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As ardent followers of this blog are well aware, one of my favorite pastimes is keeping tabs on who is suing whom in the cannabis industry for trademark infringement. These lawsuits serve as great examples for my clients of what NOT to do when choosing a brand for their company. The last couple of years have provided a couple of big-name cannabis trademark lawsuits, including the Gorilla Glue dispute and the Tapatio Foods lawsuit.

This time, it’s the United Parcel Service (UPS) suing a group of cannabis delivery companies for trademark infringement. The lawsuit was filed in the U.S. District Court for the Central District of California on February 13, 2019 and alleges trademark infringement against United Pot Smokers, UPS420, and THCPlant, all of which market and sell cannabis products. These companies, according to the complaint, offer delivery and logistics services via the websites www.upsgreen.com and www.ups420.com.

In its complaint, UPS accuses the defendants of infringing its family of trademarks, which includes its famous shield logo, and states that the defendants “intended to capitalize off UPS’s extensive goodwill and reputation.” UPS allegedly sent multiple cease and desist letters to the defendants, which were unwisely ignored.

The lawsuit includes claims for trademark infringement, trademark dilution, false designation of origin, deceptive advertising, and unfair business practices, and includes a request for damages, an end to defendants’ infringement, and control over defendants’ websites.

We’ve made this point many times before, but it warrants repeating: Cannabis companies are not immune from trademark infringement claims, and must choose brands that do not infringe the rights of third parties, including third parties outside of the cannabis industry. For ease of reference, here are several past blog posts relating to trademark infringement, and how to choose a brand that won’t get you sued:

And here are the factors a court will consider in assessing whether one mark is likely to be confused with another, proving trademark infringement (AMF Inc. v. Sleekcraft Boats):

  • Strength of the mark;
  • Proximity of the goods;
  • Similarity of the marks;
  • Evidence of actual confusion;
  • Marketing channels used;
  • Type of goods and degree of care likely to be exercised by the purchaser;
  • Defendant’s intent in selecting the mark; and
  • Likelihood of expansion of the product lines.

The two most basic factors I recommend our cannabis clients evaluate before they select a brand are 1) is your mark similar to or the same as an existing mark, and 2) are you intentionally “riffing” off an existing brand? Remember that parody is not a defense to trademark infringement that will typically fly in a commercial setting. When you choose a mark as a “parody” of an existing brand, chances are you’re actually infringing a registered trademark, and possibly diluting a famous mark, which is exactly what is alleged here, in the UPS case. And the fact that you knew of the senior trademark would absolutely play against you in litigation, as your infringement would be deemed willful.

These two factors are only the beginning of the analysis. There are instances where similar, or even the same brand names can coexist if the goods those brands are used on are completely different and marketed through separate channels to disparate groups of consumers. The analysis for likelihood of confusion can be quite complex.

Before adopting a new brand name, we recommend consulting with an experienced trademark attorney and we also recommend having them perform a trademark clearance search to ensure your brand won’t be infringing any existing registrations.

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Time to kick back and consider Oregon cannabis.

On January 31, the Oregon Secretary of State released an audit of Oregon marijuana regulation. The audit is a hefty 37 pages, but its core findings are listed right there on the cover sheet: “Oregon’s framework for regulating marijuana should be strengthened to better mitigate diversion risk and improve laboratory testing.” Now: we would all like to see less diversion and better testing, but those findings are not exactly surprising. And no one should expect big fixes anytime soon.

Below is some straight talk about the audit’s two primary conclusions, and a few thoughts about where things are headed.

  1. Much of the medical market is a black market and diversion is unstoppable at this time.

The Oregon Medical Marijuana Act (OMMA) was passed over 20 years ago, in 1998. As we explained a few years back, OMMA was (and is) little more than an affirmative defense for designated marijuana possessors and distributers from state criminal prosecution, and from federal hassles to the extent possible. Those are commendable goals, but the program never made sense from a commercial perspective. Thus, the Oregon Health Authority (OHA) has always found itself in the unenviable position of struggling to write rules around legislation that creates a marketplace while ignoring the market itself.

When the legislature did decide to build a primitive market, it did so in fits and starts. It took seven years to put a grow site registry together, and fifteen years for dispensary licensing. Heck, even the first grow site inspections (and there haven’t been many) didn’t occur until 2016. All of this was toothpicks and BAND-AIDS. And all the while, many people made money trading in the “medical” market. Did a lot of that weed and cash make its way across the country? You bet.

