Tag Archives: compliance

Two Recalls Hit California Cannabis Market

By Aaron G. Biros
No Comments

Just weeks ago, the first voluntary cannabis product recall occurred under California’s new regulations. According to an article on MJBizDaily.com by John Schroyer, the recall for their vaporizer cartridges affects almost 100 dispensaries in California.

Bloom Brands, the company issuing the voluntary recall, mentioned in a press release that batches sold between July 1-19, 2018 were contaminated with the pesticide Myclobutanil and therefore does not meet the Bureau of Cannabis Control (BCC) standards. Below is an excerpt from the press release:

We are working closely with the BCC to remedy this issue and expect clean, compliant products to be back on shelves in three weeks…. At Bloom, we are continuing to work with the BCC and other partners to ensure that the space is properly regulated and safe for all customers. Transparency and safety remain our top concerns and we will provide updates as additional information becomes available. We apologize for any concern or inconvenience this serious misstep has caused. We thank you for your continued trust and confidence in our products.

Then, just days later, Lowell Herb Co. issued a voluntary recall on their pre-rolls. First reported by MJBizDaily.com, it appears the products initially passed multiple lab tests and was cleared for retail sales. Weeks after the batch passed tests, a laboratory reversed its decision, saying the products failed to pass the state’s testing standards. The contaminant in question was not mentioned.

The CCIA post calling out the BCC
The CCIA post calling out the BCC

Many seem to think these recalls are a product of the BCC’s unrealistic expectations in their lab testing rules. In a Facebook post days ago, the California Cannabis Industry Association called out the BCC for their unworkable rules. “The BCC has set testing standards that are nearly impossible to meet,” reads the post. “As a result recalls like this will be the norm and the industry will suffer a bottleneck in supply. Testing standards need to be realistic, not impossible.”

On July 13, California issued the first draft of their proposed permanent regulations, which would update and change the current emergency regulations. The proposed action levels for a batch to pass a pesticide test can be found on pages 105 and 106. The state’s regulatory bodies are holding public meetings on the proposed rules throughout August and stakeholders can also submit comments via email.

Dr. Ed Askew
From The Lab

Quality Plans for Lab Services: Managing Risks as a Grower, Processor or Dispensary, Part 4

By Dr. Edward F. Askew
No Comments
Dr. Ed Askew

In the last three articles, I discussed the laboratory’s responses or defenses used to reply to your questions about laboratory results that place stress on the success of your business. The Quality Control (QC) results can cause this stress if they are not run correctly to answer the following questions:

  1. Are the laboratory results really true?
  2. Can the laboratory accurately analyze sample products like my sample?
  3. Can the laboratory reproduce the sample results for my type of sample?

Now let’s discuss the most important QC test that will protect your crop and business. That QC sample is the Matrix Sample. In the last article in this series, you were introduced to many QC samples. The Matrix Sample and Duplicate were some of them. Take a look back at Part 3 to familiarize yourself with the definitions.

The key factors of these QC sample types are:

  1. Your sample is used to determine if the analysis used by the laboratory can extract the analyte that is being reported back to you. This is performed by the following steps:
    1. Your sample is analyzed by the laboratory as received.
    2. Then a sub-sample of your sample is spiked with a known concentration of the analyte you are looking for (e.g. pesticides, bacteria, organic chemicals, etc.).
    3. The difference between the sample with and without a spike indicates whether the laboratory can even find the analyte of concern and whether the percent recovery is acceptable.
    4. Examples of failures are from my experiences:
      1. Laboratory 1 spiked a known amount of a pesticide into a wastewater matrix. (e.g. Silver into final treatment process water). The laboratory failed to recover any of the spiked silver. Therefore the laboratory results for these types of sample were not reporting any silver, but silver may be present. This is where laboratory results would be false negatives and the laboratory method may not work on the matrix (your sample) correctly. .
      2. Laboratory 2 ran an analysis for a toxic compound (e.g. Cyanide in final waste treatment discharge). A known amount of cyanide was spiked into a matrix sample and 4 times the actual concentration of that cyanide spike was recovered. This is where laboratory results would be called false positives and the laboratory method may not work on the matrix (your sample) correctly.
  2. Can the laboratory reproduce the results they reported to you?
    1. The laboratory needs to repeat the matrix spike analysis to provide duplicate results. Then a comparison of the results from the first matrix spike with its duplicate results will show if the laboratory can duplicate their test on your sample.
      1. If the original matrix spike result and the duplicate show good agreement (e.g. 20% relative percent difference or lower). Then you can be relatively sure that the result you obtained from the laboratory is true.
      2. But, if the original matrix spike result and the duplicate do not show good agreement (e.g. greater than 20% relative percent difference). Then you can be sure that the result you obtained from the laboratory is not true and you should question the laboratory’s competence.

