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2018 Farm Bill: Registering Trademarks & Distribution of Hemp Products

On December 20, 2018, President Trump signed the Agricultural Improvement Act of 2018 (“2018 Farm Bill”), which marked a monumental shift in federal policy towards cannabis.

So, what changed?

Significantly, the 2018 Farm Bill defines “hemp” as the Cannabis Sativa L. plant, any parts of the cannabis plant, and all derivatives therefrom, having a THC concentration of not more than 0.3% on a dry weight basis, and removes “hemp” from the CSA’s definition of marijuana. Meaning, hemp (and all that is derived from hemp) is no longer a controlled substance under the CSA. That is, all hemp with a THC content of less than 0.3% is lawful—whether sourced internationally or grown pursuant to the 2014 Farm Bill. Additionally, the 2018 Farm Bill expressly clarifies that commercialization and interstate transportation, as well as import and export, of hemp-derived products is federally lawful. However, the implementation date of certain aspects of the 2018 Farm Bill is unclear.

While this is a huge win for the cannabis industry, the 2018 Farm Bill does not legalize all hemp-derived products everywhere in the U.S.

What is still federally unlawful?

Even if the CBD comes from hemp, the Federal Food Drug and Cosmetics Act (enforced by the FDA) prevents the sale of products containing CBD that are for ingestion, unless they have undergone the FDA’s drug approval process. The FDA’s limitation applies specifically to ingestible products, e.g., supplements, oral sprays, edibles, and tinctures. Meaning, CBD-infused topicals and vape products appear to be in the clear (at least, for now). Additionally, the FDA has and will continue to enforce against companies selling CBD products that claim to prevent, diagnose, treat, or cure serious diseases, such as cancer.

Further, in California, where cannabis is legal for medical and adult use, the California Department of Public Health (CDPH) has adopted the FDA’s position and stated that hemp-derived CBD is not a permitted food additive . . . even though marijuana-derived CBD is permitted in cannabis edibles (because CDPH does not consider cannabis edibles to be “foods”).

Are CBD products legal in all 50 states?

Not yet. The 2018 Farm Bill does not preempt states from enacting more stringent regulations on the possession, production, or sale of hemp or hemp-derived products. Currently, Idaho, Nebraska, and South Dakota ban cannabis in any form, making it illegal for residents to possess CBD products.

Other than those three states, you may be able to legally sell and/or produce CBD products—but it is not black and white. Many states have strict rules for who can sell, as well as who qualifies to obtain CBD products based on the type and severity of their medical condition. For example, in Texas, CBD is available for patients with intractable epilepsy, so long as the extract contains more than 10% CBD and no more than 0.5% THC. Moreover, under current Texas law, patients only qualify for CBD oil if they are permanent Texas residents, have approval from two specialized neurologists listed on the Compassionate Use Registry of Texas, and have tried two FDA-approved drugs and found them to be ineffective. Furthermore, to lawfully cultivate, manufacture, and sell CBD products derived from hemp, the entity must obtain a dispensing organization license from the Texas Department of Public Safety (DPS). In 2017, the DPS issued three dispensing organization licenses and is not currently accepting any additional applications.

What does this mean for federal trademark protection?

We anticipate that federal trademark protection will be available for marks used in connection with non-ingestible CBD-infused products (i.e., topicals and vape cartridges), as well as other hemp-derived goods. However, the USPTO is continuing to issue refusals based on unlawfulness, in part, because it appears they have not received any implementation regulations for the 2018 Farm Bill. Instead of issuing an unlawfulness refusal, the USPTO may request “Additional Information” about the federal legality of the goods and services. This additional information request will require the applicant to answer questions directed at confirming the legality of the applied-for goods/services under the Farm Bill.

Nonetheless, if you currently sell or have plans to commercialize hemp products, a hemp branding rush is expected, and you are encouraged to apply sooner rather than later. As we explain below, an early filing date for an application can be a significant factor in determining priority, when multiple applications are submitted for the same or similar marks.

While brand owners secure common law (unregistered) rights in a brand name/trademark as soon as they start to use a given mark in commerce, there is an important exception that contravenes the general first-to-use principle: Intent-To-Use (“ITU”) applications. In the U.S., brand owners have the option to apply to federally register a mark based on intent-to-use or actual use in commerce (as well as other options). ITU applications that mature to registration are awarded national priority as of the filling date of the ITU application. This means that a mark that is the subject of an earlier filed ITU application can obtain priority over someone’s earlier common law use.

One additional factor to consider in filing an ITU application is that by owning a federal trademark registration for a mark for a hemp-derived product, you could have the added benefit of protection against someone else adopting the same or a similar mark for marijuana products. Under U.S. trademark law, marks and goods/services need not be identical to create a likelihood of confusion (the standard for trademark infringement). Though hemp and marijuana are expressly defined differently under the CSA, they are both derived from Cannabis sativa L., and certain products are therefore arguably related regardless if they contain cannabinoids from hemp or from marijuana.

Contact Evoke Law for further information on the impact of the 2018 Farm Bill and for counseling on selection, clearance, registration, and enforcement of cannabis trademarks.

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