u.s. border customs marijuana cannabisCanada’s cannabis legalization creates yet another wrinkle in the relations between the U.S. and its northern neighbor.

U.S. Attorney General Jeffrey Sessions harbors a well known hatred towards anything cannabis and he clearly has no love for Canada’s Cannabis Act either. What will this mean though for Canadians who are 100% legally involved in Canada’s cannabis industry when coming to the United States?

The answer came last week, when U.S. Customs and Border Protection (“CBP”) issued its Statement on Canada’s Legalization of Marijuana and Crossing the Border:

[a] Canadian citizen working in or facilitating the proliferation of the legal marijuana industry in Canada, coming to the U.S. for reasons unrelated to the marijuana industry will generally be admissible to the U.S. [H]owever, if a traveler is found to be coming to the U.S. for reason related to the marijuana industry, they may be deemed inadmissible. (Emphasis supplied).

Though this statement is a welcome surprise, it still provokes skepticism from U.S. immigration lawyers who have seen countless foreign nationals banned for life from entering the U.S. because they once used marijuana or were once associated with the cannabis industry.

Under the U.S. Controlled Substances Act (“CSA”), passed by U.S. Congress in May 1971, cannabis is classified as a Schedule I drug, which is reserved for substances like heroin and LSD, among others, that: (i) have a high potential for abuse; (ii) have no currently accepted medical use in treatment in the U.S.; and (iii) lack accepted safety for use under medical supervision.

U.S. federal law – more specifically the Immigration and Nationality Act (“INA”) — governs entry into the United States and under the INA, a “conviction” for controlled substances renders a foreign national inadmissible into the U.S. INA’s definition of “conviction” expands beyond a formal finding of guilt by a court of law to include instances where a foreign national admits to the essential elements of the crime under oath to a U.S. consular or CBP officer. For example, by answering “yes” to the question, “Have you ever smoked pot?”

Even a foreign national who has never consumed marijuana could be declared inadmissible under the INA based on his or her involvement in a legal cannabis business, either as “a knowing aider, abettor, assister, conspirator, or colluder with others” or “an illicit trafficker” of a controlled substance. Earlier in the year, we saw two examples of this when Canadian businesspersons Sam Znaimer and Jay Evans were banned for life from entering the U.S. because of their intended affiliations with U.S. cannabis industry.

Of course, lying about the use of or affiliation with marijuana would also render a foreign national inadmissible and you should avoid this at all costs. CBP has the legal authority to search electronic devices, and if it finds conflicting and/or incriminatory evidence about a foreign national’s actual or intended activities, that foreign national may be refused entry into the U.S. or even given a lifetime ban.

Once declared inadmissible, a foreign national needs a waiver of inadmissibility from the CBP to enter the U.S. These waivers are discretionary, costly, time-consuming, and limited in validity to between one and five years. Even with a waiver, a foreign national will typically face secondary questioning and delays each time he or she attempts to enter the U.S., even when the purpose of the visit is purely personal.

Foreign nationals have also been historically denied entry for profiting from the drug trade. Because of this, cannabis lawyers were concerned that virtually all foreign nationals lawfully engaged in Canada’s cannabis industry would be deemed inadmissible even if coming to the U.S. for purely personal reasons.

The recent statement from the CBP appears to exempt individuals who seek to enter the U.S. for reasons unrelated to cannabis. However, the process of admitting foreign nationals into the U.S. remains discretionary and subjective and only time will tell just how exactly the new policy will be applied at U.S. ports of entry.

DEA and FDA are in a bit of a tiff over CBD.

Last week, following the highly-anticipated U.S. Food and Drug Administration (“FDA”) approval of Epidiolex, G.W. Pharma’s oral cannabidiol (“CBD”) solution for the treatment of seizure associated with Lennox-Gastraut and Dravet syndrome, the Drug Enforcement Administration (“DEA”) issued a Final Order rescheduling FDA-approved drugs containing cannabis-derived CBD with no more than 0.1 percent THC under Schedule V of the Controlled Substances Act (“CSA”).

