Tag Archives: application

The Hopes of Illinois Social Equity Applicants

By Taneeshia Thomas
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It is almost impossible to turn on the tv and not find a show or news conference or even live footage of an ongoing protest over “Black Lives Matter” or “Economic Equality.” The same situation exists with social media platforms, radio broadcast, etc. All sharing the common theme of social equity. While we all seek a solution, the state of Illinois is doing their part by awarding the coveted adult use cannabis business licenses for craft growing, infusion, transportation and dispensaries to social equity applicants by using a scoring system that favors the social equity applicant. We believe in this vision at TGC Group and our dream is to pay it forward.

Taneeshia Thomas and her husband, Christopher Lacy, who did 3.5 years in prison for growing cannabis in 2009.

We see the world, especially for minorities living in poverty, quite differently because of where we come from. “Black Lives Matter” is a movement to save the lives of all people and have human life viewed equally no matter the race of an individual. Economic equality is a totally different fight. Our communities that are impoverished need cash infusions. There needs to be financial infrastructure that recirculates the dollars from the poor communities and that comes from having business owners in the affected community to put their profits back into their community. There needs to be a system of lending that is not based on credit scores and criminal background checks because most people at the bottom will never qualify. An example would be my husband, Christopher Lacy: he went to prison for 3.5 years for growing cannabis back in 2009. He is not a violent man; he never even had a fight in prison. He spent much of his time in prison teaching inmates how to read, write and most importantly, he tried to teach them economics. He is educated about cannabis because he has been intimately involved with this plant and has been growing it for just about 20 years. Yet when he tried to apply for jobs in Illinois for growing cannabis, his invisible barrier starts with the resume. Just think about it, my husband, knows more about cannabis than most people in the industry today and could manage a facility with ease. No one could see his worth because of his background and work experience? This is the same situation with so many others in our poor communities. We know for a fact that there is hidden talent in the impoverished communities and prison system, and we intend to find it and empower these individuals to rebuild what was destroyed by the war on drugs. I speak for all the ghettos when I say this: give us access to the capital and we will get the rest done on our own. Conventional banks have their hands tied with this approach because they are regulated, but private funds have more flexibility. The excess capital needed to rebuild will not come from jobs, it only comes from ownership. Luckily, J.B. Pritzker and Toi Hutchinson are aware of this and hence created the social equity fund to help the social equity applicants fund their projects if and when they are awarded a license. We must find a way to give to the bottom so that the dollars can trickle up. Trickledown economics is kind of like that movie “Platform” on Netflix. There are never enough resources to get to the bottom because the people sending the resources down have no idea how to get them to the bottom floors of society. Trickle up economics can start at the very bottom rungs of society and still will reach to this highest level of the economic system because its built in such a way that it will inevitably get there.

State Sen. Toi Hutchinson (D-Park Forest), now The Illinois Cannabis Regulation Oversight Officer

These new licenses, literally pathways to financial freedom if operated correctly and efficiently, are revenue machines capable of changing our community. This change does not come from providing jobs (although jobs do help and will be available), but by providing capital to rebuild. These funds can provide scholarships, business loans, even small infrastructure projects can get accomplished via the tax revenue generated by the local governments. We have already made a written commitment to give a portion of net margins to the village. Capital in the right hands can make dreams come true. In theory, poverty can be solved. Poverty is not a prerequisite to the American way of life. That is why we were so proud to get zoning approval by our village. They see what we see. We can change neighborhoods like Beacon Hill. The dollars must recirculate in the community. Wherever you see high poverty rates you see high crime rates. This is not a coincidence. If you can lower the poverty rate you can lower the crime rates. This raises the quality of life for everyone. We see the state is on board, the county is on board, the Village of Park Forest is on board and the citizens of the community are on board. Now all we need is the license and capital to get the resurrection started.

Unlike other applicants, we were only capable of applying for one license for a craft grow facility. Some may see this as a disadvantage because only 40 licenses will be issued for this purpose. I wish we could have applied for more to increase our odds, but resources were scarce and applying was not cheap. We decided to stick with the efficient market theory and put all our eggs in the one basket that we know we can carry and be successful with. Without the help of Justice Grown, we would’ve never completed the application so shout out to them and anyone else that helped “true” social equity applicants apply.

The wheels are in motion so all we can do is wait to see who wins. I would hate to be on the team who must decide who wins these licenses. Everyone knows large corporations found ways to apply as social equity applicants because they only needed a certain number of “social equity” employees to qualify. But if you go ask the employees, not the owners, if they have been cured of their financial burdens and see if $15 has raised their quality of life to a middle-class level. The answer is emphatically NO. You cannot give out band-aids for heart attacks. If these large corporations are awarded the licenses, it will perpetuate the cycle of poverty. We do not personally have anything against the big companies. Like Toi Hutchinson said regarding the first round of dispensary and cultivation licenses: we needed the big company dollars to fund the next round of licenses. Well, the next round is here. Let’s do right by the communities that were truly affected by the war on drugs and on a more personal level and my reason for applying: let’s do right by my husband because he lost 3.5 years of his life and was excluded from participating with his family for doing what is now legal.

The Dawn of Delivery: How This Oregon Company Launched During a Pandemic

By Aaron G. Biros
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Back in late 2016, the Oregon Liquor Control Commission (OLCC) legalized delivery for cannabis products. Since then, dispensaries could offer a delivery option for their customers to purchase cannabis products without leaving the comfort of their home. Up until quite recently, that market was dominated by a handful of dispensaries who also conduct business at their physical location, offering delivery as an option while conducting most sales in-person.

Enter Pot Mates. Founded in 2018 by Hammond Potter, the company embarked on the long regulatory road towards licensing and beginning operations. On April 20, 2020, Pot Mates opened for business, starting their engines to take on the fledgling cannabis delivery market in Portland.

Pot Mates is a tech startup through and through. The founders are former Apple employees. Hakon Khajavei, the chief marketing officer at Pot Mates, founded Blackline Collective, a business and marketing consultancy, which is where he joined the Pot Mates team. The other co-founder of Pot Mates and chief technology officer, Jason Hinson, joined after serving in the US Navy as an electronics technician maintaining satellite communications networks.