Even if Oregon were to follow the audit recommendations, however, and ramp up funding for inspections and enforcement in both the OHA and OLCC (adult use) programs, there are inherent and well documented limits to supply-side efforts when it comes to federally controlled substances. Oregon can invest heavily in keeping its cannabis under seal, but its energy would be better focused on federal lobbying to de- or reschedule marijuana under the federal Controlled Substances Act, or even on longshot solutions like promotion of interstate marijuana exchanges.

The state should also continue to push medical marijuana regulation, including enforcement, into the OLCC purview. The audit briefly suggests as much, and we’ve been talking about that forever on this blog. It’s not such a political quagmire anymore, especially as more overlap comes with each legislative session. The fundamental question is this: why have a revenue raising agency and a health authority both focus on intensive regulation of the same plant, especially when both are under-supported? It doesn’t make a lot of sense.

Finally, here’s the part that administrators, legislators and even executive branch actors aren’t saying out loud: leakage into interstate commerce really doesn’t matter at this point, especially if the state is running its studies and making token efforts to stop it. There may be some federal enforcement against black market actors (which is great), but no one is shutting these state programs down. In 2019, cannabis leakage exerts more pressure on the feds to find legislative solutions than enforcement ones.

  1. Testing is a tough issue, but more fixable.

Back in the day, when OHA first started licensing dispensaries, there were no real rules around testing. People would take weed to labs with inadequate equipment and inconsistent practices. They would leave with unreliable results. In 2016, when OHA began accrediting the first laboratories for the medical and adult use (OLCC) markets, not many of them signed up. In the OLCC market, this meant bottlenecks for an extended period.

Nowadays, all cannabis making its way to retail sale is tested more strictly than other agricultural crops, but medical marijuana outside that channel typically goes untested (unless the flower is processed by a medical marijuana processor, which is pretty niche). That’s a shame because medical marijuana patients are the ones who would benefit from testing the most: many of these individuals have conditions like cancer and HIV that directly compromise their immune systems. And roughly 10% of Oregon’s medical marijuana patient community includes children under 18 years of age and seniors over 70.

As far as testing issues that affect our industry clients (OLCC businesses and financiers) the audit recommends expanding testing requirements to screen for microbiological and heavy metal testing, and it promotes “shelf audits” at dispensaries. In theory, those steps could drive up costs along the supply chain, but we wouldn’t expect significant variance. Altogether, the testing push is more about protecting vulnerable individuals in Oregon, including people in limited, patient-caregiver relationships. We can get behind that.

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We’ve been writing a lot on this blog about the regulation and sale of cannabidiol (“CBD”) products at the state and federal levels. The United States is not the only international actor, however, that is concerned with regulating the sale of CBD products, including CBD-infused foods. The European Food Safety Authority (“EFSA”), the European equivalent of the U.S. Food and Drug Administration (“FDA”), recently changed guidance on cannabinoids, declaring that all new food products infused with the plant or its derivatives should receive a pre-market approval under the European Union “novel food” regulation.

Regulation 2015/2283, which is the latest food regulation adopted by the European Parliament and the European Union (“EU”), defines “novel food” as “food that was not used for human consumption to a significant degree within the Union before 15 May 1997, irrespective of the dates of accession of the Member States to the Union.”

The EU Novel Food Catalogue entry for CBD, which contains a non-exhaustive list of ingredients that inform member nations on whether a product will need an authorization under the Novel Food Regulation, now refers to a broader class of “cannabinoids” and provides that:

Without prejudice to the information provided in the novel food catalogue for the entry relating to Cannabis sativa L., extracts of Cannabis sativa L. and derived products containing cannabinoids are considered novel foods as a history of consumption has not been demonstrated. This applies to both the extracts themselves and any products to which they are added as an ingredient (such as hemp seed oil). This also applies to extracts of other plants containing cannabinoids. Synthetically obtained cannabinoids are considered as novel.

This new EFSA guidance drastically expands the categories of cannabinoids that would require pre-market approval–note, however, that hemp seeds, flour and seed oil remain permitted–and it suggests that CBD-infused food could be off the European market for some time. Generally, it takes 3 years for an ingredient to gain novel food status.

