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David Kluft headshot

How to Protect Your Trademarks When You Can’t Protect Your Trademarks

By David Kluft
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David Kluft headshot

Federal trademark registrations are invaluable tools for emerging businesses. They put the world on notice of a company’s name; they can secure nationwide priority over others using similar names; they distinguish a product in the marketplace; they provide crucial advantages in trademark infringement lawsuits; and they are instrumental in building goodwill. But if you sell cannabis, a federal trademark registration will not do any of those things for you … because you can’t get one.

Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations.The United States Patent and Trademark Office (USPTO) continues to refuse to register federal trademarks for cannabis businesses, even if the sale of cannabis is legal in the state where the businesses are located. The USPTO’s reasoning goes something like this: federal trademark law allows for the registration of trademarks associated with goods in “lawful” commerce, which means that the goods are not illegal under federal law. Cannabis, and its psychoactive component, THC, remain Schedule I substances under the federal Controlled Substances Act (CSA). Therefore, irrespective of state laws to the contrary, and irrespective of whether the federal law is actually enforced, the manufacture and sale of cannabis is not “lawful” commerce.

This reasoning is of fairly recent vintage. In 2009, by which time about fifteen states had legalized medical cannabis, Attorney General Eric Holder announced that the Drug Enforcement Administration would cease raids on state-sanctioned medical cannabis facilities. The USPTO followed Holder’s lead in 2010 and created a new category of acceptable goods and services for marks related to “medical marijuana.” Within months, however, the USPTO had retreated from this “mistake” and changed its practice manual expressly to preclude such registrations.

David Kluft headshot
David Kluft, partner in the Boston office of Foley Hoag, LLP

Many argue that the USPTO’s position is unjustifiable as a matter of public policy. Making it easier to infringe the trademarks of state-sanctioned businesses does not advance the purposes of the CSA, and it directly undermines a key goal of trademark law, which is to prevent the proliferation of confusingly similar trademarks. But the merits of these arguments have been lost on the USPTO, which continues to refuse to register marks for anything it perceives to be prohibited by the CSA.

So if you own a cannabis business, what can you do to protect your goodwill while the federal government maintains its current policy? Below are some ideas. Admittedly, none of them– individually or collectively – is a substitute for federal registration. But each of them is better than nothing, and all of them may help to establish your ownership and priority when and if the USPTO changes its policy.

  1. State Trademark Registrations. Each state has its own trademark registration system. State registration may offer protection from infringers within the state, or at least within the parts of the state where the registrant operates, and for that reason alone it is probably worth the small cost involved. However, state registration will have little to no efficacy outside the state. You cannot use a State A registration to file a lawsuit in State B, or to stop infringement in State B, or even to prevent conflicting registrations in State B. Additionally, most state trademark registrants, unlike federal registrants, do not benefit from presumptions of validity and ownership in the litigation context.
  2. Related Federal Registrations. Many cannabis businesses also pursue federal registrations for whatever aspects of their business are not prohibited by the CSA. For example, even though the USPTO refused the POWERED BY JUJU mark for cannabis vaporizers (because it was CSA-prohibited “paraphernalia”), it allowed the same company to register the same mark for “vaporizers for smoking purposes not for use with cannabis.” The USPTO has also allowed registrations for cannabis-related business consulting (e.g., CANNACARD; PRAIRIEJUANA); investment analysis (e.g., FORTUNE420); clothing (e.g., CANNABIS COUTURE, THE MARIJUANA COMPANY); and for CBD – as opposed to THC – derivatives (e.g., CBD LIQUID GOLD). Once the USPTO permits federal registrations for cannabis marks and the inevitable disputes over ownership arise, such federal registrations for these related products and services are likely to be highly persuasive evidence in the registrants’ favor. Moreover, even in the current legal climate, federal registrations (especially when cited in a demand letter) are of great practical use in convincing others not to use confusingly similar marks.
  3. Common Law Unfair Competition. Unfair competition is a state common law cause of action that was a precursor to modern trademark law, and it is still available to protect commercial goodwill even in the absence of a state or federal trademark registration. However, unfair competition law has similar territorial restrictions as state registration. In some cases, the protected territory may be even narrower, limited only to the area within which the plaintiff can prove consumer recognition of the mark.
  4. Other Intellectual Property Protection. Copyright law, unlike federal trademark law, has no “lawful” commerce requirement, and the U.S. Copyright Office regularly issues registrations for cannabis-related copyrights. While copyright will not protect a short phrase such as a business name, it will protect a creative logo design or original packaging, and can be very effective when it comes to getting infringing uses taken down from the internet. Note also that the USPTO does not appear to have the same qualms about legality when it comes to patents, and it often grants patent protection to useful, new and non-obvious inventions related to the cannabis industry.
  5. Save stuff. Finally, if you do nothing else, save stuff. Document that first sale; keep a copy of that first shipping invoice; and save that file containing your original packaging design. Someday, the USPTO policy may change and there could be a gold rush for federal cannabis trademark registrations. Your lawyer is going to ask you for proof of your first uses of the mark, and you don’t want your response to be a glassy stare. So keep your eyes on the eventual prize and stay ready.
TOK_logo