Now, the question is why a laboratory would not perform these matrix spike and duplicate QC samples? Well, the following may apply:

  1. These matrix samples take too much time.
  2. These matrix samples add a cost that the laboratory cannot recover.
  3. These matrix samples are too difficult for the laboratory staff to perform.
  4. Most importantly: Matrix samples show the laboratory cannot perform the analyses correctly on the matrix.

So, what types of cannabis matrices are out there? Some examples include bud, leaf, oils, extracts and edibles. Those are some of the matrices and each one has their own testing requirements. So, what should you require from your laboratory?

  1. The laboratory must use your sample for both a matrix spike and a duplicate QC sample.
  2. The percent recovery of both the matrix spike and the duplicate will be between 80% and 120%. If either of the QC samples fail, then you should be notified immediately and the samples reanalyzed.
  3. If the relative percent difference between the matrix spike and the duplicate will be 20% or less. If the QC samples fail, then you should be notified immediately and the samples should be reanalyzed.

The impact of questionable laboratory results on your business with failing or absent matrix spike and the duplicate QC samples can be prevented. It is paramount that you hold the laboratory responsible to produce results that are representative of your sample matrix and that are true.

The next article will focus on how your business will develop a quality plan for your laboratory service provider with a specific focus on the California Code Of Regulations, Title 16, Division 42. Bureau Of Cannabis Control requirements.

EVIO Logo

EVIO Labs Massachusetts Accredited to ISO 17025

By Aaron G. Biros
No Comments
EVIO Logo

EVIO Inc.’s Massachusetts lab announced yesterday they received ISO/IEC 17025 accreditation from the American Association for Laboratory Accreditation (A2LA). According to the Massachusetts Cannabis Control Commission, the body in charge of regulating the state’s cannabis industry, accreditation to ISO/IEC 17025: 2017 is a requirement for cannabis testing labs.

The press release says this makes EVIO Labs Massachusetts one of only a few operating and accredited testing laboratories serving the state’s medical cannabis industry. With recreational sales coming shortly to the state, EVIO is preparing for a higher demand in their lab testing services. “We are very proud of all of the teams’ hard work that resulted in this advanced accreditation,” says James Kocis, lab director of EVIO Labs Massachusetts. “With the state-mandated laboratory regulations, EVIO upholds the high standards of testing and plays a pivotal role in ensuring consumer safety and confidence in the states burgeoning marijuana market.”

According to Adam Gouker, general manager at A2LA, EVIO Labs Massachusetts, based in Southborough, MA, is the first cannabis laboratory they accredited in the state. “A2LA is excited to expand our cannabis accreditation program into yet another state, promoting the value of independent third-party accreditation to support quality products in the industry,” says Gouker. “Having the opportunity to work with a prominent name in the industry such as EVIO Labs and assess their exceptional Massachusetts laboratory has been an additional bonus.”

EVIO LogoAccording to the A2LA press release, by achieving ISO/IEC 17025 accreditation, EVIO Labs Massachusetts demonstrates that they “have management, quality and technical systems in place to ensure accurate and reliable analyses, as well as proper administrative processes to ensure that all aspects related to the sample, the analysis, and the reporting are standardized, measured, and monitored.” It also requires that personnel are competent to perform each analysis.

EVIO Inc. operates in the cannabis testing market with lab services in a number of states, including Oregon, California and Florida among others. Their Florida location was the first accredited cannabis lab in the state and they recently earned the same accreditation for their Berkeley, California location.