A handful of European countries such as Spain, Italy, and Austria have already taken enforcement actions against CBD products on the basis of being “novel foods.” As such, it seems likely that these EU member nations will adopt the new EFSA guidance and continue their efforts in regulating CBD-infused foods as “new foods.”

The EU or its affiliates are expected to provide further guidance on this issue; however, due to administrative procedures and time required for adequate data collection, such publication won’t likely be released until 2020.

This new EFSA guidance will further complicate U.S. CBD companies’ ability to export their products overseas. In addition to potential international law violations, CBD companies run the risk of FDA and Customs and Border Protection (“Customs”) enforcement actions. The FDA has yet to release guidelines on shipping CBD products to other countries; however, the main FDA inquiry for the purpose of exporting CBD would likely be whether the CBD products were adulterated or mislabeled due to the fact that they were not manufactured or labeled in compliance with the target country’s law. Another risk in exporting CBD products is that Customs agents may not have a sophisticated understanding of the difference between hemp and marijuana, as demonstrated in recent state enforcement actions. If such confusion were to occur, Customs would likely seize the CBD shipment and potentially involve the Drug and Enforcement Administration.

In light of those regulatory changes, CBD companies should remain informed on domestic and international shipping laws and consult with experienced lawyers to assess the risks of exporting their products overseas.

For more on cannabis and international law, check out the following:

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On February 1, it was reported that the World Health Organization (WHO) made some significant and long overdue recommendations with respect to cannabis. Those recommendations have not been formally released, but we expect that to happen soon. If adopted wholesale by the United Nations (UN), the recommendations will have a significant impact globally as to controls placed on cannabis and its constituent parts.

It is important to note that the WHO is not recommending the unfettered legalization of marijuana. Therefore, no one should expect the doors to swing wide on international cannabis trade overnight. Still, the WHO development is welcome news after nearly 60 years of unmerited and unexamined prohibition of marijuana under international law.

The WHO recommendations are reported as follows:

  • Remove whole plant marijuana and cannabis resin from Schedule IV of the Single Convention on Narcotic Drugs of 1961 (the “Single Convention”), but leave them on Schedule I of that treaty. (Under international law, Schedule I drugs are relatively safe, and Schedule IV drugs are the most heavily controlled.)
  • Place cannabis extracts and tinctures containing delta-9-tetrahydrocannabinol (THC) in Schedule III of the Single Convention.
  • Remove THC and its isomers completely from the 1972 Protocol to the Single Convention. (The 1972 Protocol is a follow-up treaty requiring states to actually enforce laws on their books against cannabis cultivation.)
  • Clarify that that cannabidiol and CBD-focused preparations containing no more than 0.2 percent THC are “not under international control” at all.

So what would all of this mean? First, cannabis containing more than trace amounts of THC would still be controlled. Whole plant marijuana would no longer be in the same class of drugs as heroin and fentanyl, but it would not be eligible for trade in the same way as coffee or even tobacco. Second, concentrated preparations of THC would be controlled more strictly than flower, but not at draconian levels. Third, penalties for possession and distribution of cannabis in any form would significantly decrease. And fourth, CBD would be treated like bonbons. In all, the WHO approach is measured and scientific, seeking to isolate various parts and preparations of the plant, and distinguish their effects.

When it comes to implications for U.S. law, the WHO’s assessment of CBD could have the most immediate impact. Readers of this blog may recall that the U.S. Drug Enforcement Administration (DEA) has taken the position that the U.S. would “not be able to keep obligations under the [Single Convention] if CBD were decontrolled under the CSA”. The Food and Drug Administration (FDA) ultimately fell in line with the DEA’s interpretation, scheduled Epidiolex (an approved CBD drug), and recently issued a public statement warning that it is unlawful “to introduce food containing added CBD … into interstate commerce.”

If the WHO recommendation is adopted by the UN, though, the FDA may reverse course quickly. When the FDA agreed to schedule Epidiolex, it advised:

If treaty obligations do not require control of CBD, or the international controls on CBD … are removed at some future time, the recommendation for Schedule V under the CSA would need to be revisited promptly.

Presumably, state health authorities would fall in line with the FDA’s ruling, and we would stop seeing things like last week’s raids in New York and Maine.

At some point this year, it is likely that the UN will vote on the WHO’s cannabis rescheduling recommendations. A really, really interesting question is where the U.S. will cast its lot on that momentous day. The U.S. has always been an international hardliner when it comes to cannabis, even as a vast majority of its states have legalized marijuana for medical or recreational use. These days, though, things are changing fast – both domestically and worldwide.