Tree of Knowledge Inc. Acquires 5% of NYSK Holdings

By Marguerite Arnold
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TOK_logo

The Canadian cannabis community has just gotten a new member. Tree of Knowledge, Inc. just became Canada’s newest public cannabis company. The company is also planning on raising $10 million in private placement capital. According to the company’s most current pitch deck, the planned use of proceeds includes $6.5 million for new capex expenditures in Canada and Macedonia plus new product development. The rest is slated for patient and doctor outreach including via social media, new hires and working capital.

Who Is Tree of Knowledge Inc.?

Founded originally in Washington State in 2015, today TOK has a global market presence with CBD products on three continents and is already positioning itself to run with the big boys on the international scene, just on its CBD footprint. In the online marketplace, they are doing business as EVR CBD. That includes state markets in the United States, Europe, South America, Australia and China.

The company also has a distinguished board that includes doctors to former professional sports stars. As of April, the company engaged in a reverse merger with Courtland Capital, a Nevada subsidiary company.TOK_logo

And as of July 2018, the company purchased 5% of NYSK Holdings – a rapidly establishing Macedonian start-up with an eye to the European market – starting with Germany.

Who Is NYSK Holdings?

NYSK Holdings is absolutely on an upward trajectory. The company, founded by Americans with strong ties to the home country along with local partners, broke ground in Skopje, Macedonia last year.

Company principals have been exploring entry into the European market ever since (Macedonia may be in the Balkans, but it is technically not part of the EU). Significantly, this also means that producers there are used to meeting European specs for import purposes, if not hopeful EU inclusion.

NYSK holdingsLike other EU partners in the west however, (notably Spain and Portugal) labour rates are also much lower than in Germany. This creates a new avenue into the EU and the German market, which is now going to be an import-dominant one until 2020.

What is even more interesting about NYSK? They produce GMP-certified product – both THC and CBD. They have been looking for partners for most of this year. They also had a booth at the ICBC in Berlin, an experience that they found highly satisfactory.

Their strategic importance to TOK is also large. NYSK brings, for the first time, THC products and high-tech processing capacity adjacent to the European Union to a firm with a global footprint.

They might, in other words, have been Europe’s most under-priced production facility. Don’t expect that to last long.

What Is Interesting About The Move

One glance at TOK’s founders, board, andadvisors is enough to establish that this is a company of mostly older Gen X and younger Boomer heavy hitters from other industries who are pooling resources and knowledge to step into a global medical cannabis space. Smartly.

For example, the focus on dosing control, trials and an operational, GMP-certified production facility in Macedonia, plus their Canadian footprint, makes TOK and their partners well suited for “European invasion.” So does their first product – a CBD-based sleep aid.

NYSK facility
The cultivation of cannabis at the NYSK facility in Macedonia

This creates, in other words, a company with Canadian and Macedonian production, American entry and global reach, including into countries other cannabis companies have so far not breached (see China), with an interesting, low-cost, lower risk entry profile. Their expanded market entry is also occurring right at a time when Europe, including the about to be Brexited UK, is now moving forward on medical reform sans very much local production.

Perhaps this comes from the experience of the principals. TOK Cofounder Michael Caridi started his involvement in the cannabis industry in Washington State in 2014 after a successful real estate and promotions career on the East Coast (New York) and experience in ex-im. However, Caridi rapidly grew disillusioned with the state’s focus if not an obsessionon a more recreational space than medical users. He and Brian Main, now president of US operations, founded TOK a year later. Current CEO, John-Paul Gaillard, has a history that includes the creator of the Marlboro Classics brand and a stint as the CEO of Nestle Nespresso who put the idea on the map if not kitchen counters globally.

No newbies here when it comes to global market strategies, penetration and experience.

Both companies to watch, for sure.

Epidiolex-GW

Epidiolex Gives GW Pharmaceuticals Boost In Global Markets

By Marguerite Arnold
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Epidiolex-GW

GW Pharmaceuticals scored a significant victory in the United States with its cannabis-based epilepsy drug Epidiolex in mid-April. The company received approval from a U.S. Food and Drug Administration (FDA) panel for its use in treating two forms of drug-resistant epilepsy.

The drug was granted “orphan drug” status in the EU a year ago.Will this be enough to move the conversation forward about cannabis as medicine in the United States? 

So what does the future hold for this drug and a company, which has visited this space before? Remember Sativex?. The Company now faces real competition from a raft of companies moving into this space from just about everywhere – both from Canada and of course Europe itself.