Soapbox

5 Things You Can Do To Get the Most Value From Your Consultant

By Vince Sebald
No Comments

I worked for about 18 years as a company employee in various levels from entry-level engineer to senior director. Since then I have spent over a decade as a consultant in the life science industry as the founder of Sebald Consulting. Presently, I also use consultants as CEO of GxPready!, a web based CMMS software company. Based on this experience, I have put together a top 5 list of things you can do to get the most value when using consultants:

1. Recognize when a project requires a consultant

There can be several reasons a project may benefit from having a consultant which may include bringing a new skill set, industry experience or an outside perspective to bear on a project that is not available otherwise.

Provide clear guidance as to what the task and deliverables are on an ongoing basis.Also, there are occasions when resources are already stretched and you need short-term support to get through an intensive segment of a project, but the work may not be enough to justify additional longer-term resources.

In any of these cases, filling the gap internally can be difficult and time consuming. A consultant can be a great solution. Even if you don’t plan to use a consultant for the project, it may be to your benefit to have a consultant perform a “gap assessment” to help you to identify areas which require improvement to meet compliance requirements or best practice guidelines. This is often done to prepare for audits, for example.

2. Vet the consultant to get a good match

Contact potential consultants to determine if they have the set of skills you are looking for and if they fit within the culture of your organization. Talk to the actual consultant you will be working with before bringing them on.  Review the consulting contract carefully to make sure the terms are mutually acceptable.  Often consultants have some flexibility to accommodate different project situations.

One advantage to using consultants is that you don’t have a long commitment so even after you vet them with interviews, you can work on small projects and gauge the results. Some consulting companies are very formal and others are less so, for example. A good fit is better for both parties. It’s not just the competence, but the culture and personal fit with your team.

3. Provide the consultant with appropriate guidance and resources

Help the consultant give you the best results possible by providing access to the resources (personnel, information, documents, systems, etc.) to allow the consultant to perform the tasks.

Consultants can help you get through unfamiliar territory or help you to manage your team’s workload. Know how to use these resources to benefit your projects. This project manager called just in time.

Provide clear guidance as to what the task and deliverables are on an ongoing basis.

Alternatively, allow the consultant to manage the project and reach out as necessary. Any guidance and resources you can provide the consultant will increase the effectiveness and help control your costs on the project.

If you don’t know exactly what needs to be done (“That’s why I hired a consultant!”) then have the consultant put together a list for you based on some general guidance and then work from that list to get your job completed.

4. Track progress with appropriate level of detail

If you have vetted and hired a consultant, chances are they are going to put in their best effort to meet your requirements. Nonetheless, it is good practice to have a system in place to track hours/costs.

Whether it is weekly reporting, or based on milestones and project updates, this helps to avoid any misunderstandings and provides opportunities for communication of project issues in addition to whatever project updates may be scheduled.

You want your team of consultants and employees to be able to work as well as possible together.Recognize that you can go overboard in this area, working against yourself and the project, if the tracking is so detailed that it takes excessive resources to document. It is definitely possible to inadvertently generate more hours (and expense) by managing time in too much detail. If the concern is high and heavy management is required, perhaps that indicates the consultant is not the best match for this project.

Generally, you can find a good balance with a simple up-front chat with the consultant to review your expectations, and for larger projects it is often formalized in the contract.

5. Recognize if it’s not a good fit

There are many consultants and clients out there. Inevitably, there are times when, despite best intentions, the consultant/client mix isn’t working out. Make sure the contract allows for management of this situation. Can you cancel the contract with reasonable notice? Is there a mechanism for being able to replace members of the team that aren’t working out?

You want your team of consultants and employees to be able to work as well as possible together. If that’s not happening, recognize it and make adjustments as necessary. But don’t lose the contact information. A consultant that doesn’t work out today may be just right for your next project!

Following the above can improve your chances of success with consultants you may hire and allow you to build a solid set of resources you can call on from time to time as things change in your company. Consultants can fill a vital role for tasks requiring specialized skills or short-term projects where a full time hire is not practical.

Maureen Smyth headshot
Soapbox

Raising the Standard for Dispensary Education: Building a Better Budtender

By Maureen Smyth
No Comments
Maureen Smyth headshot

At the National Cannabis Industry Association’s (NCIA) Cannabis Business Summit and Expo last week there was a presentation titled, “Raising the Standard for Dispensary Education: Building a Better Breed of Budtender.” Speakers included Adam Cole, learning and development specialist at Native Roots Dispensaries and Dr. Aseem Sappal, provost and dean of faculty at Oaksterdam University. Nancy Whiteman, owner of Wana Brands, was the moderator. Let’s look at some of the ways they have standardized their process in cannabis retail education.Health effects achieved in one patient are not always replicated for every patient. This is true of all medicine.

