Tag Archives: intellectual property

February 8, 2021

Hardware Platforms in Cannabis: A Q&A with Mike McDonald, President and CEO of Ammonite

By Aaron Green

More and more we are seeing the development of proprietary hardware platforms in cannabis. With proprietary technology in hand, manufacturers often lean on MSOs, LPs and other brand partners to grow their business through existing sales channels.

We spoke with Mike McDonald, President and CEO at Ammonite, to learn more about the history of the Dablicator™ platform and Ammonite’s North American brand partner strategy. Mike formed Ammonite as a spin-off company from Jetty Extracts after getting to know the founders in a real estate transaction. Prior to Ammonite, Mike was an operator in the manufacturing and product development space, having helped to launch the Giant bicycle brand as well as growing and eventually selling the Atlas Snowshoe Company to K2 Sports.

Aaron: How did you get involved in cannabis?

Mike: Well, like a lot of folks in the industry, my background is pretty eclectic. I come primarily from an operator’s perspective – I’ve been in manufacturing, product development and company growth for my whole career. I lived in Taiwan for several years and helped to launch the Giant bicycle brand worldwide. I was also involved with a ski business that was started at Stanford as a thesis project called Atlas Snowshoe Company. Fast-forward, we built it into the largest snowshoe brand and activity in the US and later sold it to K2 Sports. So, I’ve always been involved in the growth of product-related businesses.

I’ve also done some real estate development as well; I actually sold our building to the Jetty guys, which is how we met. In that process, I got involved with their company, helped Jetty reorganize its business model, raise some money, and then just got addicted to the whole industry and really found it fascinating. I liked the team at Jetty and couldn’t resist jumping in, and now I’ve been full-time in the business for over three years.

Aaron: How did you get involved in Ammonite?

Mike: Ammonite is actually a spin out company from Jetty Extracts, which is one of the largest brands in California. Our main Ammonite product is called the Dablicator™ Oil Applicator, which was originally invented at Jetty as a medical device for cancer patients. We saw a big demand for it as a private label partnership product, so we decided to spin out a separate hardware company and really focus on developing unique IP and CBD and cannabis related hardware.

Aaron: What trends are you following in the industry?

Mike: Certainly the MSOs of the world are really expanding and the top three to five are making a mark with growth and more sophistication in the market. I think the social equity movement is really a big component that we’re all excited about in the industry. You’re seeing the larger players really put their money where their mouth is around that. We’ve always been a big part of that in California.

Specifically, regarding trends in the cannabis space, Colorado and California are probably the two most mature markets. We generally say what’s happening in California and Colorado eventually make their way out to the rest of the world. Vaping was invented in California and Colorado, and now it’s a huge part of the business where before, four or five years ago, the market was mostly flower-centric.

There’s a trend away from inhalables, with more awareness around lung-related illnesses and of course COVID, so we’re seeing a big growth in edibles, drinks and so forth. Interestingly enough, although it’s an inhalable, infused pre-rolls are a big growth sector as well. Jetty is actually launching an infused pre-roll program in February.

Folks are looking for ways to get their medicine without smoking – and this has definitely led to a growth in the oil application business. Oil application has traditionally been delivered via a syringe. Dablicator™ oil applicator is essentially an improved, more convenient syringe. On the medical side, patients have been taking oil sublingually, putting it in food and drink and so forth for years because a lot of them can’t smoke. As that trend transfers over to the adult use market, oil application is becoming really big. You can take it sublingually; you can put it in your food or beverage. On the recreational side, you can add it to your loose flower or joints, or of course, dab it directly onto your rig via the heat resistant tip.

Further, you’re probably familiar with a lot of these portable dab rigs that are taking off, like the G Pen Roam and the Puffco Peak and a variety of others. So now you can dab on the go with your standard wax and shatter in a jar. It’s just not the most convenient way if you’re up on a hike or on a mountain bike ride. So now, with a portable dab rig and something like the Dablicator™ oil applicator, you can have a really convenient mess-free way to enjoy cannabis. The big growth in concentrates and areas that aren’t necessarily inhalables is where our product hardware really fits in.

Aaron: How did you come up with the idea for the Dablicator?

Mike: The Jetty team had a friend that had brain cancer. He was doing a lot of chemotherapy and was having trouble eating and keeping weight on and he couldn’t smoke. So, the guys at Jetty began to bring him cannabis oil, which he was able to use ingesting it from a spoon initially and it really helped him with his pain, his anxiety and his appetite. In that process, we realized that there wasn’t really a great way to deliver oil. Syringes were there, but they were kind of sketchy and they weren’t convenient.

So, the Jetty team developed a better mousetrap. Several iterations later, this Dablicator™ product was ready for patients. In fact, it became a big part of the Jetty Shelter Project, a non-profit where the team delivers cannabis to cancer patients, and it was a very much sought-after product delivery device in that world. So, it was developed inside of a need on the medical side and it’s really sort of grown inside the expansion on the adult-use side.

Aaron: Can you explain how the Dablicator™ oil applicator works from a perspective of form and function?