The FDA Might be on the Verge of Approving its First Cannabis-Based Drug

It is not like this is either the FDA’s or GW Pharma’s first discussion about the medical efficacy of cannabinoids. Sativex, a mouth spray containing THC, was never granted approval in the United States for the treatment of MS – although it received such approvals in Europe.

Epidiolex-GWIf the FDA approves Epidiolex (made from CBD), it will be the first cannabinoid-based drug approved in the United States by the federal agency.

Will this be enough to move the conversation forward about cannabis as medicine in the United States? What will happen in the EU?

A Divergent and Highly Different Drug Market

Will the FDA finally approve at least one form of a CBD-based drug? The chances are that Epidiolex might finally move the agency to approve. However,this is not, despite the hype that the company has made in the press about this, the first cannabinoid-based drug to be approved in the United States. It might be, however, the first drug based on actual natural cannabinoids rather than synthetic ones that it approves for some purpose. Both Cesamet and Dronabinol (or Marinol) are synthetic cannabinoid drugs approved for several conditions from chronic pain caused by chemo to Parkinson’s.

GW logo-2But those who are hoping that this drug approval might open the floodgates at the FDA for startersshould take a pew. While Sativex was not approved in the United States, it was made available after 2011 for MS patients, particularly in Germany, which has the highest rate of MS of any European country. The problem? It was just too expensive for most people to afford – since their insurance would not cover it. And doctors were even more resistant to prescribing than they are now. So even getting a prescription was almost impossible.

That conversation was different in Europe post-2013, and there were people who managed to get a doctor to write a prescription not to mention afford the eye-watering prices sans insurance coverage.

That said, given the choice between whole plant meds, most people still prefer bud cannabis to the spray variety. And in Europe right now, that is what is on the table.

What Will This Mean in the US vs Europe?

In the US, the first thing that FDA approval will mean is drug sales for only one branded drug. That is the cynicism at play here. Furthermore, it also neatly dodges the THC issue.

In Europe? Particularly Germany? This development is not likely to make much of a dent. GW is competing with every single Canadian producer with flower-based oil – and on both the medical and non-medical CBD front. That also now includes local producers. Further, this is a market which prizes genericized drugs over name brands. In France, the distribution of Sativex was held up, primarily because of the row over cost. And who would pay.

It is also unlikely that the FDA approval in the United States will change the discussion either in the US on a federal level – or in Europe.

The most important place this news already made a dent? GW Pharma’s stock price – at least temporarily. It is also a spot of good news the company really needs. In February, the company’s GWP42006 drug designed for focal seizures (drug resistant epilepsy) failed to outperform placebo results and wiped 5% off the company’s stock.

german flag

German Court Stops Pending Cannabis Cultivation Bid On Technical Fault

By Marguerite Arnold
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german flag

In a move that seems to shed more doubt than certainty on domestic cannabis cultivation and the date that it will start auf Deutschland, the Higher Regional Court (or OLG) in Dusseldorf formally stopped the pending bid procedure for the first crop on March 28th. BfArM, the federal agency in charge of regulating all narcotic drugs, initiated that procurement bid. The tender bid was launched after the German Parliament and federal legislators changed the law last year to mandate that cannabis be available via prescription, and further that public health insurers were required to cover it.

That bid announcement was supposed to come as early as last September. Criticisms about the process and requirements began immediately thereafter. For starters, the bid’s requirements excluded all German-only respondents to the bid and left both Canadian and Israeli firms in the front positions to obtain these valuable licenses. However, there were other gripes, including the fact that the amount of cannabis requested (about 6.6 tonnes) was far too low to even begin to meet real demand. Namely, there are easily 1 million German patients who could qualify for the drug.

In the space of the last year, in fact, the number of “official” German cannabinoid patients has shot up from 1,000 to about 15,000. That said, the top three covering insurers also report a mere 64% approval rate. This means that there are more doctors writing prescriptions than insurers are covering.

That, at least for patients and their advocates is a bit of good news despite the blow that any delay in domestic production has created. Doctor resistance to prescribing cannabinoids even when there are no other alternatives has been used as an excuse in many media reports for the speed of market development. That clearly is not true. The attitude on the ground in Deutschland is rapidly changing.

That bid announcement was supposed to come as early as last September. At that point, however,the agency was then forced to extend the response date, which it did, but apparently not for long enough.

Throughout the fall, it was impossible to understand, from any direction, what was going on. Four lawsuits against the bid were launched around September, each with differing complaints that ranged from criticizing the agency for the lack of extension and response time to monopolistic business practices.

The OLG dismissed all but the criticism about the extension.what this decision has done most clearly is slowed down the production of domestically grown medical cannabinoids

The one clear thing to come out of Düsseldorf? BfArM has been banned from awarding its contract to anyone to produce medical cannabis in Germany starting in 2019. The first letters to bid finalists announcing the bid had been canceledbegan arriving the day after the court’s decision.