With the sheer amount of regulations for cannabis businesses, coupled with the new delivery-based business model, Pot Mates had to focus on technology and automation from the get-go.

Not Just an Online Dispensary

For the cannabis companies already offering delivery in the Portland metro area, their websites seem to mimic the in-person dispensary experience. They offer dozens of products for each category, like concentrates, edibles and flower, making a customer pour through options, all at different price points, which can get confusing for the average consumer.

The Pot Mates logo

Pot Mates does things a little differently. “Our start up process was thinking through how do we make this the best experience possible, how do we get rid of the unnecessary junk and how do we do things that only an online dispensary can do,” says Khajavei. They have flat pricing across the board. In each category, almost every product is priced the same, moving away from the common tiered-pricing model. This, Khajavei says, removes the decision barriers customers often face. Instead of choosing the right price point, they can choose the delivery mechanism and effect they desire uninhibited by a difference in cost.

It all comes back to focusing on the simplest way for someone to buy cannabis. “Shopping online is just very different,” says Khajavei. “Our process focuses on the customer journey and limits the number of products we offer. We have a mood system, where we tag our products from reviews to typify moods that you experience with different products.” All of that requires a lot of back-end technology built into their website.

The Long Regulatory Road

Technology has been a strong suit for Pot Mates since they opened their doors, and well before that too. Making the decision to be an online-only delivery cannabis company pushed them to pursue a very unique business model, but regulations dictate a lot of the same requirements that one might see in dispensaries.

Hakon Khajavei, Chief Marketing Officer

The same rules apply to them when Pot Mates submitted their license application. You need to have a signed lease, extreme security measures, detailed business plans, integrated seed-to-sale traceability software (Metrc in Oregon) and much more. “During the months leading up to getting our license, we were able to iron out a lot of the regulatory details ahead of time,” says Khajavei. A lot of that was about security and tracking their products, which is why technology plays such a huge role in their ongoing regulatory compliance efforts. “We built in a lot of automation in our system for regulatory compliance,” says Khajavei. “Because of our technology, we are a lot faster.”

In the end, their licensing process through the state of Oregon as well as the city of Portland took about nine months. Once they had the license, they could finally get down to business and begin the process of building their website, their POS system, their inventory and reaching out to partners, producers, distributors and growers.

For any cannabis company, there are a number of regulations unique to their business. “We need to report every product movement in house through Metrc,” says Khajavei. “Every time something is repackaged it needs to be reported. We focus so much on our technology and automation because these regulations force us to do so.” But delivery companies are required to report even more. Pot Mates needs to report every single movement a product makes until it reaches the customer. Before the delivery can leave the shop, it is reported to Metrc with an intended route, using turn-by-turn directions. It complicates things when you make two or more deliveries in one trip. Reporting a daisy chain of deliveries a vehicle makes with turn-by-turn directions to regulatory authorities can get very tedious.

As far as regulations go for delivery parameters, they can legally deliver anywhere inside Portland city limits. “It is our job to figure that out, not the customer’s job; so we don’t have any distance limits, as long as it is residential,” Khajavei says. “We programmed customized technology that allows us to handle really small orders.” Without a minimum order policy or a distance limit, Pot Mates can reach a much bigger group of consumers.

Launching in the Midst of a Global Pandemic

Chief Technology Officer, Jason Hinson

Luckily, the Pot Mates team received their license just in time. About two weeks after they submitted their application, Oregon put a moratorium on any new dispensaries.

They went forward with their launch on April 20 this year, despite the coronavirus pandemic impacting just about every business in the world, including their marketing efforts tremendously. With cannabis deemed essential by the state, they could operate business as usual, just with some extra precautions. What’s good for PotMates is that they don’t need to worry about keeping social distancing policies for customers or curbside pickup, given the lack of storefront.

They still need to keep their team safe though. The Pot Mates team began 3D printing washable and reusable face masks, getting more gloves for delivery drivers, cleaning their warehouse thoroughly, cleaning vehicles and making sure employees maintained distancing. Pot Mates is even 3D printing enough masks and donating them to local organizations that need access to masks. “As a cannabis company, we always have to handle things with gloves here and take necessary safety precautions anyway, so our response is more about how we can help than what we need to change.”

Advertising Cannabis in a Pandemic is No Easy Task

“The marketing aspect is where covid-19 really hurt us,” says Khajavei. “There are so many regulations for cannabis companies advertising already. Unlike other products, we can’t just put up advertisements anywhere. We have to follow very specific rules.” So, in addition to the normal marketing woes in the cannabis industry, the team then had to deal with a pandemic.

Pot Mates had to scrap their entire marketing strategy for 2020 and redo it. “We wanted to begin with a lot of face-to-face marketing at events, but that didn’t quite work out so well.” Without any concerts, industry events or large gatherings of any kind, Pot Mates had to pivot to digital marketing entirely. They started building their SEO, growing their following on social media, producing content in the form of blogs and education around cannabis and the local laws.

On an Upward Trajectory

Obviously, the short-term problem for a new cannabis company is reaching people, especially during the COVID-19 crisis. “We have a good trajectory though, we know we are growing our business, but we still have a ways to go,” says Khajavei. It doesn’t help that social media companies have nonsensical policies regarding cannabis. Their Facebook page was recently removed too.

Founder & CEO of Pot Mates, Hammond Potter

But the bigger issue here is kind of surprising when you first hear it: “It’s not even a matter of customer preference, a lot of people just have no idea that delivery is even legal.”

It’s pretty evident that cannabis delivery has not really gone mainstream yet. “We’ve told people about our business in the past and a common answer we get is, ‘Oh my gosh, I didn’t even know we could get cannabis delivered.’” It’s never crossed their mind that they can get cannabis delivered to their home. It’s an awareness problem. It’s a marketing problem. But it’s a good problem to have and the solution lies in outreach. Through educational content they post on social media and in their blog, Khajavei wants to spread the word: “Hey, this is a real thing, you can get cannabis delivered.”