Mike: Pre-Dablicator™ you would use a syringe type product – for direct oil application, sublingual application, or as an add on to your flower. The difference between Dablicator™ oil applicator and a traditional syringe is that Dablicator™ is a twist and plunge product. Imagine a pen filled with oil, but instead of inhaling it, you’re able to dispense it through a tip that is heat resistant, which means you can apply directly to your dab rig nail. You’re able to put it in your pocket without fear of cannabis oil leakage. It’s discreet, precise, compact and portable.

Aaron: How does the user dose using Dablicator™ oil applicator?

Mike: Basically, there’s measurements on the plunger of 55 milligrams apiece – one click is 55 milligrams, and you can dispense as many clicks as you like. What’s cool about the product itself is if you’ve clicked too many times accidentally, you can back it off and the excess oil won’t dispense. You can go to dablicator.com and see demo videos as well.

Aaron: Dablicator™ oil applicator started as a Jetty Extracts spin-off. I see you are now white labeling for other oil brands. How do you go about selecting your partners?

Mike: We call it our brand partner program. It’s not too dissimilar to what other hardware manufacturers, like PAX and GPen, are doing. We’ve got a patented and innovative device where our brand partners, MSOs and leading brands throughout the US and Canada, can take their existing vape and tincture oils and offer them in Dablicator™ oil applicator hardware.

Our focus is signing up major, well respected brands and MSOs on to the “platform,” meaning they are able to immediately offer between six and ten new SKUs to their consumers. They take their existing oils, put them into a custom branded Dablicator™ hardware unit and add their custom branded packaging. It’s a full turnkey solution. For example, one of our partners, 710 Labs, is developing their RSO and were shopping for a delivery method specifically geared towards medical patients. Within eight weeks, we had a custom program for them and delivered hardware, and we assisted on the packaging front as well.

Our partners have to be reputable folks that are interested in developing or delivering oil in a unique and innovative way. Frankly, our early partners are those that see where the growth is. 710 Labs is on the platform, as well as Surterra in Florida, Ancient Roots in Ohio, and we’ve got multiple conversations going to some of the other MOSs and the LPs in Canada.

Aaron: Are the brand partners loading the oil applicator themselves?

Mike: We customize the product for them and then ship them unassembled and empty. In their lab, they use the same machinery and equipment they use to fill their vape cartridges. They then fill their Dablicator™, assemble it, package it and ship it out just like any other product that they’re processing and manufacturing.

Aaron: What kind of oils are suitable for Dablicator™?

Mike: Pretty much any oil that’s going into a vape cart is suitable and then some. Some of our customers, including Jetty, started out with a THC distillate. Live resin is becoming a big product category in California as well as solventless oils. Dablicator™ oil applicator can accommodate everything from distillate to live resin to solventless to RSO and even full spectrum CBD. If it can flow, if it doesn’t crystallize up like shatter and sugars and diamonds, you can put it into Dablicator™, even the thickest of oils. It’s designed to contain any kind of liquids that are flammable.

Aaron: What geographies are you currently in?

Mike: We’re in multiple states throughout the US and actually just signed up with an LP in Canada. We only launched the program in August of 2020, and today we’ve got partners California, Colorado, Ohio, Arizona, Missouri, Florida, soon to be Michigan, Illinois, and throughout Canada.

Aaron: Any plans for international expansion beyond North America?

Mike: We’re getting inquiries on a regular basis from all over the place, including internationally. We’re in conversations with some folks down in Brazil. Spain is actually a big cannabis market and we’re having some conversations with some folks there. The inquiries are coming in faster than we can process the relationships, but right now our major focus is on North America.

Aaron: What are your goals with Ammonite?

Mike: We are developing a category, right? So today, oil dispensing isn’t top of mind. Today, if you want oil, you go into a dispensary and say, “Hey, give me those syringes.” My goal is that a year from now, you can walk into Harborside in Oakland and you see a wall of different branded Dablicator™ oil applicators. The goal is to really turn the oil dispensing business into a category, and then position Dablicator™ oil applicator as the best and leading product in that category.

Aaron: What are you personally interested in learning more about?

Mike: Well, I’ve got two teenagers – two daughters, as a matter of fact, a freshman and a senior – and they’re being homeschooled right now. So that’s been quite an interesting development!

I think on the cannabis side, it’s just fascinating what it is as a business model. It’s the most recent multi-billion-dollar opportunity in consumer products. You only get a chance to participate in something like that maybe once in a lifetime. I’m really looking forward to seeing it become more adopted into the mainstream and it’s already becoming that way from a consumer perspective. I am watching the cannabis market become legal from a federal perspective, hoping that the social equity component of the industry really stays with it.

I’ve been in a lot of businesses over the years; I feel like one of the gray hairs in this business that is actually an operator versus someone who came over from the financial side. I am continuing to learn, grow and work with great people and this has been a really amazing experience for me.

Aaron: Okay, great. Mike, that’s the end of the interview. Thank you for your time today!