The DEA’s decision to reschedule this very specific formulation of FDA-approved CBD was largely influenced by a joint recommendation made by the U.S. Department of Health and Human Services (“HHS”) and the FDA earlier this year (“Memo”). However, according to a letter released last week by HHS Assistant Secretary Brett Giroir (“Letter”), the FDA concluded that CBD and its salts “could be removed from control” because:

  • “There is little indication that CBD has abuse potential or presents a significant risk to the public health”;
  • “No evidence for a classic drug withdrawal syndrome for CBD, and no evidence that CBD causes physical or psychic dependence”;
  • “CBD does not appear to have abuse potential under the CSA”;
  • “There is no signal for the development of substance use disorder in individuals consuming CBD-containing products”; and
  • “It is unlikely that CBD would act as an immediate precursor to THC for abuse purposes.”

Upon sharing its conclusion with the DEA, the FDA was advised that removing CBD from the CSA would violate international drug treaties to which the United States is a signatory. Specifically, the DEA explained that the United States would “not be able to keep obligations under the 1961 Single Convention on Narcotic Drugs if CBD were decontrolled under the CSA”. Consequently, the FDA revised its recommendation and advised the DEA to place CBD in Schedule V—which applies to drugs with demonstrated medical value and deemed unlikely to cause harm, abuse, or addiction—instead. Nonetheless, the FDA declared that “[i]f treaty obligations do not require control of CBD, or the international controls on CBD…are removed at some future time, the above recommendation for Schedule V under the CSA would need to be revisited promptly.”

As we previously discussed, the World Health Organization (“WHO”) Expert Committee on Drug Dependence submitted a recommendation in July to the United Nations Commission on Narcotic Drugs (“CND”) that “preparations considered to be pure CBD” should not be scheduled under any international drug treaty. The CND is scheduled to consider this recommendation at its annual meeting in March 2019. Yet, even if the CND were to deschedule CBD, the DEA would be free to ignore the FDA’s recommendation (i.e., scientific advice) and continue resisting a broader rescheduling of CBD. After all, the United States is currently disregarding the scientific data supporting the therapeutic value of CBD and refusing to join the global medical community, which favors its use and descheduling. That being said, if CBD were to be descheduled at the global level, the United States, specifically the DEA (i.e., Jeff Session’s Department of Justice), would no longer be able to hide its personal biases behind international treaties.

We will continue to monitor these actions and provide any domestic or international updates. In the mean time, feel free to contact us with any questions you might have on CBD-related issues.

marijuana canada vancouver police
New rules at the Vancouver P.D.

Despite a few employee victories across the country, states continue to allow employers to punish employees for off-work use of marijuana—even if they are medical marijuana users. Oregon and California tried and failed to pass legislation to protect off-work use of marijuana. The federal government even tried to protect off-work use for medical marijuana. Despite the efforts, a majority of states with legal marijuana allow employers to terminate employee for off-work marijuana use. Our neighbors to the north, however, seem to be moving in the opposite direction.

Canada legalized the sale and use of marijuana earlier this year and is set to begin legal sales on October 17. It’s only the second country to fully legalize at the national level. Along with Canada’s progressive views on marijuana, comes progressive views on public employees’ use of marijuana. To wit, the Vancouver Police Department (“VPD”) has officially approved off-work marijuana use.

Initially, back in early August, the VPD proposed a 24-hour pre-shift period of abstinence. Instead of immediately accepting or rejecting the proposal, the VPD did its research. The VPD issued a report noting that cannabis can affect individuals to different degrees and THC remains in an individuals system despite the individual no longer feeling the effects. Specifically the VPD rejected any pre-shift abstinence period, finding that:

specifying a time frame can create an implicit approval that that this period of abstinence is all that’s required to ensure fitness for duty…This can lead to unnecessary labour conflicts where employees are fit for duty but have consumed cannabis within this time frame, or where employees are not fit for duty but mistakenly believe they are as they consumed outside this time frame.”

The VPD, much like it does with alcohol, will require officers to refrain from partaking prior to the start of their shift and present “fit-for-duty.” The VPD will also allow officers to possess cannabis during working hours so long as the substance is stored in its original, sealed, and unopened package.

