In our previous post, we touched on some of the interesting issues related to the enforcement of cannabis patents through litigation. In this post, we turn to an alternative to litigation to discuss some of the unique cannabis-related issues that could arise before the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”).
The Trademark Trial and Appeal Board (“TTAB”) reiterated once again that you cannot register marijuana marks at the federal level. The TTAB announced its decision on July 16, 2019, rejecting Canopy Growth Corporation’s, a Canadian corporation, trademark filings for marijuana vaporizers “Juju Rx” and “Juju Hybrid.” In re Canopy Growth Corporation by assignment from JJ206, LLC, Serial Nos. 86475885 & 86475899 (TTAB, July 16, 2019).
Marijuana is classified as an unlawful drug under the federal Controlled Substances Act (“CSA”), and marijuana vaporizers are also classified as unlawful drug paraphernalia under the CSA. Even though several states have legalized the use of marijuana, federal trademark applications for marijuana marks will continue to be rejected until the drug is legalized on the federal level.
As a basis for the decision, the TTAB relied on the CSA and a 2016 precedential TTAB decision. In re JJ206, LLC, 120 USPQ2d 1568 (TTAB 2016). Trademark registrations are based off of actual use or intended use in lawful commerce. So, as long as marijuana and marijuana paraphernalia remain unlawful in commerce, you are better waiting to file your trademark applications.
Husch Blackwell’s own Kris Kappel was recently featured in an article, written by reporter James Dornbrook and appearing in the Kansas City Business Journal, on the “gray areas” of securing trademark protection for cannabis-related products, even industrial hemp, cultivation of which was recently approved in 2018 by Congress.
According to data by Quest Diagnostics, marijuana use in the workforce is on the rise. Usage increased 10% last year to 2.3% of the U.S. workforce according to an analysis of 10 million urine, saliva and hairs samples. In a post on Husch Blackwell’s Safety Law Matters blog, Donna Pryor explains the safety hazards involved with marijuana use in the workforce and outlines how employers should respond to safety risks. Learn how the Husch Blackwell Safety & Health team can help.
Husch Blackwell attorneys, Mike Annis and Emily Lyons provide an overview on the latest from the Association of Animal Feed Control Officials (AAFCO) and the U.S. Food and Drug Administration (FDA) regarding when and where hemp or hemp produced cannabidiol (CBD) can legally be used which could be of particular interest to animal feed and pet food manufacturers interested in expanding into the so-called green rush. Read the full post here.
Cannabis Regulation and Tax Act
In May 2019, the Illinois General Assembly passed the Cannabis Regulation and Tax Act (the “Act”). With the Act’s passage, Illinois became the first state legislature to pass a bill that legalized both the sale and possession of recreational marijuana. The Act passed the Senate on Wednesday, May 29th and was approved by the House by a bipartisan vote of 66-47 on Friday, May 31st. While the Act is robust, below is a highlight of important sections.
Effects on Individuals
The Act expands upon the Compassionate Use of Medical Marijuana Pilot Program Act and legalizes the recreational use, possession, consumption, purchase, and transfer of marijuana for individuals over the age of 21. As is typical in other states that have legalized the recreational use of marijuana, there are certain limitations on the amount of cannabis an individual can possess.
Social Equity Component
Similar to California, the Act contains a social justice component. In addition to the expungement of criminal records and dedication of revenues to address economic development, violence prevention and youth development in impacted communities, the Act also contains provisions that allow individuals who qualify as “Social Equity Applicants” to obtain low-interest loans and grants as to fund a marijuana operation as well as waivers for licensing fees. In order for a Social Equity License holder to transfer the license to an individual that does not meet the Social Equity qualifications within 5 years of the date of issue, the new license holder must pay the cannabis business development fund any fees that were waived in the original application, any outstanding amount owed on a social equity loan, and the full amount of any grants that the Social Equity Applicant received.
The Act provides a scheme of shared authority that will oversee the use, production, and regulation of marijuana. The enforcement authority is primarily made up of three government departments: the Department of Agriculture, the Department of Financial and Professional Regulation, and the Department of the State Police. The Department of Agriculture is charged with the administration of the portions of the Act that govern cultivation centers, craft growers, infuser organization, and transporting organizations including the issuance of ID cards, the limitation on potency and serving size for cannabis products, and the issuance, renewal, and discipline of licenses. The Department of Financial and Professional Regulation will oversee the registration of a dispensaries and the licensing process that accompanies both the dispensary and the individuals who operate it. The Department of Financial and Professional Regulation will also oversee license renewals and transfer licenses for dispensaries.
Within the Department of Financial and Professional Regulation, the Act creates the position of the Illinois Cannabis Regulation Oversight Officer. The Cannabis Regulation Oversight Officer will serve as the liaison between departments to ensure coordination and compliance with the Act. The Officer may collect necessary data pertaining to cannabis and make recommendations for policy, statute, and rule changes. Importantly, the Cannabis Regulation Oversight Officer does not participate in the issuance or dispute resolution of business licenses. Finally, the Department of State Police is tasked with conducting a criminal records check of the prospective principle officers, board members, and agents of any cannabis business establishment applying for a license under the Act.