For more on cannabis and international law, check out the following:

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Home of “dietary supplement” CBD.

This post is part two of two on how New York is regulating CBD. 

On Monday, I wrote about the New York City Department of Health’s (“DOH”) recent crackdown on Hemp-CBD in food and how it was consistent with the New York State Department of Agriculture’s (“Department”) FAQs on hemp-derived CBD (“Hemp CBD”). In summary, the Department’s FAQs state that any Hemp-CBD product sold in New York state must be labeled and manufactured as a dietary supplement. Today’s post focuses on the Department’s Template CBD Processor Research Partner Agreement (“CBD Agreement”) which elaborates on the dietary supplement classification.

The CBD Agreement is a research contract between Hemp-CBD processors, referred to as “Research Partners” in the Agreement, and the Department. Its provisions would not bind other actors including Hemp-CBD sellers or Hemp-CBD processors legally operating in other states. However, the CBD Agreement does shed light on what the Department is going to require for Hemp-CBD.

Research Partners cannot process or sell Hemp-CBD as food. A Research Partner must also obtain written approval from the Department if it intends to sell or distribute Hemp-CBD dietary supplements in a form other than “pill, capsule, caplet, tablet, tinctures, droplets or elixir, chewable, or isolate form[.]”

The CBD Agreement expands on how Research Partners, or CBD processors in other states hoping to sell products in New York, can comply with FDA’s dietary supplement standards:

For the purposes of this Research Agreement, products and production methods used shall comply with FDA law, regulation and guidance concerning dietary supplements with respect to the standards for: personnel, facilities, production, process control systems, quality control measures, record retention, packaging, holding and distribution, supply chain management, recalls, returns, complaints and training associated with dietary supplements.

The dietary supplement standards are in addition to THC testing for CBD products. Hemp-CBD intended to be consumed or absorbed into the human body must also be tested under New York’s medical marijuana program for “cannabinoid profile, solvents, pesticides, heavy metals, bacteria and molds.”

The CBD requirements requires that Research Partners must also provide a serving size and applicable warning on the label. According to the CBD Agreement, CBD products shall also include the following information:

  • The list of all pharmacological active ingredients, including and not limited to THC, CBD, and other cannabinoid content over .05%;
  • The CBD product must set forth the servings per bottle/package, the amount of CBD in milligrams per serving and the total CBD content, in milligrams per package, and the maximum recommended daily amount;
  • The list of all solvents (pesticides) used in the cultivation/extraction process;
  • The manufacture date and source;
  • The batch number;
  • The product expiration date, and
  • The following warning, along with an appropriate warning to consult with a physician concerning the product use:

“This product is neither reviewed nor approved by the State of New York; and has not been analyzed by the FDA. There is limited information on the effects of using this product. Keep out of reach of children.”

The CBD agreement also covers reporting, approved extraction methods, and sourcing hemp.  According to the CBD Agreement, the Department may eventually require registration from entities selling Hemp-CBD.

Recently, I wrote about the FDA’s stated position is that Hemp-CBD is not a dietary supplement. As such, the Department’s position is contrary to the FDA’s. The following language in the CBD Agreement requires Research Partners to acknowledge the FDA’s position:

The Research Partner represents that it has sought whatever legal or other advice it believes to be appropriate and is not relying upon the Department’s approval of its research proposal or any other statement or conduct by the Department in connection with the Research Partner’s evaluation of any legal or other risk to which the Research Partner may be exposed in undertaking the project, including, without limitation, the FDA’s position with respect to CBD and dietary supplements.

For CBD Processors in New York, the CBD Agreement must be carefully observed. For CBD Processors operating in other states who wish to sell products in New York, the Department’s position makes things a little more complicated. For example, the FDA has different standards for cosmetic products. CBD Processors may want to argue that they are selling a CBD cosmetic not a dietary supplement. However, if that CBD cosmetic is sold in New York, it must be labeled as a dietary supplement. This may mean that the CBD cosmetic distributor may need to avoid New York or adopt labeling and manufacturing requirements as if the product was a dietary supplement.

Though it may be hard to comply with the Department’s regulations, the FAQs and CBD Agreement at least provide guidance. If you want to sell Hemp-CBD in New York, it must be sold as a dietary supplement, at least for now.