August 22, 2019

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:

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:

a BT/BD genotype;
a terpene profile in which myrcene is not the dominant terpene;
a terpene oil content greater than about 1.0% by weight; and
a CBD content greater than 3%;
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 B_T/B_Dgenotypes 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 B_T/B_Dgenotypes).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 B_T/B_Dgenotype 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

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/.
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/.
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.
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.
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.
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 Strains, https://www.leafly.com/news/science-tech/peak-thc-cbd-levels-for-cannabis-strains.
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
J Ethnopharmacol. 2012 Sep 28;143(2):673-9. doi: 10.1016/j.jep.2012.07.026. Epub 2012 Jul 31.
Retrieved from https://www.fundacion-canna.es/en/about-us, on August 6, 2019.
Retrieved from https://www.fundacion-canna.es/en/variations-terpene-profiles-different-strains-cannabis-sativa-l, on August 6, 2019.

June 27, 2019

Hemp: A Growing Market Ripe for Protection

By David Holt, Whitt Steineker

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With recent changes in federal and state law, and growing consumer awareness, the long-dormant hemp industry may finally be able to take heed of George Washington’s advice, “Make the most you can of [India Hemp] … The Hemp may be sown anywhere.”¹

Hemp has a long and varied history in the United States. Throughout his lifetime, George Washington cultivated hemp at his Mount Vernon Estate, and, for a time, Washington even considered replacing tobacco with hemp as the Estate’s primary cash crop.² Like Washington, Thomas Jefferson grew hemp at Monticello and his lesser-known Poplar Forest plantation.³ Both Founding Fathers primarily used the hemp cultivated on their property for making household items like clothing, rope, and fishing nets.

From the colonial era until 1970, hemp was routinely cultivated across the United States for industrial use. But, with the passage of the Controlled Substances Act (“CSA”) in 1970, U.S. hemp production ceased.⁴ The CSA banned cannabis of any kind, eliminating any distinction between hemp and other types of cannabis. As a result, hemp production became illegal in the United States.

A wide variety of hemp products can be found throughout the Untied States markets. Image courtesy of Direct Cannabis Network

More recently, the U.S. government finally began to ease restrictions on hemp cultivation and production. The 2014 Farm Bill introduced the USDA Hemp Production Program.⁵ Under the Program, universities and state departments of agriculture are allowed to cultivate hemp if:

The industrial hemp is grown or cultivated for purposes of research conducted under an agricultural pilot program or other agricultural or academic research; and
The growing or cultivating of industrial hemp is allowed under the laws of the state in which such institution of higher education or state department of agriculture is located and such research occurs.

The 2014 Farm Bill did not remove hemp from the auspices of the CSA, nor did it address the continuing application of federal drug control statutes to the growth, cultivation, manufacture, and distribution of hemp products.

The 2018 Farm Bill built upon the deregulation that began in 2014.⁶ Although both the 2014 and 2018 bills define hemp as the plant Cannabis sativa L. and any part of that plant that has a delta-9 THC concentration of 0.3% or less by dry weight,⁷ the 2018 Farm Bill took the additional step of removing hemp from the federal list of controlled substances and categorized it as an agricultural product. As a result, the production of hemp is now subject to USDA licensure and regulation. However, until the USDA completes its rulemaking process for implementing hemp regulation, hemp production remains illegal unless done in compliance with the terms of the earlier 2014 bill.⁸ For the time being, legal cultivation of hemp still must occur in a state that has authorized hemp research⁹ and the researcher must be either an institute of higher education or a state department of agriculture (or its designee).

With the increasingly favorable changes to federal and state law allowing for the expanded cultivation and production of hemp in the United States, the market is expected to grow significantly in the coming years. In 2014, the U.S. industrial hemp market was estimated at approximately $504 million.¹⁰ In only one year after the passage of the 2014 Farm Bill, the industrial hemp market was estimated to have increased by over $95 million to almost $600 million. By 2017, the worldwide market for industrial hemp was estimated to be $3.9 billion and growing at a compound annual growth rate (CAGR) of 14%.

In addition to favorable changes in U.S. law, the hemp market is benefiting from growing consumer awareness and demand for hemp-based food products.¹¹ High in omega-3 and omega-6, amino acids and protein, hemp is growing in popularity as a cooking oil, dairy substitute, flour source and bakery ingredient. Among other things, hemp is considered by some to provide positive health effects for those seeking help with insulin balance, cardiac function, mood stability, and skin and joint health.

Although hemp cultivation is now allowed in the U.S.—at least for research purposes—and the market is forecasted to rise steadily under growing demand for hemp-based products, broad access to viable, legal seeds continues to present a challenge for researchers and commercial growers. In order to legally implement authorized cultivation programs and take economic advantage of a swiftly growing market, farmers must have access to seeds that can be guaranteed to consistently produce plants that fall under the legal definition of hemp. In an attempt to alleviate the problem, several states, including California, Indiana, Maine and Oregon, have implemented programs to license or certify compliant seed distributors and producers.