As the market develops and as consumers begin to key in on cannabis delivery, there’s nowhere to go but up. Especially in the age of Amazon and COVID-19 where consumers can get literally anything they can dream of delivered to their front door.

Moving forward, Pot Mates has plans to expand as soon as they can. Right now, they’re limited to Portland city limits, but there’s a massive population just outside of Portland in towns like Beaverton, Tigard and Tualatin. “We are so close to these population centers but can’t deliver to them now because of the rules. We want to work with OLCC about this and hopefully change the rules to allow us to deliver outside of the city limits,” says Khajavei. In the long term, they plan to expand out of state, with Washington on their north border being first on the docket.

To the average person, one would think launching a delivery cannabis business in the midst of a global pandemic would be a walk in the park, but Pot Mates proved it’s no easy task. As the market develops and the health crisis continues, it seems the Oregon market will react positively to the nascent delivery market, but first they need to know it is even an option.

Multi-Element Analysis Using ICP-MS: A Look at Heavy Metals Testing

By Cannabis Industry Journal Staff
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Across the country and across the world, governments that legalize cannabis implement increasingly rigorous requirements for laboratory testing. Helping to protect patients and consumers from contaminants, these requirements involve a slew of lab tests, including quantifying the levels of microbial contaminants, pathogens, mold and heavy metals.

Cannabis and hemp have a unique ability to accumulate elements found in soil, which is why these plants can be used as effective tools for bioremediation. Because cannabis plants have the ability to absorb potentially toxic and dangerous elements found in the soil they grow in, lab testing regulations often include the requirement for heavy metals testing, such as Cadmium, Lead, Mercury, Arsenic and others.

In addition to legal cannabis markets across the country, the USDA announced the establishment of the U.S. Domestic Hemp Production Program, following the enactment of the 2018 Farm Bill, essentially legalizing hemp. This announcement comes with information for hemp testing labs, including testing and sampling guidelines. While the information available on the USDA’s website only touches on testing for THC, required to be no greater than 0.3% dry weight concentration, more testing guidelines in the future are sure to include a discussion of heavy metals testing.

Table 1. ICP-MS operating conditions (shaded parameters were automatically optimized during start up for the HMI conditions).

In an application note produced by Agilent Technologies, Inc., the Agilent 7800 ICP-MS was used to analyze 25 elements in a variety of cannabis and hemp-derived products. The study was conducted using that Agilent 7800 ICP-MS, which includes Agilent’s proprietary High Matrix Introduction (HMI) system. The analysis was automated  by using the Agilent SPS 4 autosampler.

Instrumentation

The instrument operating conditions can be found in Table 1. In this study, the HMI dilution factor was 4x and the analytes were all acquired in the Helium collision mode. Using this methodology, the Helium collision mode consistently reduces or completely eliminates all common polyatomic interferences using kinetic energy discrimination (KED).

Table 2. Parameters for microwave digestion.

As a comparison, Arsenic and Selenium were also acquired via the MassHunter Software using half-mass correction, which corrects for overlaps due to doubly charged rare earth elements. This software also collects semiquantitative or screening data across the entire mass region, called Quick Scan, showing data for elements that may not be present in the original calibration standards.

SRMs and Samples

Standard reference materials (SRMs) analyzed from the National Institute of Standards and Technology (NIST) were used to verify the sample prep digestion process. Those included NIST 1547 Peach Leaves, NIST 1573a Tomato Leaves and NIST 1575 Pine Needles. NIST 1640a Natural Water was also used to verify the calibration.

Figure 1. Calibration curves for As, Cd, Pb, and Hg.

Samples used in the study include cannabis flower, cannabis tablets, a cannabidiol (CBD) tincture, chewable candies and hemp-derived cream.

Sample Preparation

Calibration standards were prepared using a mix of 1% HNO3 and 0.5% HCl. Sodium, Magnesium, Potassium, Calcium and Iron were calibrated from 0.5 to 10 ppm. Mercury was calibrated from 0.05 to 2 ppb. All the other elements were calibrated from 0.5 to 100 ppb.

Table 3. Calibration summary data acquired in He mode. Data for As and Se in shaded cells was obtained using half mass correction tuning.

After weighing the samples (roughly 0.15 g of cannabis plant and between 0.3 to 0.5 g of cannabis product) into quartz vessels, 4 mL HNO3 and 1 mL HCl were added and the samples were microwave digested using the program found in Table 2.

HCI was included to ensure the stability of Mercury and Silver in solution. They diluted the digested samples in the same acid mix as the standards. SRMs were prepared using the same method to verify sample digestion and to confirm the recovery of analytes.

Four samples were prepared in triplicate and fortified with the Agilent Environmental Mix Spike solution prior to the analysis. All samples, spikes and SRMs were diluted 5x before testing to reduce the acid concentration.

Calibration

Table 4. ICV and CCV recovery tests. Data for As and Se in shaded cells was obtained using half mass correction tuning.

The calibration curves for Arsenic, Cadmium, Lead and Mercury can be found in Figure 1 and a summary of the calibration data is in Table 3. For quality control, the SRM NIST 1645a Natural Water was used for the initial calibration verification standard.  Recoveries found in Table 4 are for all the certified elements present in SRM NIST 1640a. The mean recoveries and concentration range can also be found in Table 4. All the continuing calibration solution recoveries were within 10% of the expected value.

Internal Standard Stability

Figure 2 highlights the ISTD signal stability for the sequence of 58 samples analyzed over roughly four hours. The recoveries for all samples were well within 20 % of the value in the initial calibration standard.

Figure 2. Internal standard signal stability for the sequence of 58 samples analyzed over ~four hours.

Results

In Table 5, you’ll find that three SRMs were tested to verify the digestion process. The mean results for most elements agreed with the certified concentrations, however the results for Arsenic in NIST 1547 and Selenium in both NIST 1547 and 1573a did not show good agreement due to interreferences formed from the presence of doubly-charged ions

Table 5. Mean concentrations (ppm) of three repeat measurements of three SRMs, including certified element concentrations, where appropriate, and % recovery.

