a customer would think NFurn is the source of the cannabis sold by NCanna, or that one of NCanna’s customers would walk into a natural furniture store looking to buy cannabis.

The claim for tarnishment requires a different analysis. Under trademark law, the owner of a famous trademark can sue for using its mark in a way that dilutes or tarnishes the mark. There is no need to show a likelihood of confusion in a tarnishment claim; you only need to show that your mark is famous and similar to the accused mark. Although it is easier to list famous trademarks—Coke®, Amazon®, Google®, Starbucks®, Xerox®—than it is to define “famous,” generally a highly distinctive mark that is very well-known throughout the market, and has been used extensively and continuously for a long time, can be found to be famous. NFurn argues that NCanna’s use of Naturewave® with a traditionally illegal product will tarnish or dilute its mark. But is Naturewave® “famous” under trademark law? Arguably not, at least on our hypothetical facts. In that case, NFurn would not have a claim for dilution.

The upshot of this imagined case is that NCanna could evaluate NFurn’s lawsuit and know it had solid arguments to defend the case. The strength of the litigation position is, however, only one factor. Ultimately, whether to litigate a trademark dispute or settle or seek a coexistence agreement is a business decision for the cannabis company.

Related posts:

 

 

Cannabis edibles and the FDA
The FDA is the 800 pound gorilla of cannabis edibles.

The Food & Drug Administration (FDA) has only the jurisdiction Congress gave it in the Food, Drug and Cosmetic Act (FDCA). Under this act, the FDA has broad regulatory powers over legal drugs, with more limited powers over food.

Under the FDCA, the FDA categorizes a substance as either a food or a drug depending on how it is labeled or advertised. If labeling suggests the substance is “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, or is an “article[]” (other than food) intended to affect the structure or any function of the body of man or other animals,” the FDA will regulate it as a drug (except as noted below).

Cannabis edibles should stay out of the drug category if possible because drugs are subject to a comprehensive regulatory scheme that controls every part of the process, including formulation, testing for safety and efficacy, pre-clearance, manufacturing, labeling, sales, and recalls. For drug firms, the FDA is the 800-pound gorilla in the room.

The FDA categorizes food as anything people ingest that is not a drug. The FDA’s role in food is essentially hands-off. Though the FDA has promulgated hundreds of pages of food regulations, it mostly relies on food makers to self-enforce these regulations. However, when the FDA learns of regulatory violations it can and will take action.

The food/drug distinction is not always clear. In the Dietary Supplement Health & Education Act (DSHEA), Congress permitted some labeling claims for food (including dietary supplements) formerly limited to drugs. Under DSHEA, the FDA has issued regulations allowing certain specific health claims to be made on foods, e.g., “Three grams of soluble fiber from oatmeal daily in a diet low in saturated fat and cholesterol may reduce the risk of heart disease.” Food makers can also ask the FDA to permit other health claims if supported by scientific evidence. Other claims may be made, e.g., the role of an ingredient intended to affect a structure or function of the human body, under certain limited circumstances.

What does all of this mean for makers of cannabis edibles? If your cannabis label or your advertising does not make claims that bring your product within the FDA’s drug definition, the FDA will not treat your edible as a drug under the FDCA Act. This does not make it federally legal of course; it just means you won’t have to spend time having to deal with the FDA.

What if your edibles are marked with health claims or structure/function claims under DSHEA for cannabis or cannabis components, e.g., THC or CBDs? The FDA has in the past sent warning letters to firms making claims like these:

  • Studies have found CBD to possess the following medical properties: … Antipsychotic – combats psychosis disorders…combats neurodegenerative disorders … Anti-tumoral – combats tumor and cancer cells …combats…depression disorders
  • CBD helps with cancer, multiple sclerosis …diabetes, arthritis, dystonia, Crohn’s disease
  • Treats rheumatoid arthritis

The FDA has said that: “It is important to note that these products are not approved by FDA for the diagnosis, cure, mitigation, treatment, or prevention of any disease. Consumers should beware purchasing and using any such products.” If you make any health claims regulated by FDA for cannabis edibles, you risk federal administrative enforcement action.

For more on what the FDA has done with marijuana, check out the following:

There may though be change on the horizon. FDA Commissioner Scott Gottlieb recently said that “It’s high time [pun intended?] to start looking at rules around the [cannabis] plant, which some states have legalized for medicinal or recreational use.” Gottlieb also predicted that “We’ll have some answers to this question very soon because I think we do bear some responsibility to start to address these questions.”

 

Stay tuned.