The importance of hemp seed availability and development has also been recognized on the federal level. On April 24, 2019, the USDA Agricultural Marketing Service published a Notice to Trade announcing that the USDA’s Plant Variety Protection Office (“PVPO”) is now accepting applications of seed-propagated hemp for protection under the Plant Variety Protection Act (“PVPA”). Among other things, the PVPA provides intellectual property protection to breeders who have developed new varieties of seed-propagated plants. Under the new guidance, breeders of new hemp varieties can now secure protection pursuant to the PVPA. Those holding a certificate of protection from the PVPO can exclude others from marketing or selling a registered hemp variety and manage how other breeders and growers use their protected variety.

The process for requesting protection under the PVPA is fairly straightforward. Breeders, or their attorneys, must complete all application forms, pay the required fees,¹² submit a distinct plant variety name, and provide a deposit of at least 3,000 viable and untreated seeds of the variety (or 3,000 seeds of each parent variety for a hybrid). One required form for a completed PVPA application is the Objective Description of Variety form.¹³ This form provides a series of questions that identify the distinct aspects of the variety in question, including, among other things, plant and leaf characteristics, seed properties and anticipated uses. Upon receipt of the completed application and fees, the PVPO examines the application to determine whether the listed plant variety is new, distinct, uniform, and stable. If the PVPO determines that the requirements are satisfied, it will issue a certificate of protection granting the owner exclusive rights to the registered variety for a period of 20 years.Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.

Although hemp has traditionally been used in the textile and fiber industries, the estimated 17.1% CAGR in the hemp seed segment is being driven by the increase in demand for hemp oil, seedcakes, and other food and nutraceutical products. These products are primarily derived from the hemp seed as opposed to its fibers. Presently, hemp seeds contain approximately 30-35% oil, of which approximately 80% is essential fatty acids, and 25% crude protein.¹⁴ Under the new PVPA guidelines, if a breeder is able to cultivate a sustainable plant that increases the plant’s production of the desirable compounds, he or she could achieve a significant position in the growing market.

The protection provided by the newly expanded PVPA builds upon other avenues of intellectual property protection now available to hemp breeders and growers. In addition to the PVPA, plants meeting certain criteria may also be protectable under a plant patent or a utility patent, both of which are administered by the U.S. Patent and Trademark office. Generally speaking, PVPA protection may be available for seeds and tubers, plant patent protection applies to asexually propagated plants, and utility patent protection may be available for genes, traits, methods, plant parts and varieties.¹⁵

With a market that is expected to grow substantially in the near future, and with the passing of increasingly friendly federal and state legislation, the hemp industry is on the cusp of significant expansion. Now is the time for farmers, researchers, and hobbyists alike to take advantage of the expanded opportunities available for protecting intellectual property for proprietary hemp varieties.

George Washington to William Pearce, 24 February 1794.
George Washington and Agriculture, https://www.mountvernon.org/library/digitalhistory/digital-encyclopedia/article/george-washington-and-agriculture, last visited May 14, 2019.
Hemp, Thomas Jefferson Encyclopedia, https://www.monticello.org/site/research-and-collections/hemp, last visited May 14, 2019.
Controlled Substances Act, Pub.L. 91-513, 84 Stat. 1236.
Agricultural Act of 2014, Pub.L. 113-79.
Agriculture Improvement Act of 2018, Pub.L. 115-334.
Any plant having a THC content in excess of 0.3% is considered marijuana and remains illegal as a controlled substance under the CSA.
See, e.g., https://www.ams.usda.gov/rules-regulations/farmbill-hemp.
To date, at least 41 states have passed legislation authorizing hemp cultivation and production programs consistent with federal law. As of the date of this article, those states that have not enacted legislation allowing the cultivation of hemp for commercial, research, or pilot purposes include: Connecticut, Georgia, Idaho, Iowa, Louisiana, Mississippi, Ohio, South Dakota, Texas, and the District of Columbia.
Industrial Hemp Market – Market Estimates and Forecasts to 2025, Grand View Research, https://www.grandviewresearch.com/industry-analysis/industrial-hemp-market, last visited May 14, 2019.
Currently, the Food and Drug Administration prohibits hemp-based CBD in food and beverages. However, the FDA has set a public hearing to discussing the legalization of CBD in food and beverages for May 31, 2019.
The PVPA application fee is currently $4,382 with an additional fee of $768 due upon issuance of a certificate of registration.
The Objective Description of Variety form for Hemp (Cannabis sativa L.) can be found at https://www.ams.usda.gov/sites/default/files/media/113HempST470.pdf.
Hemp Seed (Cannabis sativa L.) Proteins: Composition, Structure, Enzymatic Modification, and Functional or Bioactive Properties,Sustainable Protein Sources (Ch. 7), R.E. Aluko (2017).
Regulations are currently under consideration that could expand or otherwise modify the scope of protection available under each of the enumerated intellectual property protection schemes. Consult a licensed attorney for questions regarding the specific program that may apply to a particular set of circumstances.