Some plant materials can contain high levels of rare earth elements, which have low second ionization potentials, so they tend to form doubly-charged ions. As the quadrupole Mass Spec separates ions based on their mass-to-charge ratio, the doubly-charged ions appear at half of their true mass. Because of that, a handful of those doubly-charged ions caused overlaps leading to bias in the results for Arsenic and Selenium in samples that have high levels of rare earth elements. Using half mass correction, the ICP-MS corrects for these interferences, which can be automatically set up in the MassHunter software. The shaded cells in Table 5 highlight the half mass corrected results for Arsenic and Selenium, demonstrating recoveries in agreement with the certified concentrations.

In Table 6, you’ll find the quantitative results for cannabis tablets and the CBD tincture. Although the concentrations of Arsenic, Cadmium, Lead and Cobalt are well below current regulations’ maximum levels, they do show up relatively high in the cannabis tablets sample. Both Lead and Cadmium also had notably higher levels in the CBD tincture as well.

Table 6. Quantitative data for two cannabis-related products and two cannabis samples plus mean spike recovery results. All units ppb apart from major elements, which are reported as ppm.

A spike recovery test was utilized to check the accuracy of the method for sample analysis. The spike results are in Table 6.

Using the 7800 ICP-MS instrument and the High Matrix Introduction system, labs can routinely analyze samples that contain high and very variable matrix levels. Using the automated HMI system, labs can reduce the need to manually handle samples, which can reduce the potential for contamination during sample prep. The MassHunter Quick Scan function shows a complete analysis of the heavy metals in the sample, including data reported for elements not included in the calibration standards.

The half mass correction for Arsenic and Selenium allows a lab to accurately determine the correct concentrations. The study showed the validity of the microwave sample prep method with good recovery results for the SRMs. Using the Agilent 7800 ICP-MS in a cannabis or hemp testing lab can be an effective and efficient way to test cannabis products for heavy metals. This test can be used in various stages of the supply chain as a tool for quality controls in the cannabis and hemp markets.


Disclaimer: Agilent products and solutions are intended to be used for cannabis quality control and safety testing in laboratories where such use is permitted under state/country law.

Who’s Afraid of Biotech Institute LLC?

By Brett Schuman, Daniel Mello, Nicholas Costanza, Olivia Uitto
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While cannabis patenting activity is still in its infancy, relatively speaking, a lot has been written already about the cannabis patenting activity of an entity called Biotech Institute LLC (BI) of Westlake Village, California.1 BI is building a sizable portfolio of utility and plant patents covering various aspects of the cannabis plant. According to some commentators, BI’s patents have “many in the cannabis industry concerned.”2

But how concerned should members of the cannabis industry really be about BI’s patents? Generally, patents are susceptible to numerous challenges in multiple fora. From 2012-2016, approximately 80% of challenged patents were invalidated by the Patent Trial and Appeal Board (PTAB) each year.3 The PTAB was created in 2011 by the Leahy-Smith America Invents Act, 35 U.S.C. § 6, to create a process for eliminating improvidently issued patents. And the statistics suggest that the process may be working as intended by Congress.

BI may be building its portfolio by taking advantage of some unique challenges in the cannabis patenting area. First, even though cannabis has been cultivated and consumed by humans for thousands of years, there is a relative lack of published prior art available to patentees and patent examiners examining patent applications.4 Second, patent examiners are not as familiar with cannabis patent applications as they may be with other types of patent applications.

So, we examined carefully BI’s earliest and arguably broadest utility patent, U.S. Patent No. 9,095,554, and concluded that maybe the cannabis industry need not be so concerned about this and some of BI’s other utility patents. Although the ’554 patent is lengthy – 247 columns of text and over an inch thick when printed in hardcopy – there appears to be little if any novelty to the claimed invention. Alternatively, the patent appears to be obvious in light of the available prior art.

In a patent, the claims define the metes and bounds of the patentee’s intellectual property. Claim 1 of the ’554 patent recites:

  1. A hybrid cannabis plant, or an asexual clone of said hybrid cannabis plant, or a plant part, tissue, or cell thereof, which produces a female inflorescence, said inflorescence comprising:
  1. a BT/BD genotype;
  2. a terpene profile in which myrcene is not the dominant terpene;
  3. a terpene oil content greater than about 1.0% by weight; and
  4. a CBD content greater than 3%;
  5. wherein the terpene profile is defined as terpinolene, alpha phelladrene, beta ocimene, careen, limonene, gamma terpinene, alpha pinene, alpha terpinene, beta pinene, fenchol, camphene, alpha terpineol, alpha humulene, beta caryophyllene, linalool, cary oxide, and myrcene, and wherein the terpene oil content is determined by the additive content of the terpenes in the terpene profile; and wherein the terpene contents and CBD content are measured by gas chromatography-flame ionization detection (GC-FID) and calculated based on dry weight of the inflorescence; wherein a representative sample of seed producing said plants has been deposited under NCIMB Nos. 42246, 42247, 42248, 42249, 42250, and 42254.

While claim elements define the metes and bounds of the invention, typically only certain claim elements are intended to distinguish the claimed invention from the prior art. Other claim elements merely help to describe the invention. For example, the preamble in the ‘554 patent, or the part of the claim before subpart (a), describes the flowering part of the cannabis plant. This is not intended to describe anything novel about the claimed invention, but rather it simply describes the part of the cannabis plant that is relevant to the invention.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Before the priority date of the ’554 patent, it was known in the prior art that BT/Bgenotypes produce nearly equal amounts of THC and CBD (both are dominant; one is not recessive).5 Thus, it is not unexpected to have a CBD content greater than 3% in a genotype that can produce large amounts of CBD (known references state as high as 21% in CBD-dominant strains and 3%-15% in BT/Bgenotypes).6 Further, it was known in the prior art that terpenes generally constitute more than 1.0% percent by weight (usually between 2-4%) of the flower.7

As these databases continue to grow and studies of cannabis are publicly disclosed, cannabis patents like BI’s ’554 patent will become more and more susceptible to patent challenges and invalidation.Claim element (b), reciting a terpene profile in which myrcene is not the dominant terpene, appears to be one of – if not the only – claimed element of novelty of the BI invention. Terpenes are aromatic compounds produced in plants, and the cannabis plant has more than 100 different terpenes. Claim element (e) simply lists the most abundant terpenes in the cannabis plant. A majority of cannabis strains express high levels of myrcene; however, there are known prior art strains that express high levels of other terpenes, such as caryophyllene, limonene, pinene, etc. Additionally, it is well known in the art that terpenes have different therapeutic effects. For example, pinene and linalool are known to have antidepressant activity.8 Thus, a prior disclosure of a BT/Bgenotype that has a terpene profile where myrcene is not the dominate terpene very likely invalidates this claim. And even assuming there is any novelty to a high-CBD strain where myrcene is not the dominant terpene, there is a motivation to breed for a dominant terpene besides myrcene.