Reading Between the Lines

There have been rumors since last fall that the bid would end up in such waters. However,all the major producers widely suspected to have applied for the bid also began announcing themselves as finalists in press releases. For this reason, the official line from everyone that the bid was still, in fact, on track.

Nobody could understand why anyone would want or even be able to halt the production of direly needed, locally sourced, high-gradecannabis. That includes BfArM, which made an impassioned response, via their attorney to the OLG in Dusseldorf. Attorney Heike Dahs warned the court that any interruption of the bid was “very bad for the care of patients.”  He was similarly pessimistic about the ability to begin production domestically by the previously set 2019 deadline.

In fact, what this decision has done most clearly is slowed down the production of domestically grown medical cannabinoids (although potentially not by much) while giving officials at BfArM a rather nasty black eye that might yet lead to further legal action.

It also means that there will be another bid process. In the meantime, the ex-im market is, if anything, taking off.

This is a Shock And Opportunity – but not a Surprise

No matter the opinionated emails and IM’ing going on in several languages all over the world right now about the implications legally in the future, the major producers are all taking this in stride. And appear to be well positioned to respond.

According to Dr. Pierre Debs, the managing director of Spektrum Cannabis (the global medical brand of Canopy and based just south of Frankfurt), who responded to CannabisIndustryJournal a day after the court decision, the company is not affected by this development. “Spektrum has a steady and constant supply and we do not anticipate any problems supplying patients through their pharmacies,” he says. Debs received the first German medical import license to bring Canadian cannabis into the country a mere two years ago and has continued to carve a leading path in the discussion across Europe. “In addition to our supply from Canopy Growth Corp, our partnership supply agreement with Alcaliber in Spain will see Spektrum importing sun-grown medical cannabis products starting towards the end of the summer,” says Debs.

DR_PIERRE_DEBS
Dr. Pierre Debs, managing director of Spektrum Cannabis
Photo: ICBC, Berlin

But it is not just the big guys in the mix anymore. And there are many who see opportunityto a situation, which is frustrating.“As the second-largest country by population in Europe and a leader within the EU, the German market represents a new frontier for the cannabis industry in general in the region,” says Zlatko Keskovski, chief executive officer of NYSK Holdings, a Macedonian firm now in its second harvest of GMP-certified cannabis and holding EU export rights.

For such firms, even though NYSK is a surprise entrant to the conversation this year and outside the EU, the current situation represents an unbelievable chance to enter a market literally starving for qualifiedproduct. The firm is currently looking for German distributors who cannot access medical grade cannabinoids via other routes including attending the ICBC in Berlin in April. “This year’s ICBC looks to be a seminal moment for NYSK,” says Keskovski. “We have taken the appropriate steps to ensure our high-quality standards have led to products that our customers, and eventually patients, can rely on. We look forward to the chance to showcase our achievements that we’ve worked so hard for. The ICBC will also present us with the opportunity to meet with potential distributors and future partners.”

German Patients are Going to be on the Front Lines of This Discussion

The difficulties that German patients have already faced in obtaining a drug that is now legal in their own country for medical use (and even for recreational purposes across an open border in Holland) are legion. While to a certain extent, German patients are in the same boat as patients elsewhere and their problems, in fact, there are still huge access issues that remain. For starters, the drug is much more expensive here, so those without health insurance approval face bills of about $3,000 per month. Why the eye-watering price? All medical grade cannabis is still imported, although increasingly this is now just via other EU countries, not just from Canada.

“One of the reasons we organized the national German Patient Roundtable is to give patients a voice in all of this supply and demand discussion and to help BfArM and others formulate workable solutions for all,” responded Philip Cenedella IV when reached for a response by CIJ. Cenedella, an American expat and the organizer of the Roundtable, a nationally focussed, umbrella group that is kicking off its campaign this year, spoke for many who are far from court and boardrooms where the decisions are being made.

Philip Cenedella
Philip Cenedella, pictured left, at the Deutsche Hanfverband (DHV) conference in Berlin last November.
Photo: @MedPayRx, Instagram

“While there are very talented firms who will now take up this discussion with the government and reissue a response for the tender, what we continue to see on the ground is that patients simply do not have the access granted them in the law which was passed over a year ago,” Cenedella says, with more than a note of frustration. “We again are calling on all government officials, industry executives and patient advocates to band together to immediately establish workable protocols that directly help the patients.”

Indeed, despite the frustration and delay, if not new costs and opportunities that this decision creates, one thing is very clear on the ground here. The current status quo is unacceptable. That alone should also put pressure on the powers that be to remedy the situation as quickly as possible. And via several routes, including widening import quotas or even issuing new licenses as a new solution to domestic cultivation is implemented.