November 7, 2018

Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 6

By Richard Naiberg

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Editor’s Note: This is the sixth and final 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 raised the issue of plant breeders’ rights and Part 4 discussed trademarks and protecting brand identity. Part 5 took a detailed look at copyright laws for cannabis companies and how they can protect works of creative expression.

In Part 6, the conclusion of this series, we take a look at nine key takeaways from the series:We hope you enjoyed this series and found the information provided to be useful. If you’d like to learn more about intellectual property law in Canada as it relates to the cannabis industry, feel free to reach out to Richard Naiberg at rnaiberg@goodmans.ca

Summary of Practical Considerations For Cannabis Producers

Cannabis producers should establish procedures by which the technological innovations achieved by their employees are kept confidential and are quickly reported to management for consideration as to whether the innovation should be protected as a trade secret, by patent, by plant breeder’s right or not protected at all.
If a trade secret protection is desired, the producer must invoke systems that limit knowledge of the secrets to those in the company with a need to know it, and make sure that departing employees understand their obligations of confidentiality and do not take any documentation of the secrets with them when they go.
The nature of the innovation under consideration will drive the choice between a patent and a plant breeder’s right. Plant breeder’s rights only protect whole plants. Patents protect other innovations, subject to the limitations described above. Patents may be drafted to protect whole plants, albeit indirectly: a patent on genetic sequences or engineered cell can be infringed by a whole plant that incorporates those sequences or cells.
The decision as to whether to file an application for a patent or a plant breeder’s right, and in what jurisdiction(s), should be made with careful consideration of whether the producer will employ the invention/variety in its business (and in what countries), as well as the potential value of the invention/variety to other producers who may eventually become licensees of the resulting patent(s) or plant breeder’s right.
Cannabis producers must remain up-to-date on patent and plant breeder’s rights applications that are filed in the jurisdictions in which they operate so as to be in a position to identify patents and plant breeder’s rights that will potentially affect their freedom to operate. Such due diligence will also allow the producer to predict the technological and business focuses of their competitors.
Cannabis producers must select a trademark that is immediately distinctive or can quickly become distinctive of its goods and services. The trademarks ought to be fully available, in the sense that they are not in use by any competing business in any of the jurisdictions in which the producer intends to do business. Ideally, the trademark ought to be available as a domain name to ensure that there is no confusion on the Internet.
Once the trademark is selected, the cannabis producer should make consistent and extensive use of that trademark. The more consistent and ubiquitous the use, the stronger the producer’s brand and trademark will be.
The owner of the trademark must routinely conduct searches to ensure that no third party is using a trademark that is similar that of the owner. If such unauthorized use is discovered, the owner must act quickly to restrain that use or potentially license the use.
Cannabis producers ought to contract to ensure that they are the first owners or assignees of any copyright subsisting in the artwork, literature and websites the company creates or hires other to create. Producers ought also to obtain waivers of the moral rights of any authors of this work.

We hope you enjoyed this series and found the information provided to be useful. If you’d like to learn more about intellectual property law in Canada as it relates to the cannabis industry, feel free to reach out to Richard Naiberg at rnaiberg@goodmans.ca

October 31, 2018

Quality From Canada

Protecting Intellectual Property in Canada: A Practical Guide, Part 5

By Richard Naiberg

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Editor’s Note: This is the fifth 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 raised the issue of plant breeders’ rights and Part 4 discussed trademarks and protecting brand identity. Part 5, below, will detail copyright laws for cannabis companies and how they can protect works of creative expression.

Copyright: Protection for Works of Creative Expression

In the course of describing and marketing its products, the cannabis producer will prepare or have prepared any number of articles, instructions, write-ups, photographs, videos, drawings, web site designs, packaging, labeling and the like. Copyright protects all such literary and artistic works from being copied by another.

Copyright arises upon the creation of the work, although one can register the copyright under the Copyright Act for a minimal cost.Canada’s Copyright Act provides that the owner of copyright has the exclusive right to make copies of copyrighted work for the lifetime of its author, and for fifty years thereafter. The Court will enforce this copyright, stopping infringements and ordering infringers to compensate the owner in damages, accountings of profits and delivery up of infringing material for destruction. Intentional copying or renting out of a copyrighted work is also an offence that can attract imprisonment. The owner of a copyright can also request the seizure of infringing articles being imported or exported in Canada.

Copyright arises upon the creation of the work, although one can register the copyright under the Copyright Act for a minimal cost. Registration creates a presumption that copyright subsists in the work and that the registrant is the owner, presumptions that can simplify copyright proceedings. In litigation, the fact of registration also removes the ability of a defendant to argue that it did not have notice of the copyright, a factor relevant to the Court in awarding a remedy.Copyright protects all such literary and artistic works from being copied by another.

There are two aspects of copyright law that tend to cause confusion. The first involves the distinction between the right to use a copyrighted article and the copyright itself. To illustrate, consider the sale of a literary work, such as a book. The purchaser acquires the physical book but not the copyright. The purchaser can use the physical book and can sell that book to another. What the purchaser may not do is make and sell another copy of the book. Making copies is the exclusive right of the copyright holder.