Because cannabis has been and remains a Schedule I drug under the Controlled Substances Act, previously known and used strains generally have not been chemically characterized, studied, researched, and the subject of publications that can be used as prior art for purposes of challenging cannabis patents. But that is changing. For example, the Open Cannabis Project (OCP) attempted to characterize and publish chemical details of cannabis plants. Even though OCP closed as of May 31, 2019, is database is still publicly available. Another example is CANNA, a non-profit initiative of the CANNA Espana Fertilizantes SL company, which carries out studies and conducts research on cannabis and its active compounds.9 In one study,10 CANNA found that some strains have terpene profiles where myrcene is not the dominant terpene, which could be relevant to a novelty-based or obviousness challenge to claim 1 of the ‘554 patent. As these databases continue to grow and studies of cannabis are publicly disclosed, cannabis patents like BI’s ’554 patent will become more and more susceptible to patent challenges and invalidation.


References

  1. See, e.g.,Amanda Chicago Lewis, The Great Pot Monopoly Mystery, GQ (August 23, 2017), https://www.gq.com/story/the-great-pot-monopoly-mystery;  Brian Wroblewski, Utility Patents on Marijuana? Who is BioTech Institute LLC?, The National Marijuana News, https://thenationalmarijuananews.com/utility-patents-marijuana-biotech-institute-llc/; Eric Sandy, Biotech Institute Has Applied for Patents on 8 Individual Cannabis Cultivars, Cannabis Business Times(June 24, 2019), https://www.cannabisbusinesstimes.com/article/biotech-institute-cannabis-patent-applications/.
  2. Nicole Grimm, George Lyons III, and Brett Scott, Biotech Institute’s Growing Patent Portfolio — U.S. Patent No. 9,095,554 and the Path Forward, JD Supra (November 17, 2017), https://www.jdsupra.com/legalnews/biotech-institute-s-growing-patent-17433/.
  3. World Intellectual Property Organization, An overview of patent litigation systems across jurisdictions,World Intellectual Property Indicators 2018, https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_2018-chapter1.pdf.
  4. Brett Schuman et al., Emerging Patent Issues In The Cannabis Industry, Law360(February 20, 2018), https://www.goodwinlaw.com/-/media/files/publications/emerging-patent-issues-in-the-cannabis-industry.pdf.
  5. Chandra, et al. Cannabis sativa L. – Botany and Biotechnology, pages 142-144, Springer, 2017 (citing de Meijer, Genetics163: 225-346 (2003)). See alsoMolecular Breeding (2006) 17:257-268, doi/10.1007/s11032-005-5681-x. 
  6. American Journal of Botany 91(6): 966:975 (2004). doi.org/10.3732/ajb.91.6.966; See e.g., Jikomes, Peak THC: The Limits on THC and CBD Levels for Cannabis Strainshttps://www.leafly.com/news/science-tech/peak-thc-cbd-levels-for-cannabis-strains.
  7. PLoS One. 2017; 12(3): e0173911. doi: 10.1371/journal.pone.0173911.  See also, Fischedick J. T., Hazekamp A., Erkelens T., Choi Y. H., Verpoorte R. (2010). Phytochemistry712058–2073 (2010). 10.1016/j.phytochem.2010.10.001
  8. J Ethnopharmacol. 2012 Sep 28;143(2):673-9. doi: 10.1016/j.jep.2012.07.026. Epub 2012 Jul 31.
  9. Retrieved from https://www.fundacion-canna.es/en/about-us, on August 6, 2019.
  10. Retrieved from https://www.fundacion-canna.es/en/variations-terpene-profiles-different-strains-cannabis-sativa-l, on August 6, 2019.

The Illinois Hemp Industry Is About To Explode

By Aaron G. Biros
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Within two days of announcing the opening of license applications for growing hemp, the Illinois Department of Agriculture received roughly 350 applications. According to the Lincoln Courier, that number has since grown to 575 applications in the past couple weeks. The Illinois Department of Agriculture has already issued 341 licenses for growing and 79 for processing, as of last Friday.

According to Jeff Cox, Chief of the Bureau of Medicinal Plants at the Illinois Department of Agriculture, a lot of this excitement comes from farmers wanting to branch out from the state’s traditional crops, such as corn and soybeans. “Corn and soybean prices have not been the best over the past few years, and so I think they see this as an opportunity to have a different source of income on their farm,” Cox told the Lincoln Courier.

Morgan Booth, spokeswoman for the Illinois Department of Agriculture told the Chicago Tribune that they were expecting this kind of enthusiasm among farmers. “We knew there was a lot of interest in it,” says Booth. “We were very pleasantly surprised.”

Back in late December of 2018, after the Farm Bill was signed into law, the Illinois Department of Agriculture was quick to jump on the hemp train. They announced their intentions to submit plans for a program to the federal Department of Agriculture, opened a 90-day public comment period, and finalized the rules in April. The state’s regulators hoped to expedite the process and have farmers growing hemp by June 1, which appears to be successful. Dozens of hemp farmers throughout the state are anticipating their first crops will be in the soil by the end of the month.

US Patent & Trademark Office Issues Guidance for Trademarking CBD Products

By Aaron G. Biros
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Last week, the United States Patent and Trademark Office (USPTO) published an Examination Guide to provide further clarity for how they assess the legitimacy of trademarks for cannabis products. For the uninitiated, the 2018 Farm Bill, which President Trump signed into law on December 20, 2018, removed hemp-derived cannabidiol (CBD) from the Controlled Substances Act. In order to register a trademark in the United States, the mark must be used in a lawful setting, meaning that the USPTO does not register trademarks for products that violate federal law- even if it is legal under state law.