“Patients are not being served and do not have access to a medicine that has been proven to improve lives,” says Cenedella. “Our simple request is for BfArM to finally invite patients into their discussions, to work with patients to formulate workable cultivation and distribution solutions, and we humbly request that this happen now before they go down another dead-end road, ending in another court defeat, and resulting in even more delays to the patients that are still lacking the care afforded them by the German Federal Court’s decision of 2017.”

RJ-Palermo

RJ Palermo Joins Innovative Publishing Company Team

By Cannabis Industry Journal Staff
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RJ-Palermo

RJ Palermo has joined Innovative Publishing Co. (IPC) as Director of Sales – Events. In this newly created position at IPC, RJ will be managing the business development activities of the company’s food safety medical device and cannabis industries, working on both conference sponsorships and booth sales.

RJ will work side by side with Marc Spector, Director of Sales – Publishing. Marc had been responsible for all events and publishing sales, as well as for the year-after-year growth in these areas. The addition of RJ to the IPC team will support the company’s growth in sponsorship and exhibit sales, and allows Marc to continue supporting growth in digital advertising sales across all three of IPC’s digital publications, Food Safety Tech, MedTech Intelligence and Cannabis Industry Journal.

For many of IPC’s customers who leverage IPC’s unique position of conference sponsorships and digital advertising, they will be serviced in tandem by Marc and RJ.

“We saw a 25% growth in total revenue in 2017 and see tremendous growth potential in the three industries that we serve. Bringing RJ onto the team provides us the bandwidth to capitalize on the opportunities facing us,” said Rick Biros, president and co-founder of IPC. “Plus, RJ’s years of B2B conference and trade show management experience complements the IPC team’s current skill sets.”

RJ has more than 20 years of media, conference and agency experience. He was most recently a biopharmaceutical equipment contributor for the Pharma’s Almanac publication, and delivered several branding and research projects for pharmaceutical and medical device contract manufacturers. For 17 years RJ served as vice president of Interphex, the largest pharmaceutical manufacturing event in North America and was a key contributor of a successful launch of Medical Device Puerto Rico, which created the largest life sciences event in the Caribbean. RJ is an avid NY sports fan, and enjoys working out and spending time with his family and friends. RJ is married to his wife Beth, has a daughter Nora and dog Beau, and resides in Norwalk, CT.

Steven Burton

Top 4 Food Safety Hazards for the Cannabis Industry

By Steven Burton
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Steven Burton

As many US States and Canadian provinces approach legalization of cannabis, the question of regulatory oversight has become a pressing issue. While public awareness is mainly focused on issues like age restrictions and impaired driving, there is another practical question to consider: should cannabis be treated as a drug or a food product when it comes to safety? In the US, FDA governs both food and drugs, but in Canada, drugs are regulated by Health Canada while food products are regulated under the CFIA.There are many food safety hazards associated with cannabis production and distribution that could put the public at risk, but are not yet adequately controlled

Of course, there are common issues like dosage and potency that pharmaceutical companies typically worry about as the industry is moving to classifying its products in terms of percentage of chemical composition (THC, CBD, etc. in a strain), much as we categorize alcohol products by the percentage of alcohol. However, with the exception of topical creams and ointments, many cannabis products are actually food products. Even the herb itself can be brewed into teas, added to baked goods or made into cannabis-infused butters, oils, capsules and tinctures.

FDAlogoAs more people gain access to and ingest cannabis products, it’s only a matter of time before food safety becomes a primary concern for producers and regulators. So when it comes to food safety, what do growers, manufacturers and distributors need to consider? The fact is, it’s not that different from other food products. There are many food safety hazards associated with cannabis production and distribution that could put the public at risk, but are not yet adequately controlled. Continue reading below for the top four safety hazards for the cannabis industry and learn how to receive free HACCP plans to help control these hazards.

Aflatoxins on Cannabis Bud

Just like any other agricultural product, improper growing conditions, handling and storage can result in mold growth, which produce aflatoxins that can cause liver cancer and other serious health problems. During storage, the danger is humidity; humidity must be monitored in storage rooms twice a day and the meter must be calibrated every month. During transportation, it is important to monitor and record temperatures in trucks. Trucks should also be cleaned weekly or as required. Products received at a cannabis facilities should be tested upon receiving and contaminated products must always be rejected, segregated and disposed of safely.

Petri dish containing the fungus Aspergillus flavus. It produces carcinogenic aflatoxins, which can contaminate certain foods and cause aspergillosis, an invasive fungal disease.
Photo courtesy of USDA ARS & Peggy Greb.

Chemical Residues on Cannabis Plants

Chemical residues can be introduced at several points during the production and storage process. During growing, every facility should follow instructions for applying fertilizers and pesticides to crops. This includes waiting for a sufficient amount of time before harvesting. When fertilizer is being applied, signs must be posted. After cannabis products have been harvested, chemical controls must be in place. All chemicals should be labelled and kept in contained chemical storage when not in use to prevent contamination. Only food-grade chemicals (e.g. cleaners, sanitizers) should be used during curing, drying, trimming and storage.