What does this mean for the rest of North America? Not a lot exactly. Canada’s laws, rules, and policies have zero effect in the U.S. or elsewhere. But perhaps Canada’s policies will trickle down. U.S. lawmakers seem to be unable to draft a bill that garners enough support to protect employees’ off-work use of marijuana. Many states, like Oregon, fail because the marijuana remains a controlled substance federally. Unless marijuana is de- or rescheduled, states will continue to struggle to protect employees off work use.

At most, Canada’s legalization may show the United States a way forward. If Canada’s legalization goes smoothly, perhaps federal U.S. lawmakers will realize it can be done and will not continue to cleave to the failed policies of prohibition. At the state level, maybe jurisdictions like Oregon and California can look to Vancouver for guidance on protecting employees’ rights to use marijuana off-work.

VPD has taken a reasonable approach to off-work marijuana use: don’t show up to work impaired. This is the same standard we use with other substances, so why not marijuana? As Canada moves forward with its legalization, let’s hope the U.S. and its states look north for guidance in areas such as employee rights.

jamaica canada international marijuanaI recently traveled to Montego Bay for the annual CanEx Jamaica conference. I spoke on a panel with attorneys from Jamaica and Canada about the legal challenges across international cannabis markets. Grace Lindo of Jamaican firm Nunes, Scholefield, DeLeon & Co. and Sandra Gogal of Canadian firm Miller Thomson LLP, each spoke about the markets in their respective countries while I cover legal challenges in the US. The panel was moderated by Imani Duncan-Price, Chief of Staff for the Office of the Leader of the Opposition.

Jamaica breaks commercial cannabis licenses into six categories: cultivator, processor, transporter, retailer and a research and development license. A licensed business must be “substantially owned” (at least 51%) by Jamaican residents.

Because Jamaica has decriminalized cannabis under its licensing regime, intellectual property protection is available for trademarks. According to Lindo, Jamaica’s Patent Act is somewhat outdated, meaning that it is not possible, per se, to get protection for plant varieties. Trade secrets and know-how are not statutorily protected, so in Jamaica, confidentiality agreements are key.

Canada’s legal cannabis market is poised to take off this month, so it was very interesting to hear about the legal framework for our northern neighbors. This is when Canada’s “Cannabis Act” goes into effect, legalizing cannabis at the federal level. Like the US, Canada has a federal system of government. When it comes to cannabis, the federal government has jurisdiction over cultivation, quality control, and taxation. Provinces and territories, in turn, have jurisdiction over distribution and retail. There will be six license types: cultivation, processing, analytical testing, sale, research, and a cannabis drug license.

The Canadian market will arrive in a somewhat subdued form. Edible products, other than oils, will not be available initially. Also, the Canadian government is imposing strict limitations on the advertising and marketing. There is a general prohibition on promoting cannabis other than exceptions for “informational” and “brand-preference” promotion. That promotion will only be permitted for adults.

Because cannabis is going to be legal at the federal level in both Jamaica and Canada, my fellow panelists agreed that the international cannabis trade is going to be picking up in the near term. I discussed why America won’t be participating in this market until our federal laws change. As I recently wrote, the Controlled Substance Act makes it nearly impossible to import or export cannabis. I also spoke about the difference between marijuana and industrial hemp, and how the states have taken different approaches to regulating both hemp and marijuana.

It appears to me that both Jamaica’s and Canada’s laws have been influenced by various U.S. state markets. For example, like Jamaica, several states impose residency requirements. Canada has followed states like Washington in creating restrictive marketing rules designed to prevent promoting cannabis to children. On a larger scale, both Jamaica and Canada have also been influenced by the type of licenses issued. The model of issuing cultivation, processing, retail, and research licenses is certainly influenced by states like Washington, Oregon, and California.