The standard education module at Native Roots (20 retail locations throughout Colorado, and were awarded licenses in Manitoba, Canada) for onboarding a budtender includes laws and compliance, ID checking and sales limits, customer service and physical effects. Oaksterdam University provides cannabis education and focuses on botany, introduction to the endocannabinoid system, bioavailability, CBD, and edibles vs. smoking as a delivery mechanism. In addition to the already mentioned classes, Wana Brands also teaches the concept of sustained release and capsules (due to product specificity). The Native Roots educational program contains continuing education in the history of cannabis, the endocannabinoid system, methods of consumption, phytocannabinoids and terpenes. For those of you in medical professions beginning your cannabis education, these modules provide a great outline to launch your own learning and development program.

How can dispensaries integrate the medical profession at the point of distribution?The presentation highlighted the legal aspects of providing cannabis information and cannabis products. A licensed medical professional oversees all educational content and everything is run through a legal department. It is important that all cannabis providers use language that offers no definitive medical outcomes. Health effects achieved in one patient are not always replicated for every patient. This is true of all medicine. At Native Roots Dispensary, they address symptoms not diseases. They have specific language to avoid giving medical advice. For good reason, there is a state regulatory body called the Marijuana Enforcement Division (MED) that oversees dispensaries and their adherence to the “no medical advice” decree, along with a slew of other regulatory compliance issues.

Dispensaries offer careful symptom-based product recommendations to many types of consumers. How can dispensaries integrate the medical profession at the point of distribution? Native Roots has partnerships with doctors and the Rocky Mountain Cancer Institute. Additionally, the CEO of Wana Brands mentioned the use of medical kiosks in some dispensaries. My question to Adam Cole was, “Would you like to see trained cannabis nurses on staff or on board as a consultant in dispensaries to deal with patients and have the budtenders service the customer?” His answer: “Absolutely.”

german flag

German Drugs Agency Issues New Cannabis Cultivation Bid

By Marguerite Arnold
No Comments
german flag

Lessthan a week after Cannabis Industry Journal reported that BfArM had finally cancelled the first German tender bid for cannabis cultivation, and after refusing to confirm the story to this outlet, the agency quietly posted the new one online, at 3.45pm Central European Time, July 19.

First Thing’s First

For those who have not seen it yet, here is a first look at the “new” bid auf Deutsch. It is basically identical to the last one. For the most part, Europe is shaping up to be a high volume ex-im market.For now, that is all that exists. However,a move is on in Europe to translate the bid into English. Why? To hold BfArM accountable. And to help educate all the foreign and for the most part, non-German speaking investors who want to know what is required to get the bid in the first place. The process last time left a great deal to be desired.

Bid Redux

Apart from this, however, very little seems to have changed from the last time. Notably,the amount to be grown domestically is the same. This means that the government is deliberately setting production below already established demand.

german flag
Photo: Ian McWilliams, Flickr

Why?

As has become increasingly clear, the German government at leastdoes not want to step into the cultivation ring. Further,because they are being forced to, the government wants to proceed slowly. That means that for at least the next couple of years, barring local developments, it is actively creating a market where imports are the only kind of cannabis widely available – for any purpose. And in this case, strictly medical. With many, many restrictions. Starting with no advertising.

Import Europe

For the most part, Europe is shaping up to be a high volume ex-im market. This was already in the offing even last year when Tilray announced the constructionof their Portuguese facilities last summer, and Aurora and Canopy began expanding all over the continent, starting in Denmark, but hardly limited to the same.

These days it is not the extreme west of Europe (Spain and Portugal) that are the hot growingareas, but the Balkans and Greece. Cheap labour, real estate and GMP standards are the three magic words to market entry.

Can This Situation Hold?

There are several intriguing possibilities at this point. The simple answer is that the current environment is simply not sustainable.

In an environment where the clearing firm for all German securities has refused to clear any and all cannabis related North American public cannabis company stock purchases from Germans (and just updated the list to include companies like Growlife), citing “legal reasons,” it is clear the “fight” (read banking and finance) has clearly now landed in Europe.