Without a comprehensive food safety program, problems will inevitably arise.There is also a risk of excessive concentration of chemicals in the washing tank. As such, chemical concentrations must be monitored for. In general, water (obviously essential for the growing process) also carries risks of pathogenic bacteria like staphylococcus aureus or salmonella. For this reason, city water (which is closely controlled in most municipalities) should be used with an annual report and review. Facilities that use well water must test frequently and water samples must be tested every three months regardless.

Pathogenic Contamination from Pest Infestations

Insects, rodents and other pests spread disease. In order to prevent infestations, a pest control program must be implemented, with traps checked monthly by a qualified contractor and verified by a designated employee. It is also necessary to have a building procedure (particularly during drying), which includes a monthly inspection, with no holes or gaps allowed. No product should leave the facility uncovered to prevent fecal matter and other hazards from coming into contact with the product. Contamination can also occur during storage on pallets, so pallets must be inspected for punctures in packaging material.

Furthermore, even the best controlled facility can fall victim to the shortcomings of their suppliers. Procedures must be in place to ensure that suppliers are complying with pest and building control procedures, among others. Certifications should be acquired and tracked upon renewal.

Pathogenic Contamination Due to Improper Employee Handling

Employee training is key for any food facility. When employees are handling products, the risk of cross-contamination is highest. Facilities must have GMP and personnel hygiene policies in place, with training conducted upon hiring and refreshed monthly. Employees must be encouraged to stay home when sick and instructed to wear proper attire (gloves, hair nets, etc.), while glass, jewelry and outside food must not be allowed inside the facility. Tools used during harvesting and other stages may also carry microorganisms if standard cleaning procedures are not in place and implemented correctly by employees.

As the cannabis industry grows, and regulatory bodies like the FDA and CFIA look to protect public safety, we expect that more attention will be paid to other food safety issues like packaging safety (of inks and labels), allergen control and others. In the production of extracts, for example, non-food safe solvents could be used or extracts can be mixed with ingredients that have expiration dates, like coconut oil. There is one area in which the cannabis industry may lead the way, however. More and more often, risks of food terrorism, fraud and intentional adulteration are gripping the food industry as the global food chain becomes increasingly complex. It’s safe to say that security at cannabis facilities is probably unparalleled.

All of this shows that cannabis products, especially edibles (and that includes capsules and tinctures), should be treated the same as other food products simply because they have the same kinds of hazards. Without a comprehensive food safety program (that includes a plan, procedures, training, monitoring and verification), problems will inevitably arise.

Jeff Sessions and Eric Holder

Jeff Sessions Rescinds Cole Memo

By Aaron G. Biros
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Jeff Sessions and Eric Holder

According to The Associated Press, U.S. Attorney General Jeff Sessions rescinded the Cole Memo today, an Obama-era policy barring Department of Justice officials from going after state-legal cannabis businesses. This move comes just after California, the nation’s most populous state, legalized adult use sales of cannabis. Previously, the Cole Memo has served as a kind of stopgap for states to conduct legal cannabis markets, giving them peace of mind that the federal government wouldn’t interfere.

Sen. Jeff Sessions (R-AL)
Photo: Gage Skidmore, Flickr

Ushering in 2018 with a bang, California’s cannabis businesses finally celebrated their new market launch on New Year’s Day. Even CNN rang in the New Year with copious amounts of cannabis, sending journalist Randi Kaye to Denver where she was passed joints and even donned a gas mask bong.

One fifth of the entire United States population now live in states where adult use cannabis sales are legal. A majority of states in the country have some form of cannabis legalization law on the books.

According to The Associated Press, AG Sessions’ new policy will leave it up to federal prosecutors to determine how they wish to enforce federal law and the controlled substances act. Sessions has been historically conflicted with federal policy surrounding legal cannabis and has repeatedly expressed his disdain for the drug.

But his back and forth on policy directives has been largely symbolic until now. In January last year, Sessions said he would uphold federal law but expressed openness to ending the conflict between state and federal laws. In February of last year, he tied legal cannabis to violence in a press conference where he alluded to greater enforcement. But flip-flopping again in March of last year, he said the Cole Memo is valid and appropriate after a speech.

Sen. Cory Gardner (R-CO)
Image: Gage Skidmore, Flickr

The Trump Administration’s confusing and often-unclear stance on cannabis has only fueled more speculation, worries and fear that cannabis businesses are no longer safe from federal prosecution.