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Hopefully, anyway…

Back on January 4, 2018, the industry was in a slight tailspin due to then acting Attorney General Jeff Session’s (renowned marijuana hater) rescinding of all marijuana enforcement guidance from the Department of Justice (“DOJ”). Reactions in the media ranged from treating the Sessions announcement as nothing more than an attempt to frighten the cannabis industry to claiming that it was the first step in an organized crackdown of the marijuana industry that could affect cannabis businesses and users. Both possibilities are arguably realistic. And the drama that followed Sessions’ moves was pretty satisfying, including when Cory Gardner vowed to (and did) block DOJ appointments until the issue was resolved in favor of the states, culminating in a deal with President Trump to back off of state-legal marijuana. However, now that Sessions is out at the helm of the DOJ, industry folks can breathe a little easier where new Attorney General nominee William Barr has gone on record stating that state-law abiding cannabis businesses will not be prosecuted by the DOJ and essentially that the 2013 Cole Memo will be back from the dead.

In rescinding all DOJ guidance on marijuana enforcement, Sessions torpedoed the famous 2013 Cole Memo, which outlined eight specific enforcement priorities of the DOJ in states with legal marijuana and which, between the lines, indicated that “robust” state regulations would keep the DOJ at bay regarding enforcement of the federal Controlled Substances Act. After that memo, entire states built their comprehensive cannabis licensing and taxation systems on those eight enforcement priorities, ensuring that compliance restrictions and barriers to entry were strong enough to support the same. Instead, Sessions put in place the “Sessions Memo,” which was short on specifics. It doesn’t contain an outright directive ordering U.S. Attorneys to go after marijuana businesses. It simply withdraws all of the earlier marijuana-specific guidance memoranda and directed U.S. attorneys to treat marijuana sales like any other federal crime. The withdrawn memos include, the 2013 Cole Memo, the February 2014 Cole Memo that extended low enforcement priority status to apply to banking activities (although the FinCEN guidelines are, importantly, still alive); and the 2014 Wilkinson Memo that was a sort of Cole Memo for tribal lands.

Right now, U.S. attorneys have full discretion to determine to what extent they can/should enforce federal law in the context of marijuana crimes in states with legalization and medicalization–which they always had anyway–but the 2013 Cole Memo helped them prioritize certain marijuana issues across the DOJ. In his memo, Sessions referred to the principles of enforcement in the U.S. Attorneys’ Manual, but that document reinforces the level of discretion and authority that each U.S. attorney has already. The Cole Memo was ultimately useful in providing a consistent nationwide federal policy. Under Sessions Memo, we are back to the days of having potentially 93 different enforcement policies — one for each U.S. Attorney. To date, there haven’t been any reported incidents of the Feds going after state-law compliant cannabis operators in states that have legalized and regulated.

A new sheriff is coming to town though, and that could be a very good thing for the momentum of state-by-state legalization in that states will better know what to expect from Big Brother as will marijuana businesses and their investors. William Barr may end up becoming a very unlikely helper when it comes to state-legal cannabis. He was Bush I’s attorney general from 1991-1993, and he’s a dyed in the wool conservative who, as Attorney General, was “tough on crime” and put many, many people in prison. As reported by Marijuana Moment, Barr in a mid-January hearing with Congress testified that:

My approach to this would be not to upset settled expectations and the reliant interests that have arisen as a result of the Cole memorandum . . . However, I think the current situation is untenable and really has to be addressed. It’s almost like a backdoor nullification of federal law . . .

While Barr also testified that he wouldn’t go “after companies that have relied on [2013] Cole memorandum . . . ,”  he also didn’t completely kowtow to state legal cannabis. He further testified that “we either should have a federal law that prohibits marijuana everywhere, which I would support myself because I think it’s a mistake to back off marijuana. However, if we want a federal approach—if we want states to have their own laws—then let’s get there and get there in the right way.”

In reading the tea leaves, it sounds like, personally, Barr would have no issue with continuing the War on Drugs as it relates to cannabis. As a department under his watch and command, however, the DOJ probably wouldn’t spend time and valuable resources on state-legal operators — even if Barr is concerned that the current dynamic is breeding “disrespect for the federal law.” Reasonable minds can differ, but I’d say that most cannabis operators and states are very mindful of federal law enforcement and it’s really Congress, the DOJ, and the President to blame for creating legal confusion because of varied enforcement over the years.