The second involves the ownership of a commissioned work. The first owner of a copyright is either the author of the work or the employer of the author if the author creates the work in the course of his or her employment. Ownership of copyright can only be transferred by written assignment. Further, the author of a work is granted moral rights in the work, meaning the right to be associated with the work and the right to its integrity. These rights can be waived by the author but not assigned.

Ownership of copyright can only be transferred by written assignment.Therefore, if a company hires a third party supplier to prepare copyrightable work, such as brochures, artwork or web sites, and does not secure an assignment of the copyright and wavier of the author’s moral rights as part of the transaction, that supplier will own the copyright in the resulting work and the author of that work will have the right to insist on his or her moral rights. The hiring company will not have the right to make or authorize others to make copies of the work, to amend the work, to derive new works from what was delivered, or to use the work without reference to the name of the author or in a way so as to offend the author’s integrity. The supplier will also be free to sell the same brochures, artwork or web sites to other companies, or to derive other works from it. All of this is so even though the hiring company paid for the work to be done. This result is often surprising and disappointing to hiring companies.

Accordingly, cannabis producers contracting with the third parties for literature, photographs, web sites and the like will need to think about how they want to use the work in the future. It is simplest if the producer contracts to have the owner assign the copyright in the work to the producer upon creation, and deliver the author’s waiver of moral rights. While the third party will likely charge more for an assignment of the copyright and the waiver of moral rights, it may be worth avoiding negotiations over specific uses and how the author is to be credited, as well as avoiding the uncertainty inherent in trying to imagine how the producer will use the material in the future.

In the 6^thand final part, Naiberg will summarize the key takeaways from his series that cannabis companies can use to protect their intellectual property in Canada.

October 15, 2018

Quality From Canada

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

By Richard Naiberg

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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!

October 9, 2018

Quality From Canada

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

By Richard Naiberg

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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!

October 3, 2018

Quality From Canada

Protecting Intellectual Property In Canada: A Practical Guide, Part 1

By Richard Naiberg

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Cannabis producers are making large investments in new technologies to improve their plant varieties, production know-how and product formulations. At the same time, producers are working hard to create and promote more compelling, top-of-mind brand identities for their improved products. The series concludes with a 9-point outline of specific steps cannabis producers need to consider taking to protect their key intellectual property assets.

The value of these investments cannot be realized if competitors are allowed to copy and exploit the producer’s successes. Canada’s intellectual property laws can and should be used to protect cannabis producers from such predation. Invoking Canada’s laws to this end is not difficult and does not have to be expensive. It does, however, require specific, deliberate and early action.

This series of articles outlines the principal means of protecting intellectual property rights in the core technologies and marketing programs of cannabis companies. The series also highlights what any cannabis company must do to ensure that its own activities do not run afoul of another’s rights. No company wants to begin a new venture only to face a lawsuit for intellectual property infringement.

The series concludes with a 9-point outline of specific steps cannabis producers need to consider taking to protect their key intellectual property assets.

Trade Secrets: Protection For Confidential Know How

A trade secret is specific, commercially valuable information and know-how that is kept confidential within the company and cannot generally be reversed-engineered by outsiders. A trade secret provides protection over any type of information or know-how and is not subject to any expiry date. Trade secret protection is lost only when the information or know-how becomes available to the public.

As a best practice, defining the trade secret in a confidential document can be useful as a way of restricting access to the secretCannabis producers generate all kinds of valuable know-how that cannot be appreciated simply from an inspection of the vended product. Examples would include methods of crossbreeding, cultivation, harvesting, extraction and processing. Customer lists and other internal business structures and information may also qualify as trade secrets.

There are no statutory pre-conditions that must be met to obtain a trade secret. A trade secret is acquired simply upon the generation of valuable information or know-how that is kept confidential. As a best practice, defining the trade secret in a confidential document can be useful as a way of restricting access to the secret, and as evidence in proceedings as to the scope of the trade secret (an issue that is frequently in dispute in such cases).

For the trade secret to be maintained, the producer will need to take steps to ensure that access to the know-how and associated documents is restricted only to those who need to know the secret for purposes of carrying out their functions at the company. All personnel with access to the trade secret will need to be bound to confidence by employment agreement and/or by separate contract. When employees leave, they ought to be reminded of their obligations of confidentiality and must be prohibited from removing any documentation regarding the trade secret from the company. All outside companies who need access to the secret must sign non-disclosure agreements. It is typical for owners of trade secrets to be vigilant in their market surveillance and to engage private investigators when they suspect a trade secret has been stolen.

A trade secret’s very confidentiality provides its principal value. A competitor cannot copy what it has no ability to discern. However, when someone with access to the secret ‘goes rogue’, such as by using the know-how for his or her own account or for that of a new employer, the owner of the trade secret must act quickly and bring the matter before the Court. The Court has a broad discretion to stop the rogue and any persons or companies who learn the secret from the rogue from further dissemination or exploitation of the trade secret. The Court also has a broad discretion to craft an appropriate remedy to compensate the trade-secret owner for the wrong. If the action is brought before the trade secret is broadly disseminated, the trade secret may be reinstated and enforceable in the future. If the owner of the secret acts too slowly and the dissemination of the trade secret becomes too broad, the trade secret may be lost forever.