In their guidance document, the USPTO identifies the distinction between hemp and other cannabis varieties as the basis for either issuing or refusing a trademark registration. This means that in the trademark application, companies need to specify that the cannabis product is derived from hemp, or cannabis with less than 0.3% THC in dry weight.

The USPTO clarifies that applications for trademarks that involve CBD filed before December 20, 2018 will be refused, but if they amend the filing date to after that date, the registration will be examined. Below is a direct quote from their examination guide clarifying this:

For applications filed before December 20, 2018 that identify goods encompassing CBD or other cannabis products, registration will be refused due to the unlawful use or lack of bona fide intent to use in lawful commerce under the CSA. Such applications did not have a valid basis to support registration at the time of filing because the goods violated federal law. However, because of the enactment of the 2018 Farm Bill, the goods are now potentially lawful if they are derived from “hemp” (i.e., contain less than 0.3% THC). Therefore, the examining attorney will provide such applicants the option of amending the filing date and filing basis of the application to overcome the CSA as a ground of refusal.

The USPTO’s Examination Guide explicitly mentions the authority of the FDA to regulate products derived from cannabis, much like the 2018 Farm Bill’s language. There is still some confusion in the cannabis industry surrounding the marketing and sale of hemp products under FDA regulation.

FDAlogoUnder the Federal Food Drug and Cosmetic Act (FDCA), using a drug in a food or dietary supplement that is currently undergoing clinical trials is illegal (as is the case here- see Epidiolex for an example of CBD being used as an active ingredient in an FDA-approved clinical trial). According to the USPTO, this means that “registration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.”

Regarding trademarks for services involving “cannabis and cannabis production,” the USPTO also issued guidance. This section of the Examination Guide pertains to companies applying for a trademark that fall in the category of ancillary services, such as growing supply companies, lighting, nutrients, pest control and packaging, among other service providers. Basically, this section boils down to the same distinction the Farm Bill made between hemp and other varieties of cannabis. An applicant for a trademark needs to make clear their identification of services offered as involving cannabis containing less than 0.3% THC.

For a helpful guide breaking down what this means for cannabis companies pursuing a trademark registration, Christiane Schuman Campbell, partner at Duane Morris LLP, published this client alert about the USPTO’s examination guide.

Top 5 Cybersecurity Threats To The Cannabis Industry

By Lalé Bonner
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Is your cannabis business an attractive target for cyber criminals? With the influx of investment to this market and new businesses opening frequently throughout the United States, the legal cannabis industry is a prime target for cyber criminals.

Never share personal information (login and passwords, social security numbers, payment card information, etc.) over email.Cannabis industry hackers pick their targets by vulnerability, exploiting consumer or patient data to darknet black markets and forums. The impact can be devastating to both the business and their consumers. With new laws on protecting consumer and patient data on the horizon, businesses that do not adequately protect that data, could face stiff fines, in addition to losing the trust of their customers.

So, how do these attacks present themselves? Recent studies implicate employees as the “weakest link” in the cybersecurity chain due to a lack of cybersecurity best practices and training. Implementing safeguards and providing employee training is imperative to the cybersecurity health of your business.

Now, let’s identify the top 5 cybersecurity threats to the cannabis industry and some valuable tips for protecting against these criminal hacks:

PhishingPhishing is a form of cyber-attack, typically disguised as an official email from a trustworthy entity, attempting to dupe the recipient into revealing confidential information or downloading malware. Don’t take the bait! 91 percent of cyber-attacks start as phishing scams, with most of these lures being cast through fraudulent emails.

  • Tips: Do not download attachments from unknown senders!
  • Never share personal information (login and passwords, social security numbers, payment card information, etc.) over email.

Password ManagementPassword complexity is key to protecting against cyber breaches. When it comes to data hacking, 81 percent of breaches are caused by stolen or weak passwords. With a password often being the only barrier between you and a data breach, creating a complex password will dramatically decrease those password-sniffers from obtaining your sensitive information.

  • Tips: Create passwords that are at least 12 characters in length – include letters, numbers and symbols (*$%^!), and never use a default password. This will fend off brute-force attacks.
  • Change passwords every six months to a year, keeping them complicated and protected. For IT Managers, make using a password manager mandatory for all employees. (Pro-tip: LastPass is free).Be cautious with network selection as hackers set up free Wi-Fi networks that appear to be associated with an institution.

Public Wi-FiBeing able to connect in public spaces, while a modern marvel of convenience, leaves us wide open to cyber-attacks. Whether you are in an airport or café, always err on the side of caution.

  • Tips: Be cautious with network selection as hackers set up free Wi-Fi networks that appear to be associated with an institution.
  • Browse in a “private” or “incognito” window to avoid saving information. If you have a VPN, use it. If not, then do not handle any sensitive data.

BYOD: Beware of Bad Apps: Using personal devices for work has become the norm. In fact, approximately 74 percent of businesses have bring-your-own-device (BYOD) policies or plans to adopt in the future.

With these platforms providing greater access to mobile apps, comes greater responsibility on the part of the end user.

  • Tips: Password protect devices that will be used for work (and, any device in general).
  • Only download applications from a trusted, authorized app store. Do not use untrusted play apps.
  • Mobile device protection is recommended for any device being used on a business network.

Whether it is an app from an unauthorized website or a lost/stolen device that was not password protected, cyber criminals do not need much to compromise critical data.Avoid logging into a SaaS application on a public computer or public Wi-Fi network.

SaaS Selectively: Keep Sensitive Data Safe: SaaS (Software As A Service) are cloud-based software solutions and chances are you are using one of these SaaS solutions for work purposes. IT is typically responsible for implementing security controls for SaaS applications, but ultimate responsibility falls on IT and the end user jointly. Here is what you can do to help keep these solutions safe:

  • Tips: Avoid logging into a SaaS application on a public computer or public Wi-Fi network.
  • Never share your SaaS login credentials with unauthorized persons over digital format or in person. Lastly, if you need to step away, always lock your screen during an active session.