The cannabis industry and politicians around the country were quick to respond to the AG’s new policy shift. Sen. Cory Gardner (R-CO) said he would be holding up DoJ nominees, “until the Attorney General lives up to the commitment he made to me prior to his confirmation.” The Cannabis Control Commission of Massachusetts, the regulatory body tasked with overseeing the state’s legal cannabis industry, says “nothing has changed” and that it will continue their work to legalize and regulate the cannabis industry.

Steve Schain, Esq. practicing at the Hoban law Group

Steve Schain, Esq., an attorney with Hoban Law Group, a prominent cannabis law firm, says this only fuels the confusion. “With Jeff Sessions threatening to singlehandedly crush $7.2 billion legalized marijuana industry spanning 30 states, generating millions in taxes and providing tens of thousands of jobs, much confusion abounds,” says Schain. “While unclear if merely a ‘knee jerk reaction’ to California program’s launch breadth of coverage, unless and until the United States Department of Justice provides an official statement, publication, or other specific information, neither legalized marijuana’s current status – nor the Federal Government lack of Congressional mandate or funds to derail state programs – has changed.”

Omar Figueroa, a well-known California cannabis attorney, urges clients and friends to start getting informed. “Which district is your ‘commercial cannabis activity’ operation(s) located? Who is the US Attorney for that district? What is that US Attorney’s cannabis policy? The answers to these questions just became extremely important. Please contact us for legal advice and representation.”

Advocates and activists were also very quick to condemn Sessions’ move, including Matthew Schweich, interim executive director for the Marijuana Policy Project (MPP). “This extremely misguided action will enable a federal crackdown on states’ rights with regard to marijuana policy,” says Schweich. “Attorney General Sessions has decided to use the power of the federal government to attack the ability of states to decide their own laws. A majority of Americans support legalization, and Sessions has simply decided to ignore their views. In the states where marijuana is legal, voters approved those legalization policies at the ballot box. This is a direct attack on the will of the people.”

National Cannabis Industry Association (NCIA) Executive Director Aaron Smith gave the following statement in a press release:

“This news from the Department of Justice is disturbing, especially in light of the fact that 73% of voters oppose federal interference with state cannabis laws. But, the rescinding of this memo does not necessarily mean that any major change in enforcement policy is on the horizon. This has been, and still will be, a matter of prosecutorial discretion. We therefore hope that Department of Justice officials, including U.S. Attorneys, will continue to uphold President Trump’s campaign promise to not interfere with state cannabis programs, which have been overwhelmingly successful in undercutting the criminal market.

In addition to safely regulating the production and sale of cannabis, state-based cannabis programs have created tens of thousands of jobs and generated more than a billion dollars in state and local tax revenue to date. Any significant change in federal enforcement policy will result in higher unemployment and will take funds away from education and other beneficial programs. Those revenues will instead go back to drug cartels and other criminal actors.”

Could this move be a genuine policy shift that will cause a crackdown on the legal cannabis industry? One action that could prevent the DoJ’s ability to target cannabis businesses relies on a Senate vote passing the Leahy Amendment as part of the Omnibus Appropriations Bill. That amendment would prevent the DoJ from using resources to go after state-legal medical cannabis laws, but does not exactly protect companies operating under adult use and recreational laws.

Is it possible that this is just the Trump Administration moving public eyes away from the bombshell revelations in Michael Wolff’s book and Trump’s feud with Steve Bannon? The current administration has a history of creating headlines amidst unrelated controversy, deflecting a public relations crisis from the public eye.

Marguerite Arnold

The Great Cannabis Branding Conundrum in Europe

By Marguerite Arnold
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Marguerite Arnold

Cannabranding is buzzy. In the United States and in Canada, it is a vertical that is developing fast along with the multi-billion dollar legitimizing cannabis market. In both the United States and Canada, digital marketing to promote brands is a hot topic.

Social media has firmly rolled over traditional advertising barriers even as it still remains a landmine. And if there were ever a “fun” brand to be associated with, cannabis carries a lot of plusses. Starting with the rapidly fading stigma. According to Adweek, there were 170 advertising and marketing agencies picking up national cannabis business in the United States, with additional firms serving smaller firms or markets at the beginning of the year.

Yet battles that should be dated with the year 2017 in the mirror, are still raging and underway even in these jurisdictions. No matter what or where, advertising remains complicated. Beyond the American hemisphere, the issue of branding is a still-slumbering giant that may yet awake in the second part of the next decade. For the most part, that will have to await the advent of recreational use, at least within Europe.Are there successful brands already established in the world of cannabis? Of course.

How brands enter the market in the EU in fact, based on their social media and internet influence elsewhere, is very much a part of that discussion. So far in Europe, there has been no federal recreational reform. Medical use is still in front of legislatures. As a result, that means that more traditional social media efforts in particular, are verboten when launched in country.

With foreign firms now entering the EU market, the big question is, can such firms establish a brand presence here (or for any of their products?) Or will that too, be launched from abroad?