In addition to the enforcement authorities, the Department of Public Health and Department of Human Services will participate with the regulation of cannabis. The Department of Public Health will provide opinions and recommendations to the other enforcement departments in regard to the appropriate health warnings, advertising, and labeling requirements. The Department of Human Services will serve as the public education body and will identify educational programs for ailments such as mental health and addiction.
Number of Licenses
The Act provides for the issuance of licenses beginning January 1, 2020. Any medical cannabis dispensary that is properly licensed pursuant to the Compassionate Use of Medical Marijuana Pilot Program Act will be able to apply for and Early Approval Adult Use License within 60 days of the signing of this Act. Additionally, individuals can begin the application process to obtain a Conditional Adult Use License in October 2019. The Department of Finance and Professional Regulation will issue up to 75 licenses before May 1, 2020 and up to 110 licenses by December 2021.
Purchasing and Transferring a License
The application for a Conditional Adult Use Dispensing Organization License requires that an applicant provide a variety of information and pay a nonrefundable fee of $5,000.00 for each license applied for. Significantly, the applicant must detail a plan for community engagement. The community engagement portion is significant because it affects the transfer of a regular dispensing organization license.
License transfers are subject to the approval of the Department of Financial and Professional Regulation. The regulations detailing approval have not yet been finalized, but the Act does specify that the Department may withhold approval if the person to whom the license is being transferred does not commit to the same community engagement plan that was agreed to in the original license application. The Department will not issue an Adult Use Dispensing Organization License until the Department has inspected the dispensary site for compliance with the Act, the holder has paid the registration fee, and they have met all the requirements and rules under the Act.
Written with the assistance of Lindy Martinez, a summer associate in the Husch Blackwell LLP Denver office.
Today, the U.S. Food and Drug Administration held a meeting to discuss its regulatory approach to products that contain cannabis and cannabis-derived compounds, including cannabidiol (CBD). Read more about what topics FDA expressed interest in receiving comments.
On May 28, 2019, the United States Department of Agriculture (the “USDA”) and the Office of the General Counsel (the “GC”) issued a legal opinion on the status of hemp following the passage of the 2018 Farm Bill. The opinion confirms: first, hemp must be produced under the 2014 Farm Bill until the USDA creates federal regulations or endorses a State program, and second, all hemp produced under the 2014 Farm Bill is protected by the provisions in the 2018 Farm Bill.
The legal opinion clarifies three major points of concern for farmers, business owners, and investors interested in the production of hemp: descheduling, legal ways to produce hemp under current law, and the interstate transport of legally produced hemp.
Most importantly, the opinion confirms hemp has been entirely removed from the Controlled Substances Act (the “CSA”), effective December 20, 2018. Enforcement and penalties for producing, transporting, and owning hemp are now out of the hands of the Drug Enforcement Agency. Instead, the USDA, Food and Drug Administration (“FDA”), and State governments hold responsibility for enforcing the laws and rules around hemp.
Legal Production of Hemp Under Current Law
As Husch Blackwell has stated since the passage of the 2018 Farm Bill, hemp production is allowable only under the provisions of the 2014 Farm Bill until the USDA creates new federal regulations. The 2014 Farm Bill requires hemp to be produced for the purpose of research under a State pilot program.
Transportation of Legal Hemp Across State Lines
Third, in contrast to a recent magistrate decision in Idaho, the USDA and GC have taken the position that States and Tribes may not impede the transportation of hemp produced under a valid 2014 Farm Bill pilot program. The 2018 Farm Bill prohibits States and Tribes from interfering with interstate transport of any hemp produced lawfully under the 2018 Farm Bill, which, according to the USDA and GC, incorporates the 2014 Farm Bill’s pilot programs.
Canna Compliance West is a unique gathering of policy-makers, attorneys, proprietors, and growers. They all come together annually to discuss the current legal regulations on cannabis and the state of the market. Husch Blackwell’s Steve Levine will be the keynote speaker for the conference on May 30, 2019. Steve will be giving a presentation called, “Where are We? The Latest Scorecard on State Regs and Overall Market Evolution.” In his presentation he will address the current state of cannabis and deregulation. Learn more about the event on the conference website.
Trademark practitioners, hemp producers, and hemp-derived product manufacturers have long struggled with the clash of federal and state law regarding protection of trademarks with the United States Patent and Trademark Office (USPTO). Historically, the USPTO has refused registration of marks that include cannabis, hemp, CBD or derived products on the basis that these marks were unable to have lawful use in commerce under existing federal law. These waters became even murkier after the passage of the Agricultural Improvement Act of 2018 (known as the 2018 Farm Bill), which removed “hemp” from the list of controlled substances under the Controlled Substances Act (CSA). On May 2, 2019, the USPTO issued Examination Guide 1-19, outlining the USPTO’s policies with respect to trademarks including legal CBD and hemp-derived goods and services since passage of the 2018 Farm Bill. This appears to open the door for registration of marks that include legal CBD, hemp or hemp-derived products (such as hemp oil), or services such as the cultivation or production of hemp.