In the end, Barr’s testimony ultimately serves to show the country that Congress has been woefully impotent and ignorant when it comes to cannabis as a whole and especially as the topic relates to states’ rights. What’s good to know though is that if Barr is confirmed, we’re very likely returning to the 2013 Cole Memo principles, which will at least create a political atmosphere of certainty in that the DOJ has bigger fish to fry than state-legal marijuana. Right now, Barr is pretty much a lock for U.S. Attorney General, so hopefully he’ll make good on his cannabis compromises.

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Home of “dietary supplement” CBD.

This post is part one of two on how the State of New York is regulating CBD. 

Last week, New York City’s Department of Health (“DOH”) quarantined a number of edible products that contained hemp-derived CBD (“Hemp-CBD”) and announced that Hemp-CBD would not be allowed in food products in the City. Eater first broke the story, but the crackdown made national news with the Wall Street Journal, the New York TimesNBC, and Fox all publishing stories on the event. It is unsurprising that the DOH action drew such coverage. CBD is massively popular, New York City is the largest city in the United States, and the story is compelling because the DOH actually sent out agents to quarantine products, rather than simply issuing a statement. It seems to be this last point that garnered national attention based on the relative lack of coverage a very similar story garnered back in December 2018.

On December 18, 2018, shortly before the signing of the 2018 Farm Bill, the New York State Department of Agriculture and Markets (the “Department”) issued a series of frequently asked questions (“FAQs“) and a CBD Processor Template Agreement (“CBD Agreement“) that were both focused on Hemp-CBD. Unlike the DOH, the Department did not take any enforcement action. Coverage of the FAQs and the CBD Agreement was sparse. Now that New York City is taking action, it’s time to dig into the state’s position on Hemp-CBD.

The Department oversees New York’s industrial hemp program, which was promulgated under the 2014 Farm Bill. Rather than issuing licenses or permits, the Department enters into research agreements with individuals and companies who wish to process hemp into commercial products. The Department uses a number of template agreements available online. The CBD Agreement applies to processors who wish to create Hemp-CBD products intended for human consumption.

The FAQs and the CBD Agreement make it clear that the Department is intending to treat Hemp-CBD as a dietary supplement. The FAQs state that an individual cannot “sell any item for human consumption that has CBD as an ingredient unless” the two following standards are met:

  1.  The item is produced under the rigorous dietary-supplement standards described in the CBD Agreement; and
  2. The item is properly labeled and packaged for sale pursuant to FDA regulations for dietary supplements.

The FAQs elaborate on its dietary supplement standard:

What is the difference between a dietary supplement and a food product?

No product for human consumption that has CBD added to it can be labeled and marketed as a food. All extracted CBD and CBD products must be manufactured pursuant to FDA dietary supplement standards and must be labeled and marketed as a dietary supplement[.]

What are “dietary-supplement standards” or “dietary supplement GMP”?

The FDA sets three levels of Good Manufacturing Practices (GMPs): one GMP standard for foods, a more rigorous GMP standard for dietary supplements, and an extremely rigorous GMP for pharmaceuticals. Products listing CBD as an ingredient must be manufactured pursuant to the dietary-supplement standards. The dietary supplement GMPs are federal, and are described here: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/cfrsearch.cfm?cfrpart=111

This section is titled “Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements.” Any product for human consumption that lists CBD as an ingredient must be manufactured pursuant to these dietary-supplement standards.

This dietary supplement classification applies to any “product that is a combination of ready-to-eat food with additional CBD infusions or CBD extracts, such as CBD chocolate syrup or CBD soda or CBD-infused frosting drizzled cookies.” The FAQs also make clear that they apply to products from other states: “products made from industrial hemp that are sold in NYS must meet NYS standards, regardless of where the product is processed or manufactured.”

It should be noted that the Department acknowledges that its jurisdiction over Hemp-CBD is limited. For example, the Department does not require businesses to apply to the Department to add pre-manufactured Hemp-CBD to another product such as a topical or to develop products using CBD is sourced from another state. There is also no requirement to obtain any authorization from the Department to sell Hemp-CBD products. However, if the product is sold anywhere in New York State, it must comply with dietary supplement standards.

You can agree or disagree with the New York City DOH’s decision to start quarantining CBD in food, however, it does seem to be inline with the Department’s guidance. The Department is a state agency and the DOH is a city agency so DOH’s decision may be it showing deference to the Department.