When it comes to cannabis, American states have been pioneers and are now influencing regulatory regimes across the globe. However, America as a nation continues to fall behind due to the inability to participate in the international markets. There are signs that this could change, as the Associated Press recently reported that the University of California San Diego’s Center for Medical Cannabis Research obtained a permit from the Drug Enforcement Agency to import capsules from Tilray Inc., a Canadian cannabis company, that contain CBD and THC derived from marijuana. UCSD researchers will look into the cannabinoids effectiveness in treating tremors.  Though this is limited, it is a step in the right direction to keep the US involved in the growing international market.

canada cannabis trademarkNews broke recently that Tweed, Inc., a subsidiary of Canadian cannabis company Canopy Growth Corp., filed a Canadian trademark application on August 31, 2018 for CHRONIC BY DRE, which they subsequently withdrew, apologizing and calling it a mistake. As we’ve written before, the number of trademark filings covering cannabis and cannabis-related goods and services in Canada has increased dramatically since the cannabis legalization process began. This rush to file cannabis trademarks in Canada could have been what spurred Tweed’s employee to rashly file the CHRONIC BY DRE mark without obtaining the artist’s consent and without having any sort of licensing deal in the works. (No matter what jurisdiction you’re in, don’t ever file for trademark protection for a mark that is already affiliated with a celebrity, hoping to beat them to the punch.)

The application filed for CHRONIC BY DRE covered a wide range of goods including body lotion and body creams, essential oils, personal preparations containing cannabis or cannabis derivatives, sunglasses, housewares, jewelry, stationery, pet accessories, clothing, dog and cat toys, beverage products, smoking products and accessories, and “cannabis and marijuana and derivatives thereof, namely live plants, seeds, dried flowers, liquids, oils, oral sprays, capsules, tablets, and transdermal patches.” That’s pretty broad.

For anyone familiar with the trademark application process in the United States, this specification makes Tweed’s registration of the CHRONIC BY DRE mark seem unattainable, but in Canada, it is not (setting aside the fact that Tweed does not have any deal in place with Dr. Dre himself). In the U.S., as we’ve covered extensively, in order to obtain federal trademark protection, your mark must be in lawful use in commerce (or, if you’re filing an intent-to-use application, you must have a bona fide intent to use the mark lawfully in commerce at the time of filing). This precludes the federal registration of any mark for use on goods or services that violate the federal Controlled Substances Act.

And in fact, Andre Young AKA Dr. Dre filed a U.S. federal trademark application for CHRONIC BY DR. DRE way back in 2013, and it was ultimately abandoned. The examining attorney at the time inquired into whether the goods contained marijuana because if they did, the mark would not be eligible for registration.

But back to Canada, where it is possible to obtain a trademark registration for cannabis, and where Dr. Dre would likely be successful (barring other legal obstacles) in obtaining such a registration for CHRONIC BY DRE. Even though it is relatively straightforward to obtain a trademark for cannabis goods or services in Canada, there are many restrictions placed on how those cannabis trademarks can be used via the proposed cannabis regulatory framework. For example, cannabis trademarks may not be used to promote cannabis goods:

  • In a manner that appeals to children;
  • By means of a testimonial or endorsement;
  • By depicting a person, character or animal, whether real or fictional;
  • By presenting the product or brand elements in a manner that evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk, or daring;
  • By using information that is false, misleading or deceptive, or that is likely to create an erroneous impression about the product’s characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks;
  • By using or displaying a brand element or names of persons authorized to produce, sell or distribute cannabis in connection with the sponsorship of a person, entity, event, activity or facility, or on a facility used for sports, or a cultural event or activity; and
  • By communicating information about price and distribution (except at point of sale).

For cannabis business owners in the U.S., it may make strategic sense to consult with a trademark attorney with experience filing cannabis-related applications to consider whether Canadian trademarks make sense. Because successful brands will be those that think globally, not nationally.

For more on Canadian branding (and marketing) regulations, check out my recent post here.

Our firm’s main practice areas include cannabis, China, trade and immigration. As such, it may not surprise you to learn that we get a lot of questions about the developing international cannabis trade. This is in large part due to the fact that Canada is on the verge of legalizing marijuana nationwide.

Importing or exporting cannabis in the United States at this point is extremely limited. Marijuana is listed as a Schedule I substance in the Controlled Substances Act (CSA) and it is illegal under federal law to possess or sell marijuana. The Controlled Substances Import and Export Act incorporates the schedules of the CSA. That means that the U.S. Customs and Border Protection is likely to seize any shipments of marijuana, even if shipments are going to or coming from a nation that has legalized marijuana in some form. There has even been some noise about barring travel by foreign marijuana company investors themselves as of late.