The significance of all of this?

Clearly, it is two-fold. The first is to deleverage the power of financial success as a way of legitimizing the drug if not the “movement.” Further, if Germans want to profit from the legal cannabis market it is going to be very difficult. See the bid last year beyond this new development.

That means everyone else is going to have to get creative. The industry, advocates and patients have seen similar moves before. Patient access and profitability are not necessarily the same thing.An increasing numbers of companies are finding ways around being cultivators to get their product into the country anyway.

What Now?

The only problem with such strategies, just like banning German firms from competing in the bid, is that “prohibition” of this kind never works.

It will not keep cannabis out of Germany. The vast majority of the medical cannabis consumed by patients in Germany will come from the extremes – of east and western Europe – with Canadian, Dutch and even Danish stockpiles used as necessary. It will also not discourage the domestic cannabis movement here, which is critical as ever in keeping powerful feet to the fire.

It will also not discourage German firms from entering the market – in a variety of creative ways. Most German cannabis companies are not public, and most are setting themselves up as processors and distributors rather than growers.

So in summary, the bid is back. But this time, it is absolutely not as “bad” as ever. An increasing numbers of companies are finding ways around being cultivators to get their product into the country anyway.

As for raising money via public offerings? There are plenty of other countries where the publicly listed, now banned North American companies can raise funds on public exchanges (see Sweden and Denmark) as they target the cannabis fortress Deutschland.

2018 Food Safety Consortium

Save the Dates for the 6th Annual Food Safety Consortium conference in Schaumburg, IL, a summit of Food Safety and Quality Assurance (FSQA) industry experts and government officials. The 2018 Food Safety Consortium will have a cannabis track this year where topics will include: regulations, standards, cannabis food safety & quality and much more.

NCIA Releases Cannabis Testing Policy Guides

By Aaron G. Biros
No Comments

The National Cannabis Industry Association (NCIA) announced earlier this week the release of two white papers at their Cannabis Business Summit in San Jose, California. The first white paper, dedicated to cannabis testing policy, offers recommendations for state’s addressing cannabis testing, advising them on how to write rules for the testing market.“As wonderful as cannabis is, we’ll face a crisis together as an industry way too soon.  When it happens, the key will be how we respond to it,” says Moss.

The NCIA Policy Council is like a think tank for helping for and shape state and federal level policy related to cannabis. Kurshid Khoja, principal at Greenbridge Corporate Counsel and member of the Policy Council, says this release of the testing policy recommendations demonstrates how we can help shape policy on the state level. “As both an NCIA Board member and a member of the Policy Council, I am really excited about the Council’s work,” says Khoja. “Somewhat under the radar, the Policy Council is establishing itself as the think tank for the cannabis industry. On topics ranging from tax policy to pesticides to international competition, the Policy Council is churning out quality papers to raise awareness and educate policy makers in DC. With the release of its testing policy recommendations this week, the Policy Council is demonstrating that it could also help shape policy on the state level.”

The second white paper is meant to provide guidance to businesses dealing with crisis communications. The manual describes best practices in crisis communications, showing businesses how to identify and avoid potential public communications issues in the cannabis industry.

Jeanine Moss, Crisis Manual Subcommittee Chair of NCIA’s Marketing & Advertising Committee, says the creation of a crisis manual is meant to preempt problems we might face soon in the cannabis industry. “As wonderful as cannabis is, we’ll face a crisis together as an industry way too soon.  When it happens, the key will be how we respond to it,” says Moss. “That’s why we think it is so important for NCIA members to have an easy and practical guide that can not only help protect businesses during a crisis, but also the industry as a whole. This manual will help businesses prevent problems, keep issues from spiraling out of control, and share positive messages during times of stress.”

The guides will be presented this week at the NCIA’s Cannabis Business Summit & Expo in San Jose, California.

The Importance of Medical Cannabis Trials In Europe

By Marguerite Arnold
No Comments

Calls for more testing have been a watchword of both cannabis reform advocates and opponents alike for many years.

However, now is a really good time for cannabis companies to consider sponsoring medical trials across Europe for their cannabis products. This is why:

The Current Environment On The Ground

Germany is Europe’s biggest consumer of both prescription medications and medical devices dispensed by prescription. It is, as a result, Europe’s most valuable drug market. And ground zero for every international cannabis company right now as a result.Targeting Germany for your latest pharmaceutical product is difficult no matter who you are.