Adopting the use of trade secrets to protect know-how in the cannabis business does suffer from the fragility of the right itself. One disclosure, however inadvertent, can destroy the protection. In addition, a trade secret will not protect a company from a competitor who independently derives the know-how. Further, theft of the trade secret can be difficult to spot because, by its nature, the trade secret is exploited within the walls of the competitor company and is not evident in the marketed product. The owner of the secret will need to watch its competitors for telltale shifts in business direction and product offerings, particularly when those competitors hire the ex-employees of the owner of the trade secret. It is typical for owners of trade secrets to be vigilant in their market surveillance and to engage private investigators when they suspect a trade secret has been stolen.

Editor’s Note: In part 2 of this series, which will be published next week, Richard Naiberg will take a closer look at patents and how business can protect new and inventive technology in Canada’s cannabis industry. Stay tuned for more!

March 7, 2018

Turning the Oregon Outdoor Market into a Research Opportunity

By Dr. Zacariah Hildenbrand, Dr. Kevin A. Schug

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Much has been made about the plummeting market value of cannabis grown outdoors in Oregon. This certainly isn’t a reflection of the product quality within the marketplace, but more closely attributable to the oversaturation of producers in this space. This phenomenon has similarities to that of ‘Tulip Mania’ within the Dutch Golden Age, whereby tulip bulbs were highly coveted assets one day, and almost worthless the next. During times like these, it is very easy for industry professionals to become disheartened; however, from a scientific perspective, this current era in Oregon represents a tremendous opportunity for discovery and fundamental research.

Dr. Zacariah Hildenbrand, chief technical officer at Inform Environmental.

As we have mentioned in previous presentations and commentaries, our research group is interested in exploring the breadth of chemical constituents expressed in cannabis to discover novel molecules, to ultimately develop targeted therapies for a wide range of illnesses. Intrinsically, this research has significant societal implications, in addition to the potential financial benefits that can result from scientific discovery and the development of intellectual property. While conducting our experiments out of Arlington, Texas, where the study of cannabis is highly restricted, we have resorted to the closet genetic relative of cannabis, hops (Humulus lupulus), as a surrogate model of many of our experiments (Leghissa et al., 2018a). In doing so, we have developed a number of unique methods for the characterization of various cannabinoids and their metabolites (Leghissa et al., 2018b; Leghissa et al., 2018c). These experiments have been interesting and insightful; however, they pale in comparison to the research that could be done if we had unimpeded access to diverse strains of cannabis, as are present in Oregon. For example, gas chromatography-vacuum ultraviolet spectroscopy (GC-VUV) is a relatively new tool that has recently been proven to be an analytical powerhouse for the differentiation of various classes of terpene molecules (Qiu et al., 2017). In Arlington, TX, we have three such GC-VUV instruments at our disposal, more than any other research institution in the world, but we do not have access to appropriate samples for application of this technology. Similarly, on-line supercritical fluid extraction – supercritical fluid chromatography – mass spectrometry (SFE-SFC-MS) is another capability currently almost unique to our research group. Such an instrument exhibits extreme sensitivity, supports in situ extraction and analysis, and has a wide application range for potential determination of terpenes, cannabinoids, pesticides and other chemical compounds of interest on a single analytical platform. Efforts are needed to explore the power and use of this technology, but they are impeded based on current regulations.

Dr Kevin Schug — Dr. Kevin A. Schug, Professor and the Shimadzu Distinguished Professor of Analytical Chemistry in the Department of Chemistry and Biochemistry at The University of Texas at Arlington (UTA)

Circling back, let’s consider the opportunities that lie within the abundance of available outdoor-grown cannabis in Oregon. Cannabis is extremely responsive to environmental conditions (i.e., lighting, water quality, nutrients, exposure to pest, etc.) with respect to cannabinoid and terpene expression. As such, outdoor-grown cannabis, despite the reduced market value, is incredibly unique from indoor-grown cannabis in terms of the spectrum of light to which it is exposed. Indoor lighting technologies have come a long way; full-spectrum LED systems can closely emulate the spectral distribution of photon usage in plants, also known as the McCree curve. Nonetheless, this is emulation and nothing is ever quite like the real thing (i.e., the Sun). This is to say that indoor lighting can certainly produce highly potent cannabis, which exhibits an incredibly robust cannabinoid/terpene profile; however, one also has to imagine that such lighting technologies are still missing numerous spectral wavelengths that, in a nascent field of study, could be triggering the expression of unknown molecules with unknown physiological functions in the human body. Herein lies the opportunity. If we can tap into the inherently collaborative nature of the cannabis industry, we can start analyzing unique plants, having been grown in unique environments, using unique instruments in a facilitative setting, to ultimately discover the medicine of the future. Who is with us?