And how exactly will that fare in Europe, particularly in places like Germany, where the overwhelming pressure is on to treat cannabis just like another narcotic? And in particular, a generic drug.

A Brief History of Advertising in Cannabis

Hard as it is to believe, just four years ago, there was no legal, functioning recreational market anywhere. Weedmaps and Leafly were the only game in town when it came to advertising, along with growing free press coverage, in particular for small companies who were starting to establish market presence in the legalizing cannabis business. In fact Weedmaps and Leafly can be effectively credited, certainly in the United States, with putting cannabis advertising, along with dispensaries and prescribing doctors, on the map.

The impact of a California media industry on this issue, especially with state recreational legalization imminent, cannot be underestimated. However, these days, it is not the only game in town.

Fast forward to 2017, and the world of cannabranding has exploded, no surprise, in the world of social media. “Bud porn” proliferates on Instagram. In fact, an Instagram account, along with YouTube videos, Facebook posts and Twitter pictures are derigeur for pot companies these days as much as they are for anyone else. Free media is still a force.

However even here, the rules and enforcement of the same, at least in the United States, are still shadowed with uncertainty. Federal Schedule I status means that technically, even the big social media giants are in the same boat as traditional advertising mediums (like print or even internet-based media). Section 843 of the Controlled Substances Act specifically prohibits “communications facilities” from advertising Schedule I drugs. However the internet has never really been brought under FCC guidelines – and on many fronts. See “bud porn”, as the first example. Cannabis “advertising” such as it has clearly developed, is absolutely another one.

And into this gap have poured cannabis-branding initiatives galore. One of the most corporately ambitious so far? Netflix, with not only pot-branded entertainment, but its own brands of cannabis. It is far from the only one. Google Adwords also changed its policies with regard to medical advertising this year. The advent of a recreational market in California will absolutely drive this issue globally. But beyond California state borders, how will more local laws be enforced? And by whom? Is anyone at the FCC or Jeff Sessions’ Justice Department considering the national impact of any cannabis branding launched in California, for example? And where would they start? Would corporate advertising that is present at national conferences be targeted too? Along with the growing cannabisHow will such firms establish branding in a world so totally off-limits to “brand” advertising? conference economy itself which is already multi-state? The situation is already slippery. Abroad, could or would BfArM, the German federal agency overseeing the regulation of narcotic drugs (including cannabis), bring suit against Facebook for distributing California-sourced advertising for an Australian firm now doing business in Europe?

Clearly, there are landmines everywhere one looks. And not just for the big guys. The path is still littered with issues and problems for smaller, U.S.-based initiatives. Accounts can be blocked arbitrarily on social media and have been, such as on Facebook. In sum, however, it is also very clear that the preponderance of a tide is shifting. The industry as well as internet-based branding, is winning.

Especially as recreational reform blooms in Canada and California.

Advertising, in a digital world, has no borders. And cannabis branding is about to test exactly how accurate that mantra is. Or at least how much the location of one’s server counts. And it may be that because of this issue, the entire enchilada is about to jump the shark, if not a few international borders.

The Awakening Canadian Giant

North of the American border, the great Canadian recreational cannabis experiment is more than just in the offing. The train is puffing with steam at the station. The impact of a federally legal, recreational market that Canada will become as of next summer, cannot be underestimated from the advertising and branding front.

First, it means that Canadian companies will be able to advertise and promote their brands to at least a domestic audience. Granted, they will undoubtedly face the same issues as liquor companies in some ways. But promoting specific brands and labels has already hit the Canadian social media universe. See the efforts of all the major pot-producing companies with domestic server and corporate presence.

In turn, this has further opened another question. If digital and social media has no boundaries, what does that mean for the rest of the world? Particularly those countries now also watching the larger Canadian corporates establish both growing and distribution presence within their borders, and with strict advertising bans on cannabis domestically. That includes bans on advertising marijuana as medicine.

The Most Compelling Cannabis Brand Remains Legalization

Are there successful brands already established in the world of cannabis? Of course. Think only of the many celebrity-backed brands (even for medical) that you have probably heard of in the last few years. There are likely to be more.

However the reality is that in many jurisdictions, starting with Germany, such branding theoretically at least, stops at the border. The many firms who are establishing presence here on the distribution and potentially cultivation side, do nothing more than promote their company names at industry events.

How will such firms establish branding in a world so totally off-limits to “brand” advertising?

For now, one of those answers is to establish a presence as a serious pharmaceutical company. Another of course, is to become more vocal over the need for further reform and patient access. So far, that issue has remained one mostly vocalized by reform groups on the ground. That could change, particularly with further delays in implementing medical programs in Europe. Celebrity-backed appearances in media on this issue go far.

And for the meantime? Branding specialists will have to hope that advertising campaigns developed off-shore begin to meet targeted European patient groups.

Even if the first message is the concept of cannabis as legitimate medicine.