All of that said, not all parts of the cannabis plant are considered marijuana. The CSA defines “marihuana” as “all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin.” The second classification under the CSA is “Exempt Cannabis Plant Material” which includes the following four categories:

  1. Mature stalks
  2. Fiber produced from mature stalks
  3. Oil or cake made from seeds
  4. Seeds incapable  of germination

Exempt Cannabis Plant Material also includes “any other compound, manufacture, salt, derivative, mixture, or preparation” of the items listed above. The term does not include resin derived from mature stalks as that is considered marijuana, not Exempt Plant Material.

Back in May 2018, the Drug Enforcement Administration (DEA) issued an internal directive acknowledging that Exempt Plant Material is not “marijuana.” The directive touched on how the distinction impacted internationally traded cannabis

[A]ny product that the U.S. Customs and Border Protection determines to be made from the cannabis plant but which falls outside the CSA definition of marijuana may be imported into the United States without restriction under the Controlled Substances Import and Export Act. The same considerations apply to exports of such products from the United States, provided further that it is lawful to import such products under the laws of the country of destination.”

There you have it straight from the horse’s mouth: Importing or exporting Exempt Cannabis Plant Material is lawful under the Controlled Substance Import Export Act. What is not clearly indicated is whether or not the DEA considers exporting industrial hemp, grown pursuant to the 2014 Farm Bill, as outside of the scope of the CSA.

By nature of the 2014 Farm Bill, industrial hemp cannot be imported. This is because the cultivation of industrial hemp is only permitted if grown pursuant to a state’s agricultural pilot program under the guidance of a state department of agriculture.

But before you go and order a metric ton of mature cannabis stalks, keep in mind that any shipment of any cannabis-related good can come with additional scrutiny. Even if a product is solely derived from Exempt Cannabis Plant Material, that doesn’t mean that Customs will thoroughly investigate its shipment. Importers and exporters should be prepared to prove that the product was solely derived from Exempt Cannabis Plant Material and not marijuana. This can be difficult to do as there is no way to truly test from what portion of the plant a product was derived. You may be thinking, “well can’t a lab confirm that a product contains no THC?” The answer, of course, is “yes”, but even though verifying THC content is important (THC is listed separately from marijuana as a controlled substance in the CSA) it is not dispositive in determining whether a product is derived from Exempt Cannabis Plant Material.

Intrepid importers and exporters should prepare to detail the chain of title for Exempt Cannabis Plant Material. This can include an affidavit from the original supplier of the plant that only Exempt Cannabis Plan Material was used, lab certifications, purchase orders, shipping documentation, and any other documentary evidence showing the source of the plant material. There is no single item guaranteed to satisfy the authorities, so it’s best to prepare multiple documents in case they are needed.

united nations international marijuana cannabis
Will they get it right this time?

Cannabis prohibition under U.S. federal law is nonsensical and causes many problems, from oppressive taxation to civil rights violations. Under international law, however, things may be even worse. Fortunately, it was reported this week that the United Nations (U.N.) will finally take a closer look at cannabis prohibition this fall. It was also reported that the World Health Organization (W.H.O.), an agency of the U.N., has recommended that cannabidiol (CBD) no longer be controlled under international law. Both developments are terrific news.

For public international law nerds, like me, the question of why international law is more intractable than U.S. law on marijuana is fun stuff. The short answer is that cannabis, along with opium poppy and coca bush, is restricted not just through “scheduling”, but by the core text of the principal treaty at issue. This means that under international law, 185 or so countries are going to have to agree to amend the Single Convention on Narcotic Drugs of 1961 (“Single Convention”) (specifically, Articles 1, 22, 28 and 49) in order to truly end prohibition. Then, cannabis would also need to be removed from the Single Convention’s Schedules I and IV. All of that is no small feat.

Still, it isn’t impossible that the Single Convention would be amended to loosen or abolish restrictions on cannabis. The treaty was amended once before, by the 1972 Protocol, which inter alia amended Article 22 to require nations to actually enforce laws on their books against both poppy and cannabis cultivation. Since 1961, the U.N. has also taken other action on controlled substances, mainly through the Convention of Psychotropic Substances of 1971 (which will need amending one day, too) and the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988. So, the U.N. does re-think its stance on controlled substances from time to time, and for better or worse.