While these tips will help keep your consumer/patient data from falling into the wrong hands, always have a plan B- backup plan! Your plan B must incorporate saving important data to a backup drive daily. Most likely, there is already a backup protocol in place for your mission-critical work data; however, for sanity’s sake, back up your BYOD devices as well.

5 Compliance Reporting and Notification Requirements That You May Not Know About

By Anne Conn
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New cannabis businesses must demonstrate proof of compliance to myriad laws and regulations as part of the initial license application process. And once a license is issued, it is easy to prioritize day-to-day business operations over ongoing compliance reporting requirements especially when sales are booming and compliance requirements are multi-layered, vague or obscured in non-cannabis specific programs and regulations.

But seemingly benign neglect of some minor reporting requirements can have major consequences to new and established businesses alike.

This article explores five compliance reporting requirements that cannabis businesses may not know about, and suggests ways to maintain a strong compliance posture across all regulatory agencies.

Pesticide Reporting

All licensed growers are required to prove compliance to state pesticide usage regulations. However, expectations on how and when to provide that proof of compliance vary greatly from state to state.  Furthermore, the responsibility of education and enforcement for pesticide usage in the cannabis industry often falls to non-cannabis specific agencies such as state departments of agriculture or environmental compliance.

For example in California, cultivators must report detailed monthly pesticide use reports via the State’s Agriculture Weights/Measures Division reporting portal, while Washington State regulators simply expect cultivators to keep records locally on site and provide them when requested.

With so many places to look, the best place to start your pesticide reporting requirement search is with your local agriculture department. They should be able to answer your questions and provide you with a list of resources to help you better understand how to comply with state pesticide usage and reporting regulations.

Hazardous Materials Reporting

Like pesticide use and reporting, hazardous waste handling and reporting requirements are complex and vary state to state. In fact, there may even be nuanced variations in handling requirements at the county level. The best approach to ensure compliance with a complicated set of regulations is to start by consulting your local county fire department. They will have the most specific set of rules for hazardous materials handling and reporting and can help you develop a site-specific compliance plan.

Two OSHA reporting requirements

Depending on how your cannabis business is classified, you may be required to keep injury and illness incident records and provide reports to the Occupational Health and Safety Organization (OSHA) for specific time periods.

Contact your business insurance provider’s loss prevention representative for more information about how your business is classified, which specific OSHA reporting requirements apply to you, and how to stay in compliance with applicable OSHA requirements.

Click here to learn more about how OSHA organizes reporting requirements by business type.

A note of caution here: OSHA non-compliance penalties can be steep and “I didn’t know I was supposed to do that” is not an acceptable defense when it comes to explaining any OSHA violations.

Labor Law Notification Requirements

Federal labor law requires that you notify employees of their rights. At a minimum, you post information regarding wages and hours, child labor, unemployment benefits, safety and health/workers’ compensation and discrimination in a conspicuous place where they are easily visible to all employees. Some states requires additional information be posted in a similar manner, so it’s important to be sure that those notices are posted along with the federal requirements.

This is a simple, yet easily overlooked, requirement for all businesses, regardless of industry. Ask your insurance provider for a copy of the notice to print and post right away (if you have not already) for a quick compliance win!

These five reporting and notification requirements may seem tedious, overly complicated and burdensome in the face of day-to-day business operations, but compliance to these requirements not only protects your business and employees, it also enhances the overall reputation of the industry. The good news is that regulatory agencies welcome a proactive approach and are happy to work with cannabis businesses to provide guidance and information for developing compliance plans.

Richard Naiberg
Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 3

By Richard Naiberg
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Richard Naiberg

Editor’s Note: This is the third article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business and Part 2 went into how business owners can protect new technologies and inventions through applying for patents. Part 3, below, delves into plant breeders’ rights and how breeders in Canada could protect new plant varieties.

Plant Breeders’ Rights: Protection For New Plant Varieties

Unlike the Patent Act, Canada’s Plant Breeders’ Rights Act does provide intellectual property protection for whole plants. Plant breeder’s rights are available for new cannabis plants, whether they are the product of genetic engineering or more traditional cross breeding.

The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner.The Plant Breeders’ Rights Act focuses on the material used to propagate a new variety of plant, such as its seeds. The owner of a plant breeder’s right can stop others from selling, producing or reproducing the propagating material, conditioning the propagating material for use, exporting or importing the propagating material, repeatedly using the protected variety to commercially produce another variety, and stocking the propagating material for the purpose of doing any of the above acts. The owner can also assert these same rights to stop another’s activities as they relate to another plant variety that is essentially derived from the protected variety. The owner can also recover for the damages it suffers as a result of any infringement. For cannabis plants, the term of a plant breeder’s rights endures for 20 years from the date of its issuance.

To register a plant-breeder’s right, a breeder provides an application to the Commissioner of Plant Breeders’ Rights Office, which is part of Canadian Food Inspection Agency.

To be registrable, the plant variety must be new, meaning that the propagating material has not been sold in Canada more than 1 year prior to the application (or elsewhere more than 4 years prior to the application); it must be distinguishable from all varieties that are known to exist at date of filing of the application; it must be sufficiently homogeneous, meaning that its relevant characteristics are predictable and commercially acceptable; and it must be stable in its essential characteristics over successive generations. Registration under the Plant Breeders’ Rights Act provides plant breeders’ rights in Canada only. However, Canada is a signatory to a treaty (UPOV) that allows an application originally filed in Canada to provide priority for registration in other member countries, and vice versa.The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.

The applicant must also propose a name (referred to as a “denomination”) for the new variety that is acceptable to the Commissioner. The Plant Breeder’s Rights Act puts limits on what may be chosen as the denomination. Among other things, the denomination cannot refer to characteristics the variety does not have, suggest that it is derived from another variety or bred by a particular breeder when this is not case, or comprise laudatory descriptives that could cause confusion. The denomination cannot be used or registered as a trademark and, once accepted by the Commissioner, must be used by all traders when selling the propagating material, even after the expiry of the plant breeder’s right. Indeed, the Plant Breeders’ Rights Act makes it an offence to misuse or misapply the name. The same denomination will be used for the same variety in all UPOV countries.