Here, however, are a few problems that face every pharma manufacturer, far beyond cannabis. Targeting Germany for your latest pharmaceutical product is difficult no matter who you are.

  1. The vast majority by euro spending on all drugs and devices dispensed by prescription must be pre-approved. To add to this problem, before they can be prescribed, new drugs must get on the radar of doctors somehow. To put this in stark relief, the entire prescription drug and medical device annual spend is about 120 billion euros a year in Germany. Only 20 billion euros of that, however, may be obtained relatively easily (without pre-approval from an insurer). Preapproval also only comes when there is trialor other scientific evidence of efficacy.
  2. There are strict rules banning the advertising of prescription drugs to patients and highly limiting this outreach to doctors.
  3. There are strict rules prohibiting the use of the word “cannabis” to promote anything.
  4. There is a strong reliance on what is called “evidence-based medicine.” That means that large numbers of doctors and insurance company approvers need to see hard data that this drug or device actually works better than what is currently on the market.

How then, is a new drug supposed to get on the radar of those who prescribe the drug? Or patients?

If this sounds like an impossible situation to navigate, do not despair. There is a way out.

The Impact of the European Medicines Agency

This agency has been much in the news of late. Namely, the British do not want to exclude themselves from the regulatory umbrella of this organization.

Largely unknown outside Europe, this agency actually has a hugeinfluence on how drugs are brought into the region. Specifically, this is the EU-wide agency (aka the EMA) that both regulates all drugs within Europe, but has also, since 2016, been making clinical reports submitted by pharmaceutical companies, available to anyone who asks for them. That includes doctors, members of the public and of course, the industry itself.

In the middle of July, the agency also published a report on the success of its now three-year-old program, including the usage of its entry website. Conveniently written in English, it is possible to easily search new trial data, which, also now must be made public.

Medical trial data, in other words, that can be created by sponsored cannabis company backed trials.

It remains the best way to get patients, doctors and insurance companies familiar with new drugs. Or even new uses for old drugs in the case of cannabis.

Will Trials Move Legalization Discussions?

Of all the established cannabis companies now in operations with producton the ground, GW Pharmaceuticals has learned that this strategy can actually cut both ways.GW logo-2

However,there are no other cannabis companies in the position of GW Pharma – namely with a monopoly on a whole country (the UK), where it alone can legally grow cannabis crops and process the same into medication and further for very profitable export. In addition, even more disturbingly, and clearly an era that is coming to an end, the vast majority of British patients have been excluded from access to cannabis except in the case of GW Pharma products.

The current row over expanded medical use in the UK, in fact, was triggered by two things. The failure of the latest GW Pharma trial for drug resistant epilepsy in Eastern Europe. And the deliberate importation by several desperate families, of good old cannabis (CBD) oil into the UK. No medical processing required.

GW Pharma said their product Epidiolex (for the treatment of childhood epilepsy) is being considered by the European Medicines Agency

However, that is the UK.

Other cannabis companies can take a page out of the company’s handbook. All that is required for faster market entry, is a slightly altered recipe.

By sponsoring cannabis-related trials in each country they want to enter, starting with Germany, cannabis companies can literally put themselves on the medical map.

Why?

Because doctors, patients andother researchers will be easily able to see and access country-specific medical data on each use of cannabis covered by a trial, per EU country. All made possible, of course, by the new open door policy of the EMA.

Growing the Medical Market

While this may sound like an “expensive” proposition, there are really few other alternatives. And with no advertising budget, plus a marketing budget that must include outreach to everyone in the supply chain including doctors, distributors and even pharmacies, the trial approach in the end may be the most efficacious in broadening both the demand and market. Not to mention the cheaper option.

How such a trial strategy might be coordinated at a time when domestic cultivation is still on hold is still a question. However for those companies considering market entry and cultivation bid if not domestic processing strategies for their products is an industry strategy that will pay off in spades.

Its role in the legalization of cannabis as medicine, as well as the speedier introduction of new drugs overall into the European system,cannot be underestimated, even if it is currently underutilized by the cannabis industry specifically now.

David Kluft headshot

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

By David Kluft
No Comments
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.