Like other international treaties that deal with drugs, the Single Convention is not self-executing. This means that signatory countries must pass domestic legislation to fulfill their treaty obligations. For its part, the U.S. passed the federal Controlled Substances Act (“CSA”) back in 1971. Unlike with the Single Convention, cannabis is not included anywhere in the body of this law. Instead, “marijuana” and other items are listed on separate “schedules” to the CSA. Each schedule then dictates the extent to which those items are controlled. “Marijuana” is a Schedule I drug with “no accepted medical use” and a “high potential for abuse.” That’s not so different than the Single Convention’s placement of “cannabis” at its Schedules I and IV, reserved for drugs that are “particularly liable to abuse and to produce ill effects” and where “such liability is not offset by substantial therapeutic advantages.” It’s important to note that even if the Single Convention were abolished entirely, its legacy would live on in the CSA and other domestic laws of its signatories, until those laws were also repealed.

Because the Single Convention has not been amended with respect to cannabis legality, it is controversial whether the U.S. has acted lawfully in allowing many of its states to promulgate medical and adult use marijuana programs in defiance of that treaty and the CSA. Recent U.S. delegations to UNGASS have made the argument that there is “sufficient flexibility” under the Single Convention to accommodate what has occurred under our federalist system of government. That’s a topic for another day, but suffice it to say that the “sufficient flexibility” argument is a thin one.

Many countries are no longer bothering with legal arguments, and simply ignoring their treaty obligations altogether. Canada and Uruguay are signatories to the Single Convention, and those countries have fully legalized sale and distribution of cannabis. Canada, for one, likely won’t even bother to withdraw from the Single Convention or submit reservations: It will just violate the treaty. Other countries around the world, from Israel to Germany to Columbia to Australia, have also pushed ahead to import or export medical marijuana in recent years. And many more, like the Netherlands and Spain, license or tolerate commercial or quasi-commercial marijuana activities.

Clearly, the Single Convention is outdated when it comes to cannabis prohibition, and global enforcement against licit marijuana economies is both impractical and legally problematic. In the coming months and years, countries will continue to legalize marijuana in abnegation of their treaty obligations, whether for moral or economic reasons. So let’s hope that the U.N. starts by acting on the W.H.O. recommendation to loosen controls on CBD, which shouldn’t be terribly difficult. But most importantly, let’s hope for an enlightened “big picture” approach on cannabis, even if that takes some work.

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Is the vape industry in real trouble?

Like so many other U.S. industries, the U.S. vaping industry is now in the crosshairs of a 25% tariff on products imported from China. The first two waves of President Trump’s proposed tariffs against China covered about $50 billion worth of Chinese products but they did not include any vaping products. After China retaliated and proposed its own equivalent tariffs on an estimated $50 billion worth of U.S. products imported into China, President Trump proposed a much bigger third list of China products to cover an additional $200 billion in imports from China. This third list targets vaping devices, vaping parts, and batteries from China. Because our law firm’s marijuana business lawyers represent so many companies involved in various aspects of the vaping industry, we are hearing a earful about how these tariffs will “decimate” the nascent industry.

The U.S. vaping industry is indeed particularly exposed to these tariffs. Though much of the e-liquid used for vaping is made in the United States, almost all of the vaping hardware is imported from China. Just as Gillette makes the most money selling razor cartridges and not razors, many U.S. vaping companies chose to focus on the higher margin e-liquids, rather than lower margin vaping devices. Some have noted that there are no U.S. companies that produce any vaping hardware products. We are hearing of how many vape and cannabis retail shops will be unwilling or unable to pay the extra 25% tariffs because they do not believe they will be able to pass these extra costs on to their customers. If this does prove true, the vaping industry will indeed be decimated.

Fortunately, there is still time for vaping companies to seek a tariff exemption for certain vaping products. The U.S. Trade Representative will accept comments until September 6 on whether entire categories of products listed on the third wave of proposed tariffs — the $200 billion in imports from China — should be exempted. There likely will be yet another chance to make more product-specific exclusion requests later in the fall.