The application process can involve some back-and-forth with the Commissioner, as well as the opportunity for others to oppose the registration. The Commissioner also has the power to require the performance of tests on a sample of the propagating material, such as to verify its stated characteristics.

A unique feature of a plant breeder’s right is that it can be enforced even before the Commissioner finishes his or her review against infringers who are given notice of the applicant’s application.

As of this writing, there are three registered denominations of cannabis plants under the Plant Breeders’ Rights Act. Chris Griffin has registered “Big C” – cannabis sativa subsp. indica; and MedReleaf Corp. has registered MR2017001 and MR2017002, both being varieties of cannabis sativa. It is expected that further registrations will follow.

There are some important limitations to the plant breeder’s rights. Farmers who harvest the plant variety on their “holdings” are given a privilege: they can store, produce and reproduce (but cannot sell) the variety on such holdings. The Commissioner also has the power to issue compulsory licenses when a protected variety is not available to the public at reasonable rates. Further, the plant breeder’s right is not infringed when the protected variety is used for non-commercial or experimental purpose.


In Part 4 of the series, Naiberg will discuss trademarks and how cannabis businesses should go about protecting their brand identity in Canada. Stay tuned for more!

Richard Naiberg
Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 2

By Richard Naiberg
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Richard Naiberg

Editor’s Note: This is the second article in a series by Richard Naiberg where he discusses how cannabis businesses can protect their intellectual property in Canada. Part 1 introduced the topic and examined the use of trade secrets in business. Part 2 goes into how business owners can protect new technologies and inventions through applying for patents.


Patents: Protection For New And Inventive Technology

Patents, which are issued in accordance with Canada’s Patent Act, provide their owners with the right to have a Court prevent anyone else in Canada from making, using, selling, importing or exporting what is claimed as the patent’s invention. The owner of the patent enjoys this monopoly for a period of 20 years from the date the patent is applied for. A patent is infringed even if the infringer arrives at the invention independently, without actual copying. If a patent owner brings a lawsuit and the Court finds infringement, the Court will typically order the infringing activity to cease and require the infringer to pay the owner a suitable amount of compensation.

There are several drawbacks to applying for a patent from the point of view of the applicant.Patents are meant to protect only inventions, meaning novel, non-obvious and useful solutions to practical problems. In the cannabis field, such inventions could include engineered genetic sequences or new plant cells that lead to useful improvements in the whole plant, new cultivation processes, new methods of extraction, new methods of storage or means to enhance stability, new formulations for administration, and new uses for the plant. It would not be uncommon for a cannabis producer to hold a suite of different patents that cover a whole range of innovative technologies and innovative business methods.

Not all classes of technical innovations are protectable by patent. For example, patents are not available for a whole cannabis plant because no patents are allowed on higher, multicellular organisms. Patents are not issued for genetic sequences or cells that are the result of cross breeding. Patents are also unavailable to monopolize methods of using cannabis as a medical treatment. That said, patent agents are skilled at casting innovations in areas such as these in terms that do provide some patent rights.

To obtain a patent, the applicant hires a patent agent to prepare and submit an application to the Canadian Intellectual Property Office (CIPO). An examiner at CIPO reviews the application for compliance with the statutory requirements and enters into a correspondence with the applicant’s patent agent in a process known as a patent prosecution. Third parties also have the opportunity to oppose the grant of a patent on limited grounds. The prosecution may continue for a period of years before the application is either allowed to issue to patent, or is ultimately rejected. Separate patent applications must be filed in every country in which patent rights are sought, though there are international treaties that facilitate these separate filings and preserve early priority filing dates.there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.

It is important to emphasize that if an invention had been disclosed to the public more than one year before the application for the patent is filed, a patent cannot issue. Cannabis producers must therefore ensure that disclosures of their innovative work be controlled, including when working with partners. This can typically be handled with the use of appropriate non-disclosure agreements.

The prospect of market exclusivity makes the filing of patent applications a must for cannabis businesses, including those just starting out. For a start-up, simply filing a patent application projects that the company has value and a clear vision of its business. Venture capital often seeks companies with patent applications on file because the applications can mature into assets which can be monetized either by protecting a market for the owner, or through assignment or license to others.

cannabis researchers and producers have already filed hundreds of patent applications in Canada. There are several drawbacks to applying for a patent from the point of view of the applicant. Unlike the case for a trade secret, an applicant for a patent must make full and correct disclosure of the invention and how to use it in the patent itself. This disclosure will allow competitors to understand the applicant’s technology. The public disclosure provides a blueprint for competitors to build upon the patent’s disclosure, and to design around it to avoid infringement. Also, and unlike trade secrets, patents have an expiry date after which the public is free to practice the invention. The Commissioner also has the power to issue compulsory licenses to third parties in several circumstances, including when the demand for the patented article is not being met on reasonable terms. Further, the patent right is not infringed when the patented invention is used for non-commercial or experimental purpose. Finally, there can be a significant cost in obtaining patents, particularly if patent rights are sought in multiple countries.

Disadvantages or not, cannabis researchers and producers have already filed hundreds of patent applications in Canada. These applications relate to a wide range of inventions in the cannabis field including new cannabis resins and oils, methods of producing cannabis having improved properties, specific new growing processes, new harvesting methods, new extraction techniques, new formulations for human and veterinary use as foods, medicines and supplements, new delivery devices, new purification methods, new analytical methods, and new stabilization methods. Interested companies can access these disclosures from the public record.

As cannabis companies rush to obtain patent monopolies for their technologies, minefields are created for operating companies. Cannabis producers should obtain reports on what patent applications exist and might be asserted against their operations if and when these applications mature to issuance. With that intelligence in hand, the cannabis producer can understand what threats can be safely ignored and what patents must be addressed by assignment or license, by ‘design around’ or by developing an argument as to why the patent is invalid and thus unenforceable.


Editor’s Note: In Part 3 of this series, which will be published next week, Naiberg will discuss plant breeders’ rights and protecting new plant varieties. Stay tuned for more!