References

Leghissa A, Hildenbrand ZL, Foss FW, Schug KA. Determination of cannabinoids from a surrogate hops matrix using multiple reaction monitoring gas chromatography with triple quadrupole mass spectrometry. J Sep Sci 2018a; 41: 459-468.

Leghissa A, Hildenbrand ZL, Schug KA. Determination of the metabolites of Δ9-Tetrahydrocannabinol using multiple reaction monitoring gas chromatography – triple quadrapole – mass spectrometry. Separation Science Plus 2018b; 1: 43-47.

Leghissa A, Smuts J, Changling Q, Hildenbrand ZL, Schug KA. Detection of cannabinoids and cannabinoid metabolites using gas chromatography-vacuum ultraviolet spectroscopy. Separation Science Plus 2018c; 1: 37-42.

Qiu C, Smuts J, Schug KA. Analysis of terpenes and turpentines using gas chromatography with vacuum ultraviolet detection. J Sep Sci 2017; 40: 869-877.

February 14, 2018

Israel’s Cannabis Export Plans Evaporate in Fire and Fury

By Marguerite Arnold

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Trump Administration-Israeli relations had the distinct whiff of cannabis to them in the first week of February. In a development potentially just as impactful as transplanting Israel’s capital to Jerusalem, it has now emerged that Israel’s president, Benjamin Netanyahu, has effectively scotched, at least temporarily, the country’s budding medical cannabis international export plans on the eve of finally launching them.

Why? To appease the U.S. president.

What this latest act of international “diplomacy” will eventually impact in the long run is anyone’s guess. There will, however, be winners and losers out of this situation, both now and in the long term.

Who Wins

On the surface (and to gentiles) it might be hard to understand why Israel effectively shot itself in the foot from a global perspective. But cannabis falls into complicated geopolitical and religious crevices at home too. Bibi, as Netanyahu is referred to by an international Jewish audience, has just scored political points over the Jerusalem showdown. Why rock the boat over a plant that has so recently gained legitimacy just in Israel? Remember the country only partially decriminalized recreational use in 2017. However, Israel has explored legal medical cannabis for quite some time, and Tikun Olam, the country’s flagship producer, has been growing cannabis since 2007.

Tel Aviv, Israel, where Tikun Olam has a dispensary

The quote from Netanyahu that has been widely circulated in the press says a great deal. “I spoke with Trump and he told me about his general opposition to the legalization of cannabis, and I’m not sure Israel should be the export pioneer.”

The fact that apparent encouragement of this policy came from the Israeli Finance Ministry only underscores the gravity of the impact for the losing side – and what was also probably threatened. Uruguayan pharmacies, who began distributing medical cannabis legally, walked away from customers last year after their banks were first informed by U.S. partners that they would either have to cut off the pharmacies or sever ties and access to the entire U.S. banking system. The cannabis trade was estimated to be worth between $1-4 billion per year to Israeli firms.

That said, this will also be a short-lived hiccup. Netanyahu apparently wants to see more medical evidence before moving forward with the plan. That means Israel will be in the race, but not for the next 12 to 18 months (minimum).

Prime Minister Benjamin Netanyahu (Bibi)
Image: Kjetil Elsebutangen, UD

This will also not affect the cannabinoid-related export of intellectual property, where Israel has also led the cannabinoid discussion and for several generations now. Recipes, breeding instructions and even seeds cross borders more easily than plants. If anything, it will merely sharpen and shape the start up nation’s many budding cannapreneurs in a slightly different focus.

Canadian , Australian and a few other exporters also win. As of 2018, there will also be multiple European countries and EU-based firms importing and exporting (even if it is to each other).

Who Loses

The U.S. legal state cannabis movement has just been served a two fisted punch in the face by the White House. The Trump administration, in fact, has doubled down, in the space of less than five weeks, on its views towards cannabis legalization.

This also means that there will be no U.S. firms in any position to join a now global and exploding legitimate cannabis industry that stretches from the American hemisphere north and south of the U.S. itself. Not only will American producers not be able to get export approvals themselves from the U.S. government, but they may well be facing federal prosecution back home.

It will also be interesting to see whether this heralds any post-Cole memo prosecutions of the many Israeli entrepreneurs already operating in the U.S. state cannabis space. American and Israeli entrepreneurs with IP to protect are also the losers here, no matter how much this is being fought on the California front right now. That is just a state battle. IP must be protected federally.

Investors in the U.S. who had already been tempted to invest in the Canadian cannabis industry, now have little incentive to invest domestically or in Israel, no matter how big and bad California is. There is clearly budding (and less politically risky) competition elsewhere.

It goes without saying, of course, that this decision also hurts consumers – both recreational consumers and medical patients.

Bottom Line

This is clearly sabre rattling of the kind intended to make news both internationally and abroad. However, in direct terms, it will have little impact to the overall growth of the industry, no matter who is doing the growing, distributing and ex-im. The cannabis industry will also clearly not stop being a political business for the near term.

Look for prosecutions this if not next year in the U.S. – potentially in California or another high profile “impact” state. We might see pressure on Netanyahu at home, and probably from abroad as well, to get Israel into the cannabis game globally.