For an exclusion request to have any realistic chance at being granted, marijuana and related vaping companies should address the following factors:

  • A description of the physical characteristics (dimensions, material composition, etc.) of the particular vaping products and the 10 digit subheading of the HTSUS tariff category applicable to those products.
  • Whether the particular vaping product is available only from China. In addressing this factor, requesters should address specifically whether the particular vaping product and/or a comparable product is available from sources in the United States and/or in third countries.
  • Whether imposition of additional duties on the particular vaping product would cause severe economic harm to the requester or other U.S. interests.
  • Whether the particular vaping product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.
  • Requesters must provide the annual quantity and value of the Chinese-origin product the requester purchased in each of the last three years. If precise annual quantity and value information are not available, USTR will accept an estimate with justification.
  • Requesters may also provide any other information or data they consider relevant to evaluating their request.

The process for reviewing and deciding on these exclusion requests will not result in any immediate decision but the hope is that a favorable decision eventually will allow for refunding the tariffs paid.

The goal is to have the USTR review the comments and grant exclusions, particularly for products that are not made in the United States and can only be sourced from China. The last time similar tariffs were applied on steel products back in the early 2000s, many exclusions were granted that helped ease the impact of the tariffs on downstream users.

There have already been many opposing comments and exclusion requests submitted for the first two waves of proposed China tariffs. Many of the opposing comments have noted how the proposed tariffs on the Chinese products have nothing to do with  Chinese practices of stealing or extorting intellectual property from U.S companies, which are the reasons claimed for invoking the China tariffs in the first place. Many have also objected to how these tariffs are not likely to change how China respects intellectual property  rights, but will have a catastrophic effect on certain American companies.  What was a booming U.S. vaping industry now faces going bust with the proposed tariffs. If you are in the vaping industry, now is the time to do what you can to prevent this.

Editor’s Note: A version of this post previously appeared on our law firm’s China Law Blog. It focuses on the vaping industry but much of it holds true for a host of other U.S. industries caught up in the tariffs as well. The bottom line is that the situation for products and companies that will be hurt by these tariffs is not good and the chances of overturning the tariffs are in most cases less than 50 percent. But in many cases the situation is not yet hopeless and it behooves you to try.

With implementation of Canada’s Cannabis Act (the “Act”) set for October of this year, many of our clients owning brands that will be sold in both the United States and Canada are beginning to wonder what the implications of new branding and marketing regulations will be. So far, more than 1,500 trademark applications for cannabis and cannabis-related products have been filed with the Canadian Trademark Office, and that number is certain to grow as legalization rolls out.

The Act, through its regulation of packaging, addresses many of the same concerns as certain state statutes in the U.S.: preventing false and misleading advertising and prohibiting advertising that is appealing to children. Some of the key prohibitions contained in the Act are on testimonials and endorsements, the use of real or fictional people, characters or animals, and branding or packaging that connotes “glamour, recreation, excitement, vitality, risk or daring.” Interestingly, there was discussion in the government’s Proposed Approach to the Regulation of Cannabis of implementing a plain packaging regime, something we’ve long suspected could be applied to cannabis.

The new regulations will require that all cannabis products be packaged in a manner that is tamper-evident, child-resistant, prevents contamination, and keeps cannabis dry. Packaging must be opaque. Pursuant to the Proposed Approach to the Regulation of Cannabis, licensed processors must label the package in which the cannabis product is contained in both French and English, and the following information would be generally required:

  • Name and contact information of the processor who packaged the product;
  • Product description;
  • Product lot number;
  • Product weight or volume, depending on the product class;
  • Packaging date (and expiry date, if one has been set);
  • Recommended storage conditions;
  • THC / CBD content (expressed as the percentage of THC / CBD the product could yield, and by unit or dose, if applicable); and
  • Inclusion of the statement: “KEEP OUT OF THE REACH OF CHILDREN”.

Under the Act, it is prohibited to promote cannabis in a manner that is false, misleading or deceptive, or that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks. This aligns well with what we’ve seen in U.S. jurisdictions with regulated cannabis.