Later this week, I’ll analyze the CBD Agreement and how it provides additional insight into the state’s position on Hemp-CBD.

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On February 1, it was reported that the World Health Organization (WHO) made some significant and long overdue recommendations with respect to cannabis. Those recommendations have not been formally released, but we expect that to happen soon. If adopted wholesale by the United Nations (UN), the recommendations will have a significant impact globally as to controls placed on cannabis and its constituent parts.

It is important to note that the WHO is not recommending the wholesale legalization of marijuana. Therefore, no one should expect the doors to swing wide on international cannabis trade overnight. Still, the WHO development is welcome news after nearly 60 years of unmerited and unexamined prohibition of cannabis under international law.

The WHO recommendations are reported as follows:

  • Remove whole plant marijuana and cannabis resin from Schedule IV of the Single Convention on Narcotic Drugs of 1961 (the “Single Convention”), but leave them on Schedule I of that treaty. (Under international law, Schedule I drugs are relatively safe, and Schedule IV drugs are the most heavily controlled.)
  • Place cannabis extracts and tinctures containing delta-9-tetrahydrocannabinol (THC) in Schedule III of the Single Convention.
  • Remove THC and its isomers completely from the 1972 Protocol to the Single Convention. (The 1972 Protocol is a follow-up treaty requiring states to actually enforce laws on their books against cannabis cultivation.)
  • Clarify that that cannabidiol and CBD-focused preparations containing no more than 0.2 percent THC are “not under international control” at all.

So what would all of this mean? First, cannabis containing more than trace amounts of THC would still be controlled. Whole plant marijuana would no longer be in the same class of drugs as heroin and fentanyl, but it would not be eligible for trade in the same way as coffee or even tobacco. Second, concentrated preparations of THC would be controlled more strictly than flower, but not at draconian levels. Third, penalties for distribution and possession of cannabis in any form would significantly decrease. And fourth, CBD would be treated like bonbons. In all, the WHO approach is measured and scientific, seeking to isolate various parts and preparations of the plant, and distinguish their effects.

When it comes to implications for U.S. law, the WHO’s assessment of CBD could have the most immediate impact. Readers of this blog may recall that the U.S. Drug Enforcement Administration (DEA) has taken the position that the U.S. would “not be able to keep obligations under the [Single Convention] if CBD were decontrolled under the CSA”. The Food and Drug Administration (FDA) ultimately fell in line with DEA’s interpretation, scheduled Epidiolex (an approved CBD drug), and recently issued a public statement warning that it is unlawful “to introduce food containing added CBD … into interstate commerce.”

If the WHO recommendation is adopted by the UN, though, the FDA may reverse course quickly. When FDA agreed to schedule Epidiolex, it advised: “If treaty obligations do not require control of CBD, or the international controls on CBD … are removed at some future time, the recommendation for Schedule V under the CSA would need to be revisited promptly.” Presumably, state health authorities would fall in line with the FDA’s ruling, and we would stop seeing things like last week’s raids in New York and Maine.

At some point this year, it is likely that the UN will vote on the WHO’s cannabis rescheduling recommendations. A really, really, really interesting question is where the United States will cast its lot on that momentous day. The U.S. has always been an international hardliner when it comes to cannabis, even as a vast majority of its states have legalized marijuana for medical or recreational use. These days, though, things are changing fast – both domestically and worldwide.

For more on cannabis and international law, check out the following:

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State trademarks for cannabis goods and services have been an ongoing saga in California that we have written about extensively. For a little background, until January 1, 2018, obtaining state trademark protection in California was not possible due to Sections 14270-14272 of the Model State Trademark Law of the California Business and Professions Code, which are simply titled “Miscellaneous.” Section 14272 states the following:

The intent of this chapter is to provide a system of state trademark registration and protection substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. Sec. 1051 et seq.), as amended. To that end, the construction given the federal act should be examined as non-binding authority for interpreting and construing this chapter.”

However, in December of 2017, the California Secretary of State’s Office announced that customers would be able to register cannabis-related trademarks or service marks so long as the following requirements are met:

  1. The mark is lawfully in use in commerce within California; and
  2. The specification matches the classification of goods and services adopted by the United States Patent and Trademark Office.