However, interestingly, the Act also prohibits promotion of cannabis brands using foreign media:

“It is prohibited to promote … cannabis, a cannabis accessory, a service related to cannabis or a brand element of any of those things in a publication that is published outside Canada, a broadcast that originates outside Canada or any other communication that originates outside Canada.”

This regulation could have serious implications for brands that are looking to position themselves not only in Canada, but also in other jurisdictions, including the U.S. The Canadian government has made it a priority to ensure that companies cannot evade the Act’s advertising and promotion restrictions by merely promoting the products abroad.

Sponsorship by Canadian cannabis companies will also be prohibited (perhaps even if a particular brand is only sponsoring events or individuals abroad). As such:

“It is prohibited to display, refer to or otherwise use any of the following, directly or indirectly in a promotion that is used in the sponsorship of a person, entity, event, activity or facility:

  • A brand element of cannabis, of a cannabis accessory or of a service related to cannabis; and
  • The name of a person that
    • Produces, sells or distributes cannabis,
    • Sells or distributes a cannabis accessory, or
    • Provides a service related to cannabis.”

Clearly, the implications of Canada’s cannabis advertising regulations will be far-reaching once they are implemented in October. For brands that intend to have a presence in both the U.S. and Canada, it will be particularly important to ensure that no advertisements or promotions produced in the U.S. run afoul of the Act, as they could ultimately jeopardize the license(s) in Canada and open the responsible individuals up to liability. Having an understanding of how Canada’s rules will impact your brand, if you intend to expand beyond the U.S., will be critical in the coming months.

netherlands holland cannabis marijuana

Everyone knows the Netherlands (especially the City of Amsterdam) as a pot capital of the world. Ironically, cannabis sales in the Netherlands are illegal. The country has decriminalized its use and possession to a certain extent, but law enforcement may impose a fine or misdemeanor upon a person in possession of marijuana-based drugs. However, the government has made it clear that prosecution of cannabis possession, in particular, is the lowest enforcement priority and there will likely never be a criminal investigation over cannabis prosecution.

Because of this, cannabis coffee-shops (i.e., retailers) have proliferated in the Netherlands. The government allows cannabis coffee-shops to sell cannabis to anyone as long as they follow certain regulations. Specifically, coffee-shops are not allowed to: (1) advertise, (2) trade in hard drugs, (3) sell drugs to minors, or (4) sell drugs in quantities of more than 30 grams. They are also responsible for preventing any public disturbance or nuisance.

Although there is a system in place for selling cannabis in the Netherlands, the cultivation and producing of cannabis is illegal. Retailers must rely on the black market to supply their stores. In order to combat the growth of the illegal market, the Netherlands’ government introduced a proposal that would allow certain Dutch states to legally produce and sell cannabis for a four-year trial period. This regulated supply chain for cannabis would allow certain suppliers to cultivate cannabis without facing arrest. This program will also implement government oversight into the cannabis market, requiring product testing and proper packaging. European governments are hoping this program can give lawmakers a clear understanding of what a legal cannabis market might look like in their nations. The bill is scheduled for a vote of Parliament this summer.

Additionally, the Netherlands has moved towards providing medical cannabis for patients. Under the proposed legislation, patients will be able to go to a designated pharmacy with their prescription and obtain cannabis. The government is also planning on working with designated cultivators to grow “pharmaceutical-grade cannabis” for qualifying patients.

All in all, things are moving forward on legalization. On the other hand, public cannabis consumption recently has seen its first restriction in The Netherlands. The Hague has become the first Dutch city to ban cannabis consumption in public. This ban has come as a response to the numerous complaints of residents and visitors of unwanted cannabis smoke. Coffee shops will have to monitor their odors to ensure that on-site consumption is not causing an unwanted nuisance. Certain legislators have also pushed for initiatives that would only allow for Dutch residents to purchase cannabis and cannabis products. However, those have mostly been abandoned.

The Netherlands’ cannabis policy is in flux due to the semi-legal market. If the pilot program succeeds and the Netherlands moves towards legalization, the Country could become one of the first legal cannabis countries. As an international law firm with offices in nearby Spain, we are always keeping tabs on new cannabis markets that arise in around the world. Although the Netherlands seems to be a “pot haven,” many changes still need to be made to have a completely legalized system.