The Secretary of State’s Office has reiterated that it will only accept applications insofar as the goods and/or services in question fit within an existing classification code from the USPTO’s Identification of Goods and Services Manual. Therefore, it is easy to register for things that fit squarely within the USPTO specifications, like retail services. Cannabis goods are a bit more problematic, although we have developed strategies to protect these as well.

All of this has been based on administrative policy declared by the Secretary of State’s Office, not on legislation or a change to the California Business and Professions Code, but Senate Bill 185, which was introduced on January 30, 2019 and just went to committee, would change that.

SB 185 notes that existing law in California provides for registration of trademarks where the classification of goods and services for those marks conforms to the classifications adopted by the USPTO, but proposes that for marks for which a certificate of registration is issued on or after January 1, 2020, applicants would be authorized to use “specified classifications for marks related to cannabis, including medicinal cannabis, goods and services that are lawfully in commerce under state law in the State of California.” Designated classifications of goods for cannabis products would streamline the process for trademark registration in California and provide cannabis companies with greater security regarding the enforceability of their registrations.

Additionally, SB 185 provides that the Department of Food and Agriculture, in conjunction with the State Department of Public Health and pursuant to MAUCRSA, must establish a certification program for cannabis and manufactured cannabis products comparable to the federal National Organic Program and the California Organic Food and Farming Act. As we’ve written before, it is not permissible to use an organic designation on cannabis products unless that designation is pursuant to state law or pursuant to a private certification, since the U.S. Department of Agriculture generally regulates that certification under the Organic Foods Production Act.

SB 185 lays the groundwork for some important improvements to the way cannabis companies protect their brands and the establishment of an organic certification program will benefit both companies and consumers. We’ll be following this bill closely and hope it doesn’t stall in committee. Stay tuned!

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Earlier this year, the Food and Drug Administration (“FDA”) began seizing various cannabidiol (“CBD”) products from store shelves. These enforcement actions reflected the implementation of the agency’s position that CBD, regardless of the source from which it is derived, cannot be lawfully sold for human consumption.

A few states, including states that have adopted industrial hemp pilot research programs under the 2014 Farm Bill, now seem to have embraced this FDA position by banning certain CBD-infused products from local stores.

Last Friday, several New York restaurants, bakeries, and bars were forced to stop selling CBD-infused foods and drinks. Officials with the state Department of Health confiscated those products, marking them as “embargoed.” The embargo process consists of identifying, itemizing and removing products. The Department has yet to issue a public statement or to provide further information on these actions, but it appears that state health inspectors explained to the affected business owners that CBD could not be used as a “food additive”.

This argument was similar to that used by the Maine Department of Health and Human Services (“DHHS”). Earlier last week, Maine health authorities began notifying businesses that they were required to remove all CBD-infused foods, tinctures, and capsules from their shelves. Relying on an internal report by the state Attorney General’s Office, which concluded that CBD could not be used in mass-market food until Maine’s hemp pilot program receives federal approval pursuant to the 2018 Farm Bill, the Maine DHHS determined that CBD was an unapproved food additive that the FDA does not recognize as safe.

Section 201(s) of the Food, Drug, and Cosmetic Act (“FD&C Act”) defines “food additive” to encompass any substance that may reasonably be expected to directly or indirectly affect or become part of a food. Until a food additive is tested and reveals to be safe for its intended use, it is deemed unsafe. A food additive is considered safe if there is a reasonable certainty in the minds of competent scientists that a substance is not harmful under its intended use and condition. If a food additive is added to a food prior to FDA approval, its presence renders the food adulterated and subject to enforcement action.

Because the FDA has yet to approve CBD as a food additive, is it accurate that Hemp-CBD products, particularly edibles and infused drinks, would be deemed unsafe under the FD&C Act.

Although the state health authorities embargoed CBD edibles and other CBD products used for human consumption, they told affected business owners that they could continue selling CBD products that “could be smoked, vaped, worn as a patch or applied as lotion.” This is because cosmetics and smokable products are subject to less onerous FDA regulations than foods and dietary supplements. Nevertheless, this is all likely to change because the FDA will undoubtedly release a plan to regulate Hemp-CBD products soon.

These recent enforcement actions in places like New York and Maine threaten to spook this fast-growing industry and should remind industry players that business and legal considerations surrounding the sale of Hemp-CBD products are in a constant state of flux.

We will continue to monitor this issue and update you on other states CBD enforcement actions. Until then, don’t hesitate to contact our offices for additional information on the legal status of state and federal Hemp-CBD law and policy.

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